Amidst our current grave concerns about the number of jobs created in the Indian economy, good news comes from the tourism sector, which generated an estimated 13.9 million additional jobs in the economy between 2014-15 and 2017-18.
These include jobs that were directly in tourism, and those that were indirectly related to tourism and resulted from the strong links that tourism has with other sectors of the economy. To be clear, these estimated jobs are not the headcount of workers in tourism, but refer to the total number of jobs undertaken by workers, including multiple activities: a part-time worker can be engaged in two activities and this would count as two jobs.
This estimate of the jobs created in tourism is based on a comprehensive study of Tourism Satellite Accounts (TSA)underway at the National Council of Applied Economic Research (NCAER). Such accounts are prepared to enable a better understanding and analysis of special aspects of the economy that transcend the traditional notion of industries and are not defined as industries in the National Accounts. Many aspects of tourism are already embedded in the system of national accounts but are not obvious. Hence, the need for preparing the TSA to measure and quantify the economic importance of tourism.
NCAER has been preparing TSAs for the Government of India since 2002-03, when the first ever TSA for India for the reference year 2002-03 was put together for the Ministry of Tourism. This was followed by a second TSA for 2009-10, and the third is being prepared for the year 2015-16. All the TSAs conform to the UN World Tourism Organisation’s (UNWTO’s) recommended methodological framework (while the first TSA was based on UNWTO’s 2000 framework, the second and third TSAs follow UNWTO’s 2008 framework).
Using the reference years of the second (2009-10) and third (2015-16) TSA, 8.1 million new direct jobs were created between 2009-10 and 2015- 16. From 23.4 million direct jobs in tourism, some 4.4 per cent of total jobs in the economy in 2009-10, the number of direct jobs in the sector increased to an estimated 31.5 million in 2015-16, a growth of 34.6 per cent between 2009-10 and 2015-16.
This translates into a 1 per cent increase in the share of direct tourism jobs in total jobs in the economy. Taking indirect jobs also into account, there is an increase of 17.8 million tourism-related jobs during these six years. The UNWTO framework that NCAER uses defines tourism jobs as jobs in industries with tourism characteristics.
These are industries that rely on tourism largely, and are likely to cease to exist in the absence of tourism activity (see Box). While the other industries listed in the Box correspond to the UNWTO’s recommended set of tourism characteristic industries, health and medical related services have been added for India, given the growing demand for medical tourism.
Tourism jobs should ideally refer to the jobs strictly related to the tourism goods and services consumed by tourism visitors and produced by either tourism industries or other industries that cannot be directly observed. But UNWTO recognises that such precise measurement would require techniques and data that go beyond what is presently available. As a result, their recommendations are focused on jobs in tourism characteristic industries.
The data for estimating jobs in the tourism sector come from national level surveys on employment and unemployment, such as those conducted by the NSSO and the Labour Bureau of the Government of India. For the third TSA, NCAER is using the Labour Bureau’s Fifth Annual Employment Unemployment survey for 2015.
The TSA study also captures the indirect contribution of tourism jobs to total jobs, using what economists call an Input-Output (I-O) model, a widely used scientific method to measure inter-linkages in an economy. In our calculations, direct jobs refer to the jobs in tourism characteristic industries and indirect jobs refer to jobs generated by industries providing inputs to tourism characteristic industries.
Indirect jobs have a simple interpretation. When tourism activity increases, jobs are generated in not just the tourism characteristic industries like hotels, restaurants, transport and recreation services, but they are also generated in sectors which are part of the supply chain of these industries. This is because when demand in a particular sector increases, say in hotels, the sector’s output increases to meet the increased demand. But to do this, all the sectors providing inputs to hotels will also increase their output.
Thus, indirect jobs are created in the sectors that provide inputs to hotels (such as agriculture and allied, processed food industries, textile products, wood and furniture, etc.). For transport services, this could mean industries like coal, petroleum products, machinery etc. Hence, in looking at the total jobs impact of tourism, we should be considering both the jobs generated in the tourism sector directly and those generated in many non-tourism sectors linked to tourism.
To arrive at the estimates of indirect jobs, NCAER’s TSA studies make use of I-O model whose output is an employment ‘multiplier’for the tourism sector. When multiplied with the direct jobs contribution of the sector, this gives the combined direct and indirect jobs contribution of tourism.
Being highly labour intensive in nature with strong backward linkages with other sectors of the economy, the significant growth in tourism activity during the last few years suggests that the number of jobs in tourism should also have increased substantially since 2015-16. The data from India Tourism Statistics indicate that the number of foreign tourist arrivals (excluding NRIs) crossed the 10 million mark for the first time in 2017. This number was 8 million in 2015.
NCAER’s projections for their TSA study – an estimated increase in direct and indirect tourism jobs of 13.9 million during 2014-15 and 2017- 18, with the total number of direct tourism jobs estimated to be 35.4 million in 2017-18 and both direct and indirect tourism jobs estimated to be 81.1 million – suggest that the sector is responding to the new policy measures and public and private investment in the sector.
A number of measures undertaken by the Tourism Ministry, including development of infrastructure, promoting theme based circuits and niche areas, and granting visa-on-arrival, are all helping to boost the jobs potential of the tourism sector and should be continued and accelerated.
The writer is a Fellow with the National Council of Applied Economic Research and leads the NCAER team on its TSA work. All views are personal.