SOIL Report 2008 - ACCESS Development Services

Chapter IVgains in manufacturing have been high up to 1999-2000, and the elasticities were therefore low duringthis period. The economic growth in employment is high, and corresponding high employment elasticityfor the period 1999 to 2005 is a good sign. This should help strengthen the manufacturing sector, whichwill buttress growth and employment linkages with other sectors. The importance of manufacturing isenhanced by the fact that it has very deep linkages with sectors such as transport, storage, wholesale,retail and construction.Employment in the manufacturing sector has been largely generated by the Small Scale Industries (SSI)sector. The following two tables (4.9 and 4.10) will show the relative importance of SSIs in employmentin the manufacturing sector.Table 4.9: Trends In Growth of Employment in SSI &Industrial Sector (%)PeriodGDP Growth per annumIncrease in jobs per annumOrganised Sectorincluding GovernmentSSI sector1980-1990 5.7% 1.59% 6.7%1991-1997 5.7% 0.86% 3.5%Source: http://www.laghu-udyog.com/ssiindia/statistics/economic.htm#EmploymentTable 4.10: Jobs Created in the Organised vs SSI Sectors1980 – 1997Organised SectorSSI Sector53.66 lakh new jobs80.00 lakh new jobsThe SSI sector in India creates the largest employment opportunities for the Indian poor, next only toagriculture. It has been estimated that Rs 100,000 of investment in fixed assets in the small-scale sectorgenerates employment for four persons. 10Within manufacturing, the food products industry has ranked first in generating employment, providingemployment to 0.48 million persons (13.1 per cent). The next two industry groups were non-metallicmineral products with employment of 0.45 million persons (12.2 per cent) and metal products with 0.37million persons (10.2 per cent). In chemicals and chemical products, machinery parts except electricalparts, wood products, basic metal industries, paper products and printing, hosiery and garments, repairservices and rubber and plastic products, the contribution ranged from 9 per cent to 5 per cent, thetotal contribution by these eight industry groups being 49 per cent. The employment per unit is thehighest (20) in units engaged in beverages, tobacco and tobacco products mainly due to the high employmentpotential of this industry particularly in Maharashtra, Andhra Pradesh, Rajasthan, Assam andTamil Nadu. Next come cotton textile products (17), non-metallic mineral products (14.1), basic metalindustries (13.6) and electrical machinery and parts (11.2.) Per unit employment was the highest (10) inmetropolitan areas and lowest (5) in rural areas.In most of these sectors, the labour-capital ratios are higher than the sectoral average of 0.78. Whilethe labour-capital ratio takes into account only these two components of output, if we observe wagesin perspective to total output, the ratio is very low. The average proportion of wages in the total outputin manufacturing industries is less than 12 per cent. This compares unfavourably with construction forexample, where this ratio is over 30 per cent.10Source: http://www.laghu-udyog.com/ssiindia/statistics/economic.htm#Employment92