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India's key challenges is just one - Good Jobs
Read more on - Polity | Economy | Schemes | S&T | Environment
- Jobs and growth: India has a massive
unemployment problem, which can no longer be brushed under the carpet claiming
that higher GDP growth will automatically take care of it. Clearly, it has not,
and even growth is now struggling.
- Recent situation: Prior to the Covid crisis at the end of 2019-20 financial year, the CMIE claimed India had around 403.5 million employed people and around 35 million (or 3.5 crore) openly unemployed people in the country. To this existing pool, each year India adds roughly 10 million (or 1 crore) new job seekers. The year 2020 saw many more millions lose their jobs. So by January 2021, India had only about 400 million employed. At one level this is good news because far more had lost jobs and many seem to have regained employment as the economy has started recovering. But at another level, the 400 million number also underscores the stagnancy in India’s employment levels.
- Is it coming down: If CMIE data is trusted, then the total number of employed people in India has been steadily coming down. It was 407.3 million in 2016-17 and then fell to 405.9 million in 2017-18, and to 400.9 million at the end of 2018-19.
- So even with India’s economy growing (at a decelerating pace) before the Covid crisis, the employment situation was getting worse.
- The total number of openly unemployed people became 35 million (3.5 cr).
- If over 2020, the total number of employed people has fallen then the total number of unemployed people will be anywhere between 40 to 45 million today.
- Each unemployed person is part of a larger family, so millions of families are suffering from the lack of employment opportunities.
- This 45 million estimate captures the openly unemployed people, those who are seeking work and not finding it. The actual problem of unemployment is even bigger.
- The larger picture: Each year in India there are close to 20 million (or 2 crore) people who enter the working-age population of 15 to 59 years. But not everyone seeks a job. If law and order is poor or if cultural mores so dictate, young women may not feel empowered to seek work. It is possible that several men give up looking for work after repeated failed attempts. If more and more of India’s youth decides to sit out, India’s labour force participation rate (LFPR) falls. Data suggests this has happened.
- LFPR of India: India has an LFPR of just about 40%. So, in India, just 40% of the 20 million joining the working-age group each year actually come forward looking for a job. For women, this ratio is even lower. In most developed countries, it is around 60%. If 60% of all joining the working-age group looked for a job then, under the circumstances, India would have added almost 15 million each year to the pool of openly unemployed people.
- Why growth is not helping: Fast economic growth usually takes care of unemployment worries. Not so in India, because even when India’s GDP has grown rapidly, the no. of well-paying jobs produced was always low. In the ten years from 1999-2000 to 209-10, India’s total workforce increased by 63 million. Of these 44 million joined the unorganised sector, 22 million became informal workers in the organised sector, and the number of formal workers in the organised sector fell by 3 million. At one level, the government can feel rather happy because in the coming financial year India’s GDP growth will show a sharp rebound — thanks to a massive base effect. But none of that changes the lop-sided manner in which India grows. The GDP can continue to go up as more and more companies become more productive by replacing labour with capital (machinery) but that will only deepen India’s unemployment problem.
- Worsening: The Union Budget for 2021-22 is a clear indication that government will not be the prime mover in the economy. The mantra of “minimum government” now means no role in creating new jobs. The timing is questionable. The Indian economy is quite weak and the private sector has already shown its preference by choosing to cut jobs and boost its profits.
- Summary: Indian goverments must focus on jobs generation in formal sector as top priority, before things spiral out of control. Richer companies and poorer people makes little sense, if India values it demographic dividend at all.
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