Page 1 of 5
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 373
Trends in Disparity in Worker
Productivity: A Review
Dr.K.Venkataiah
Dept.of Economics
Patel Godavari
Dept.of Economics
The reduction in economic disparity remains a major goal of development in an economy. This section examines
trends in disparity in income per worker (worker productivity) at different levels: 1) between farm and non-farm
workers in rural areas, 2) between non-farm workers of rural and urban areas, and 3) between rural and urban
areas.
1. Disparity in worker productivity between
farm and non-farm workers in rural
areas
Estimates of income of worker in various
categories and in rural and urban areas since 1970-
71 are presented in Table 1. In year 2011-12 per
worker income varied from Rs. 33,937 for
agricultural labour to Rs.1,71,836 for rural non- farm workers. In the same year a cultivator earned
2.27 times the income earned by a labourer from
agriculture (Table 2). At the same time, per capita
income of non-farm workers was more than twice
the income of cultivators. These results show that
among rural workers, agricultural labours are at
the bottom in terms of worker productivity. Rural
non-farm sector offers 2.76 times productive
employment than the farm sector. The disparity in
worker productivity10 between different categories
of rural workers remained consistently high during
the past four decades. Nevertheless after 2004-05,
disparity among different categories of workers
(except between non-farm workers of rural and
urban areas) witnessed declining trend.
Table 1. Trends in worker productivity (at current prices) across different worker categories in India
(Rs/worker)
Year Agricultural Cultivator Farm Non-farm All rural Urban
labour workers rural workers
workers
1970-71 821 1114 1018 2294 1203 3829
1980-81 1788 2425 2216 6248 2878 8456
1993-94 5040 12271 9410 25822 12947 38934
1999-00 9246 22807 17059 51789 25380 89180
2004-05 10480 25183 19933 82990 37273 120419
2011-12 33937 77144 62208 171836 101755 282515
10 Estimated as ratio of NDP per worker between
two categories of the worker. For agricultural
labour, worker productivity was estimated by
dividing wage bill with the number of agricultural
labours using the methodology of Chand, et al.
(2015)
The wide variation in worker productivity arises
due to composition of rural output, over- dependence on agriculture sector and nature of the
work performed by different categories of workers.
In the year 1970-71, 85.5 per cent of the rural
workers engaged in agriculture produced only 72.4
Page 2 of 5
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 374
per cent of the rural output and worker
productivity in non-farm sector was 2.25 times the
worker productivity in farm sector. Subsequently,
due to significantly higher growth in non-farm
sector, the share of agriculture in rural output
declined by 33.5 percentage points till the year
2004-05 but agriculture share in rural workforce
declined by meagre 12.9 percentage points.
Consequently, the disparity in worker productivity
between farm and non-farm sectors increased to
more than four times by the year 2004-05.
Table 2. Disparity in per worker income between different worker categories
Year CULT/ NFW/ NFW/ NFW/ URBAN/ URBAN/
AGL CULT AGL FW NFW RURAL
1970-71 1.36 2.06 2.79 2.25 1.67 3.18
1980-81 1.36 2.58 3.50 2.82 1.35 2.94
1993-94 2.43 2.10 5.12 2.74 1.51 3.01
1999-00 2.47 2.27 5.60 3.04 1.72 3.51
2004-05 2.40 3.30 7.92 4.16 1.45 3.23
2011-12 2.27 2.23 5.06 2.76 1.64 2.78
CULT: Cultivator, AGL: Agricultural labour, NFW: Non-farm worker, FW: Farm worker
During 2004-05 and 2011-12, acceleration in rate of
agricultural growth coupled with simultaneous
withdrawal of agricultural workers and increase in
relative prices of agricultural produce resulted in the
narrowing down of disparity in worker productivity
between farm and non-farm sectors to the level of
the year 1993-94. These trends clearly indicate
scope to reduce disparity between farm and non- farm sectors through employment diversification
towards non-farm sectors and acceleration in the
growth in farm output.
It is to be noted that disparity between non-farm
workers and agricultural labours reduced by 2.86
percentage points as compared to 1.07 percentage
points reduction in disparity between non-farm
workers and cultivators between 2004-05 and 2011-
12. The reason for a steeper reduction in disparity
between non-farm workers and agricultural labours
was a higher rate of withdrawal of agricultural
labours as compared to cultivators from the
agricultural workforce (Table 4.1). Another reason
was a significant increase in the wages rates and
therefore wage earnings of the agricultural labours
during this period (Chand and Srivastava 2014).
One of the measures to accelerate non-farm
employment and reduce dependency on agriculture
is to impart skills and technical know-hows to the
largely unskilled agricultural labours in the rural
areas.
The rising labour wages also narrowed down the
disparity between agricultural labour and cultivators
between 2004-05 and 2011-12
3. Disparity in worker productivity between non- farm workers of rural and urban areas
Although non-farm sectors generate higher income to
the workers over the farm sector in rural areas, it is
lower than the per worker income in the urban areas.
During 2011-12, urban workers earned 64 per cent
higher income as compared to the non-farm workers
of rural areas. One of the major reasons of the
disparity in productivity of non-farm workers
belonging to rural and urban areas is the difference in
the composition of the non-farm jobs. The evidences
show that in urban areas, 69 per cent of the total non- farm output was produced by services sectors (by
engaging 62% of non-farm workers) in 2011-12. On
the other hand, the share of services sectors in non- farm output and workforce of rural areas was 44 per
cent and 43 per cent, respectively. This implies that
dominance of services sectors in urban economy,
which provides high paid jobs, is a major source of
disparity among non-farm workers of rural and urban
areas.
It is to be noted that between 2004-05 ad 2011-12,
most of the growth among rural non-farm sectors was
registered in construction sector, while the growth in
services sector decelerated both in output and
employment (Table 3.1). On the other hand, services
Page 3 of 5
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 375
sector remained a major growth driver of urban
economy. Consequently, disparity between non-farm
workers of rural and urban areas increased during
this period.
Improvement in education level and skills of the rural
workers and creating infrastructure facilities (such as
transport connectivity, communication connectivity,
basic amenities, etc.) for services sectors in rural
areas would go a long way to reduce such disparity.
4. Disparity in worker productivity between rural
and urban areas
The over-dependence on agriculture and slow pace of
low-paid construction sector led employment
diversification are reflected in the persistent disparity
in per worker output in rural and urban areas (Table
6.2). Although the disparity between rural and urban
workers narrowed down to its lowest level by the
year 2011-12, urban workers still produces 2.78 times
the output of the rural worker. As 64 per cent of the
rural workforce is engaged in agriculture, reducing
disparity would require a much attention on the
improvement of income of farmers and agricultural
labours.
5.Conclusions and Strategic Options for Pro- employment Growth
Contrary to a common perception the evidences
point out defeminisation of rural workforce
between 2004-05 and 2011-12 as female workers
withdrew from agriculture work in large numbers.
About one third of the entire reduction in female
labour force got engaged in education activities,
while rest of them confined themselves in
household activities. Increasing enrolment for
education is a desirable trend in terms of
improvement in their education level and skills.
Greater efforts will be required to create productive
employment opportunities in non-farm sectors for
those educated youth who will join the labour force
after acquiring education in the near future.
It is puzzling to note that majority of the female
workers who withdrew from farm works and stayed
back at home belong to the agricultural labour
households, whose economic conditions are not
very good. Clearly, female of agricultural labour
households do not prefer to go for farm work. Some
evidences indicate non-availability of non-farm
employment opportunities rather than lack of
willingness for outside work as the reason for de- feminisation of rural workforce. There is an
evidence that female labour participation rate
further declined after 2011-12. It is necessary to
formulate attractive avenues for the female workers
to bring them out of domestic boundaries and
engage in productive activities.
Withdrawal of workforce from agriculture
witnessed between 2004-05 and 2011-12 has
reduced dependence on agriculture and brought
convergence in the contribution of agriculture in
rural output and employment to some extent.
However, to match employment share with output
share of agriculture another 84 million agricultural
workers are required to quit agriculture and join
more productive non-farm sectors. This amounts to
about 70 per cent increase in the non-farm jobs in
rural areas.
Workers moving out of agriculture and
those entering rural labour-force are getting largely
absorbed in construction activity, as, employment
growth in manufacturing and service sector in rural
areas decelerated sharply after 2004-05. Rural
manufacturing adopted more capital-intensive
production as compared to the urban manufacturing
and it failed to address the goal of employment
generation for rural labour-force. Most of the
labour-intensive manufacturing sub-sector such as
wearing apparel, tobacco products, textile, non- metallic mineral products, and food products and
beverages witnessed either stagnation or fall in
employment between 2004-05 and 2011-12. As
conventional manufacturing has failed to generate
rural jobs, despite very high growth in output, India
need to look for different type of manufacturing for
rural areas. Labour intensive medium, small and
micro (MSME) enterprises seem to be an
appropriate alternative for rural employment
generation.
The lack of required skills and technical knowledge
are the main barrier for rural workers to enter
manufacturing sector. Setting up of industries and
improvement in infrastructure are the necessary but
not sufficient conditions for increasing rural
employment which require effective human
resources development programmes to impart
necessary skills and training to rural youth to match
the job requirement in manufacturing sector.
