Economic Highlights

New Delhi, 11 May 2013

Unemployment Report

INDIA TOO IN GLOBAL MESS

By Shivaji Sarkar

India’s growth parameter has got stuck. The journey has got jammed in one of the lowest factory output (Index of Industrial Production) in 20 years at 0.6 per cent. It appears to be as bad if not worse than the crisis of 1991-92. In percentage terms it may look as bad as that but in absolute numbers it seems to be more sinister. 

Growing unemployment is an indicator that happiness eludes the nation. It is supposed to be a worldwide phenomenon but the latest International Labour Organisation (ILO) report, Global Unemployment Trend 2013, gives a broad hint to countries such as India to decouple from global policy framework. The situation is likely to worsen till 2017 as both the US and EU are likely to further plunge into a crisis, indicates the report.

In India, the total employment grew by just 27 lakh (2.7 million) from 2004–05 to 2009-10, co-terminus with the rule of UPA-I, compared to over 6 crore (60 million) during the previous five-year period (1999–2000 to 2004–05), coincidentally the period of NDA rule.

Moreover, young people are hit hard by this crisis. Indians with a certain amount of education suffer particularly. The unemployment rates in the country increased rapidly for high-skilled workers, in particular women. Indians having skilled degrees suffer particularly, with unemployment rates reaching 34.5 per cent for women and 18.9 per cent for men during 2009-2010.

However, occupational choices bear a strong impact on the risk of joblessness as workers with technical education face lower unemployment rates than other graduates. At the same time, Indian employers have trouble hiring staff: according to the 2011 Manpower Talent Shortage Survey, 67% of employers stated that they had difficulties in filling positions.

“India has 66 per cent of its total population below the age of 35 which makes for the world’s largest youth population. However, unemployment rate in the country is quite high, especially in urban areas”, states Tine Staermose, Director, India office and Decent Work Team of ILO for South Asia.

Globally, 196 million people remain jobless. It projects global unemployment to continue rising until it hits 210.6 million by 2017. “It is unlikely that the world economy will grow at a sufficient pace over the next couple of years to both close the existing jobs deficit and provide employment for the over 80 million people expected to enter the labour market.”

The share of formal employment in India on the other hand declined from around 9 per cent in 1999–2000 to 7 per cent in 2009–10, in spite of record growth rates. Moreover, it remains unclear whether the manufacturing sector will be able to absorb large numbers of job-seekers since the share of workers in manufacturing was just 11 per cent in 2009–10, no higher than a decade earlier.

There is a difference indeed. While percentage quotient reveals a bit, when it is turned into absolute numbers as population has increased during this period, it suggests the problem is deeper than the statistics speak.

Globally, the ILO report says, the real unemployment whether in India or the US would be higher than the official statistics. It notes that the US officially estimates unemployment at 8.3 per cent whereas the unofficial figures are around 14 per cent. In the case of India too, the actual situation might be worse than officially depicted.

Another ILO concern is the poor quality of jobs. India had adopted Decent Work Country Programme in 2010, but it sadly seems to remain on paper. “A large number of workers in India remain in unprotected jobs. These are jobs in the informal sector, with low wages, without security safety or health standards. Almost 83.6 per cent of the work force is engaged in informal employment.”

A large share – 58 per cent – of workers remains in the agriculture sector. Some of them have small land holdings. They are in abject poverty but at times their overall conditions are better than the jobless in the urban centres. The farm worker has also little to gain in terms of official social security. The only insurance he has is in the close knit rural community.

However, this does not suggest a static labour market; rather there are many transitions taking place, most importantly a withdrawal from the labour force among young people and women, lowering net employment growth. This is partly associated with higher enrolment of women in educational institutions. The other reason is said to be the unwillingness of the workers to join a job offering poor wages and other working conditions.

Another new trend being seen is in the rise in part-time employment, often termed self-employment, by skilled and semi-skilled workers. In India, there has been a remarkable rise in the class of “consultants”, which covers most of the part-time workers. Contrary to the belief, the workers do not choose for such jobs voluntarily. But in most cases, as they reach their 40s they are thrown out by their employers. The same employers often re-employ them as “consultants” or “advisors” at much lower emoluments.

This trend has increased with the powers bestowed on the employers to hire and fire. Simultaneously, the workers’ benefits even in regular employment have come down drastically in India.

This problem is particularly severe in the developed economies and the EU region, where the labour force participation rate declined by close to 1 percentage point. It is expected to recede further as long-term unemployment and a weak economic outlook discourages people from staying in the labour market. As a consequence, the employment-to-population ratio has fallen sharply – in some cases 4 percentage points or more – and has not yet recovered even in cases where the unemployment rate has started to decline.

India, however, is catching up with the profit trends of the global business houses. Their profits are phenomenally increasing, the report indicates, while workers jobs and benefits are being lost.

Importantly, the ILO report condemns the austerity policies adopted in most of the industrialized countries, particularly in Europe and the US, stating that slashing spending on social programmes had produced “devastating consequences” for employment while budget deficits had actually increased because austerity measures exacerbated the economic slump.

Despite accepting India as a major South Asian economy, the ILO report warns the trends in the near future are not favourable for the working class. Dampening growth prospects, falling investments, higher taxes and tightening of purse by the Government for welfare schemes foretell a deepening crisis. The only hope there can be is if the Government changes policy tack to include the workers in the growth and development process. Will it heed the advice?--INFA

(Copyright, India News and Feature Alliance)