Open Forum

New Delhi, 9 August 2017

Rising Unemployment

ACHE DIN NOT A REALITY

By Dhurjati Mukherjee

Notwithstanding that economy has been moving on expected lines with GDP growth quite satisfactory in the last fiscal and expected to cross 7 per cent in the current financial year, ache din as promised by Modi have yet to become a reality. The most striking aspect is that the trend is towards jobless growth. For a country like India with high population growth, job creation is undoubtedly the biggest challenge.

The spectre of unemployment and underemployment has been increasing at a rapid pace with lakhs of educated youth entering the work force. While employment opportunities in the government sector, including PSUs, have been greatly reduced, the same is also true of private sector. Moreover, with joblessness increasing in rural areas, there is a huge influx of young people to urban centres in search of jobs.

The trend of the economy is such that employment opportunities are amiss in India. The planning strategy evolved over the years has also overlooked this aspect as the core strategy was maximisation of growth that, by and large, benefitted the rich and upper middle income sections of society, living in cities.

The thrust during the past decade or so has been on mechanisation of operations in all fields, curbing employment potential. In fact, it is only now that economists and planners have been referring to jobless growth, which for a populous country like ours would be disastrous. The increase in violence and crime are testimony that unemployed youths are being led to anti-social activities, which have increased and may intensify in coming years.

According to estimates, around 15 million jobs were created between 2005 and 2012, leaving a backlog of 50 million unemployed in those seven years. This may have increased to around 70 million presently. There are hardly any jobs for the 11 to 12 million who enter the workforce annually. However, recently a task force, headed by Niti Aayog Vice Chairman, recommended widening the definition of formal sector workers by including all those covered under EPFO, ESIS, government and public sector employees, workers having coverage under private insurance or pension schemes or provident funds etc.

The situation in the agricultural sector has undergone a sea change in the past two decades. There were 111 million cultivators and 75 million agricultural labourers in 1991. That’s a total of 185 million people working on land. But in Census 2011, there were 119 million cultivators and 144 million agricultural labourers i.e. 263 million people working on land. Population increased by 43% in 20 years but the number of landless agricultural labourers shot up by an astonishing 93%.

The primary reason for this is the increasing army of underemployed finding no work, thereby forcing them to crowd into agriculture or related rural work where work opportunities too are not available throughout the year. Add to this, the push towards big cities in search of jobs, where opportunities are on the decline.

On the agricultural front, the wastage of grains, fruits and vegetables is one of the highest in the world. Thus, there is huge opportunity in setting up grain storage facilities through cold chains and advanced logistics for vegetables and fruits and with a massive investment in this area, there is a potential to create number of new skilled and unskilled jobs.

Manufacturing is at low ebb and remains one of the lagging sectors. ‘Make in India’ has yet to become a reality. Chinese imports continue to flood the Indian market. Labour-intensive sectors, specially textiles, garments, jewellery, BPOs and handlooms, are too not doing well viz employment generation. Most new units, as also the old ones, are going for modernisation i.e. implementing technologies that need less labour. This has steadily become a cause for concern as surplus labour has been increasing.  

While the government through ‘Digital India’ project plans to set up franchise BPOs in small towns to give the desired services to ordinary citizens, the process has just began. It is expected that some employment may be created if and when these franchise BPOs are set up across the country.     

There is a possibility of job creation in the realm of infrastructural development. Compared to China’s 385 cities, India has only 50 cities with a million people. In most of these there is need for substantial improvement, specially in areas like slum upgradation, sewerage and drainage and treatment of drinking water.   

The strategy of focusing on increasing GDP growth without looking into grass-root employment generation has to undergo a change if adequate jobs along with self-employment have to be ensured. 

Meanwhile, the MSMEs, which constitute 45% of manufacturing, 42% of exports and over 37% of GDP, would need encouragement including technological support, financial aid to boost production and ensure economies of scale, as only these can provide maximum jobs, entrepreneurs and products. However, MSME entrepreneurs need to be given better loans.  Earlier, up to Rs 1 crore collateral free loans per unit were allowed which has increased to Rs 2 crore and paid through the Credit Guarantee Trust Fund, whose corpus has been increased from Rs 2500 crore to Rs 7500 crore.

Importantly, the government has made it mandatory for all PSUs to make 20% purchases from small businesses. At the State level, more efforts are needed. For example, there is need to popularise handlooms both for domestic and export purposes. Though efficiency level needs improvement with technological finesse, these products could steadily become the symbol of ‘Brand India’ and help generate jobs.    

On the specialised front, the decline of India’s IT sector and consequent loss of jobs appear to some extent exaggerated. In demand are engineers with skills for future. Indian IT companies are managing the shift through in-house training, innovations and digital developments in sync with their peers to anticipate and meet the changing needs of customers, specially at the global level. The advances in robotics and artificial intelligence are the key drivers of automation to raise productivity, quality and reliability to be competitive internationally. The emphasis may create jobs even though this may not be enough.

However, one cannot ignore a report of Nasscom-- Perspective 2025-- which notes that while three million jobs were generated in reaching the first $100 billion revenue by 2014, the same will not be possible in doubling the turnover and only 1.2 to 2 million jobs can be added. “In the new digital environment, productivity is being driven by technology improvements, rather than labour growth, and this decoupling of revenue from headcount is likely to continue”, the report stated.

A balance between automation and manual operations through use of computer facilities in various sectors is needed. However, one has to be a little ideological in maintaining that crushing human creativity through mindless oppressive tasks, geared just to make money instead of working for justice, social and aesthetic goals cannot be the aim of our economic planning strategy. And this cannot be accepted in a labour-intensive country like ours.

Private investment has to be encouraged in all possible manner specially in agriculture and allied sectors, small and micro sectors etc to ensure job creation while public investment has to be substantially increased. Finally, a long-term employment strategy has to be formulated, which is being echoed by political leaders and economists and planners. If implemented effectively, it could partly help in enhanced job creation and utilise the youth in a gainful manner. ---INFA

(Copyright, India News & Feature Alliance)