In a growing economy, a frequent question that is asked is whether the workforce is truly inclusive. In India, we have made significant progress in the education levels of Scheduled Castes, Scheduled Tribes and Other Backward Classes. But is the improvement reflected in employment and income potential?
In this fourth and final article in the workforce series, we explore the changes in the education and employment pattern of young urban Indian men (25-35 years) by focusing on the inclusiveness of opportunities by caste groups.
The well-established vast inequality in terms of income and wealth among Indian households belonging to different castes has often been discussed. But to truly capture the progress, if any, towards inclusiveness, we need to compare the outcomes for the younger age group. It is here that any impact of the affirmative public policies such as reservation and a general move towards breaking the caste barriers can be noticed. Further, the change is likely to be faster in urban areas and among young men.
We use data from the Employment and Unemployment Survey of National Sample Survey Organisation (NSSO) for 2004-05 and from the Periodic Labour Force Survey (PLFS) for 2017-18. Indians are divided into four broad categories in official statistics — Scheduled Caste (SC), scheduled Tribe (ST), Other Backward Class (OBC), and General Category (GC), which includes the ‘upper’ castes. Among the age group of 25 to 35 years in urban India, OBC and GC accounted for around 40 per cent each, along with SC population of around 16 per cent and ST less than 3 per cent in 2017-18.
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Uniform rise in education levels
Over the last decade, the levels of education across all social groups have increased in urban India. The education pattern of those belonging to OBC is now similar to GC (Graph 1).
Graph 1
There is also a sharp increase in the proportion of young men who are educated beyond primary schooling among SC and ST. Some of the increase in higher education levels could be a result of the affirmative action by successive central and state governments such as reserving a specified number of seats in higher education institutions and a lower entry threshold for students from certain castes.
Increase in employment levels, inclusiveness
The next obvious question to ask is: has a rise in education levels led to a change in the employment pattern among young men belonging to different castes?
Graph 2
In the age group of 25-35 years, virtually all Indian men work. Compared to 2004-05, the share of formal employment has increased among all social groups and ranged between 20-28 per cent (Graph 2). The largest increase in formal employment of 10 percentage points can be seen in the OBC and GC. While inclusiveness of the job market may have appeared to have increased, it could partly be a forced affirmative outcome of the job quota in the public sector, including in banks and administration.
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Real estate, IT services more inclusive than others
A more genuine increase driven by increasing education levels, accompanied by more openness towards inclusivity, should be reflected in the job pattern of high skill service sectors such as real estate and business services (including IT/ITES).
Graph 3
Our analysis shows that among the Indian men between the age of 25 and 35 years employed in urban regions in the real estate and business services, the share of OB, SC, ST together had risen close to half by 2017-18 and, specifically, the representation of young men from OBC has risen sharply to 35 per cent (Graph 3).
If this trend were to continue, the employment pattern in the real estate and business services by the end of the decade would be similar to the population shares of a different caste group. However, the share of the sector in total employment remains relatively low at 5.3 per cent in urban India and thus replicating the success here in other parts of the economy would be essential.
Bridging the caste gap in jobs?
While the employment pattern in India has become more inclusive in terms of industrial representation, has the caste gap in terms of occupations narrowed? Traditionally, SC and ST were locked into unskilled elementary occupations such as street vendors and low-skilled labourers in industry and services such as cleaners. Over time, however, caste can also play an important role in occupational convergence. Once the caste-based networks are formed in urban areas, they facilitate the occupational mobility of historically disadvantaged castes.
Graph 4
To explore this, we looked at the share of different occupations within each social group in 2017-18. Once again, the occupations of OBC and GC have largely become similar, barring the share of professionals (Graph 4).
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Income levels higher for upper caste
Finally, we explored the caste-based differences in income levels among young urban men by their completed years of formal schooling. Do the returns to education differ among the caste groups?
Graph 5
While the income level of a young person belonging to GC continues to remain higher than other caste groups at all levels of education, the income differences become larger among young adults with tertiary education (graduate or post-graduate levels). (Graph 5).
In sum, we find that while progress has been made by all, young men from OBCs have seen a larger catch-up. The returns to higher education in terms of wage disparities in different caste groups however, remain significant. Closing the caste gap in education, jobs and incomes of young men continues to be a work in progress in urban areas.
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This is the fourth and final article in the workforce series. Read all the articles here.
Vidya Mahambare is Professor of Economics, Great Lakes Institute of Management. Sowmya Dhanaraj is Assistant Professor of Economics, Madras School of Economics. Sankalp Sharma is post-graduate student, Madras School of Economics. Views are personal.