Economic Highlights

New Delhi, 30 April 2018

No Employment Growth

NATIONAL JOB POLICY WANTED

By Shivaji Sarkar

National and international predictions indicate over seven per cent growth. It is commendable in the not so bright world scenario. India remains one of the fastest growing economies. But for decades and particularly during the past four years of efforts of the BJP-NDA government to create jobs, the scenario has not been that encouraging.

The jobs have not grown in proportion. The educated, skilled and unskilled youth are not finding as many opportunities as their numbers are swelling. It is apparent as the numbers of applicants multiply in lakhs or crores for even the lowly government jobs. There were lakhs of applicants for police constables vacancies in Uttar Pradesh or Madhya Pradesh and now it is record 2.8 crore applications for 90,000 jobs Indian railways had advertised for.

This means there are 311 applicants for every one vacancy. That is 81.7 per cent of the youth workforce, in 18 to 30 age group applied for it. Many of the applicants are working in private sector but the working conditions are stressful and abysmal. Thus, it can be said, there is severe under-employment.

Are not jobs really growing? It is not correct. There have been 3.11 million (31 lakh) addition of workers between September 2017 and February 2018, according to Employees Provident Fund (EPF) provisional data. Experts say that many of them are existing workers but a massive government support to fund 12 per cent Provident Fund contribution has put them on rolls. This improves data and more than that the working conditions of workers.

Chief economist of State Bank of India Soumya Kanti Ghosh states: “The data shows there was a good increase in jobs every month in the last six months which will now help fill the missing link for policy-making”. It shows that in many cases data may not be revealing the reality.

It is also true that job growth is not yet in sync with the growing number of the unemployed force joining every year. It is also another strange aspect that jobs in the government sector, despite all the brouhaha, are only growing. The private sector is yet to come up to match it.

Another problem has been the growing automation or labour displacing technologies. The information technology sector, which was the principal job giver during the past few years, has adopted new software that reduces demand for additional hands. The automobile and other sectors are also not adding to the numbers.

India has demographic dividend and fabulous opportunity for job creation particularly as China is slowing and wages there remain high, said former Niti Ayog Vice Chairman, Arvind Panagariya, just before he demitted office in September last year.

He admitted that job creation remains one of the biggest challenges for the NDA government and then went on to paint a rosy picture of the possibilities the Chinese slowdown has created for the Indian job market. An average Chinese worker, he explained draws about Rs 5 lakh per annum in the manufacturing sector, which is obviously making Chinese manufacturing unviable. He also mentioned specific industries such as clothing and footwear which are looking to set up manufacturing plants outside China because of labour issues.

But what is unsaid, despite that high government subsidies and keeping the currency artificially depressed has kept Chinese goods at an advantage. Even the recent move by US President Donald Trump to slap $50 billion tariff on Chinese goods and consequent trade war is triggered by Chinese policies. So Panagariya’s suggestions are not easy to implement.

The Quarterly Employment Survey (QES) report released in February by the government’s Labour Bureau reveals that just 64,000 jobs were added in eight selected sectors during April-July 2017 down by 65 per cent compared to the previous quarter. Compared to the base level estimate of total employment of 2.52 crore as on 1 April 2016, the Indian economy has added 4.8 lakh jobs in 15 months, an increase of 2.3 per cent.

The QES covers a sample of 11179 units in Manufacturing, Construction, Trade, Transport, Education, Health, Accommodation & Restaurant and Information & Technology (IT)/ Business Process Outsourcing (BPO) sectors. These eight sectors make up about 81 per cent of employment in units with 10 or more workers.

What is worrisome is that the manufacturing sector saw a decline of 87,000 jobs in April-July 2017 quarter as opposed to an increase of 1.02 lakh in the preceding quarter. Two low-paying sectors witnessed the most increases making up for the massive dip in manufacturing jobs. These are education, which saw an increase of 99,000 jobs and health where 31,000 jobs were added.

The latest QES report, the sixth since 2016, confirms the extreme volatility and low rate of growth indicated by other estimates. Finance Minister Arun Jaitley had said in his Budget speech, that 70 lakh jobs are expected to be created this year.

CMIE noted that in 2017, January- December, just 14 lakh jobs were added in overall employment -- an increase of just 0.35 per cent over a total base of 40.4 crore workforce, against official claim of an 11.7 per cent increase.

According to CMIE, investment ratio has fallen from 34 per cent in 2011-12 to 26.4 per cent in 2017-18 and hence new investment proposal announcements have fallen from Rs.25.5 trillion to under Rs.10 trillion in the same period. Some of the reasons include the NPA crisis of the banking sector and frauds committed by top bosses in the private sector.

Though the government is suffering in popular perception, it is not its creation. The corporates have failed the country as per a written answer in Lok Sabha which said that total bad loans as on March 31, 2017 had stood at Rs 6.41 lakh crore. Prime Minister Narendra Modi in a statement said 82 per cent of loans had turned bad.

The applications for government jobs are an indicator that only about 60 per cent of jobseekers get one. Another factor for such massive rush even for the lowly jobs indicates that job quality in the private sector is poor and Indians are terribly under-employed. Thus 40 per cent of the youth do not find a job. Plus, there is even severe underemployment in the farm sector.

India needs a National Employment Policy. Schemes such as skill development and Mudra are at a nascent stage. The government needs to take up this challenge and call upon both the large and small private sector to create quality jobs. It must remember that growth will not be meaningful if disparity increases.---INFA

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