The Dilemma of Growth Without Jobs
Worsening unemployment scenario
According to a Labour Bureau report, unemployment rate in India has shot up to a five-year high of 5 per cent in 2015-16, with the figure significantly higher at 8.7 per cent for women as compared to 4.3 per cent for men. According to the fifth annual employment-unemployment survey at all-India level, about 77 per cent of the households were reported to be having no regular wage/salaried person. It said the unemployment rate was estimated to be 5 per cent at all-India level under the UPS (Usual Principal Status) approach. Unemployment rate was 4.9 per cent in 2013-14, 4.7 per cent (2012-13), 3.8 per cent (2011-12) and 9.3 per cent (2009-10). Labour Bureau did not bring out any such report for 2014-15. In rural sector, unemployment rate was 5.1 per cent whereas in urban sector, the rate was 4.9 per cent under the UPS approach. The figure was significantly higher among females compared to males. Female unemployment rate was estimated to be 8.7 per cent, whereas for males it was 4.3 per cent. In urban areas, female unemployment rate was estimated to be 12.1 per cent at pan-India level compared to 3.3 per cent for males and 10.3 per cent for transgender. The survey was conducted across all states and union territories during April 2015 to December 2015. A total sample of 1,56,563 households were covered in the survey – 88,783 households in the rural sector and 67,780 in the urban sector.
Topping the chart among the states and union territories was Tripura (19.7 per cent) followed by Sikkim (18.1 per cent), Lakshadweep (16.1 per cent), Andaman & Nicobar Islands (12.7 per cent), Kerala (12.5 per cent) and Himachal Pradesh (10.6 per cent).
Jobless Growth
Although the Indian economy is growing at little over 7 per cent growth rate, it is not adding employment to the burgeoning workforce in India. The 2016 has seen worst performance in five years in employment. According to the labour ministry’s 27th Quarterly Employment Survey of eight employment-intensive industries- textiles, leather, metals, automobiles, gems & jewellery, transport, IT/BPO and handloom/powerloom)- there were 43,000 job losses in the first quarter of FY 2015-2016. The second quarter was better, with 134,000 new jobs, but even then the 91,000 net new jobs created in the first half of FY 2015-16 are not very rewarding.
At their peak, these sectors had added 1.1 million jobs in 2010. In the following five years, however, 1.5 million jobs were lost. FY 2014-15 saw a spurt, with 500,000 new jobs added as compared to 300,000 the year before, but it was still half the peak figure. There have been no signs of recovery in FY 2016; in fact, there is a decline. One reason for the decline in jobs could be a reduction in contract workers (nearly 70,000 of them were retrenched in the first half of FY 2016, compared to 161,000 additions in the first half of FY 2015).
Export sector in India is badly hit by global downturn in demand, especially in Europe and some BRICS nations. In export sector there were only 5,000 job additions in the first half of FY 2016 compared with 271,000 in the corresponding period of FY 2015. In the automobile sector, for instance, there were 23,000 job losses in export units compared to the 26,000 job additions in the other seven labour-intensive sectors in the second quarter of FY 2016.
Reasons for jobless Growth
Some economists hold technological improvement and mechanization as a reason for jobless growth. Today the economic growth is led by sectors which are less labour-absorbing (D.K. Joshi, chief economist Crisil). Some economists feel that due to adoption of value added methodology of GDP estimates and taking market prices instead of factor cost, the estimates of GDP are somewhat over estimated and the right estimate would have been somewhere at 5 per cent. Also the technology adopted in production in India is capital intensive. Either the growth is in sectors that are not employment-intensive, or overall growth is overstated (Ajit Ranade, chief economic advisor, Aditya Birla Group).Some observers claim that higher levels of automation have led to jobless growth. (Rajeev Dubey, group president, HR & Corporate Services, Mahindra & Mahindra). Others say that the labour market in India is rigid and this deters employers to provide more employment. They say that the pace of labour reforms is slow in India (CII president Naushad Forbes). Infirmities in the labour market have dissuaded companies from creating formal employment, and incentivised investments in automation.
The India Exclusion Report 2013-14 and electoral promises
The India Exclusion Report 2013-14 by the Delhi-based Centre for Equity Studies, an autonomous research and social justice advocacy institution, says only 27 million jobs were added in the supposedly high-growth period of 2004-2010 compared with over 60 million between 1999 and 2004. Despite repeated claims and hope trading with youth for votes, the government has not been able to add employment. The youth vote bank at present is working in government’s favour, but any time soon in future, it may boomerang, if there is no breakthrough in employment scenario.
The BJP, in its election campaign, highlighted the previous government’s failure to create jobs, reiterating that while the UPA could create only about 1.5 million jobs a year on average in the 10 years it was in power, the earlier NDA regime had created over 10 million a year. Accordingly, one promise the BJP made in the run-up to the 2014 election was that it would create 10 million jobs a year, leveraging the power of youth below 35, who comprise 65 per cent of the population-the much talked about ‘demographic dividend’. The government’s Make in India jamboree held in Mumbai in 2016 saw investment commitments of Rs 15 lakh crore from Indian and overseas investors, but those projects are still largely on paper. The programme aims to increase the share of manufacturing in GDP from the current 16 per cent to 25 per cent by 2022, and create 100 million additional jobs by then.
Will manufacturing sector do the miracle?
The future growth of India should be ideally led by manufacturing and services sector on both the levels- primitive& intermediate technology as well as higher level of technology. Manufacturing sector would be mainly driven by demand factor- both in the domestic market and external market. The demand is feeble in the external market and the domestic market is constrained by distressed rural economy. And even if the much advertised programmes succeed it is a matter of time. And the immediate reality is that manufacturing sector would not be able to add so much of job in so little time because of “unemployability” of labour force as well as benefits of automation and mechanization. The labour reforms are also sluggish. The tax reforms and easing of credit policy would have any effect with time lag. Currently, the manufacturing sector has an overall employment share of 12-13 per cent. While this share has been growing slowly in the past decade, the number of workers per factory has been dropping in the past 3-4 decades due to increased outsourcing. Moreover, the growth has not been consistent across the country and is primarily in mid-sized factories and through informal employment. The manufacturing sector has been losing people to the services sector, which is seen as more glamorous, and better paid. It’s also much easier to switch jobs and gain international exposure in this sector.
The dilemma
The government in its last two budgetary proposals has made specific provisions to expand productive employment, while also giving a push to certain sectors of the rural economy and infrastructure that would create jobs. It has taken initiatives to encourage small and medium enterprises to hire more workers. The government is giving emphasis on roads and other infrastructure which are expected to have maximum backward and forward linkages. But given the goal of fiscal consolidation and twin balance sheet problem in India, it will be an stupendous task to significantly increase investments by both private business and the state-before real benefits appear. As things stand, private investments have been static, and with the government firm on its fiscal consolidation targets, public spending too is somewhat constrained.
Real work will help and not slogans
Like slogans in the past such as “Garibi Hatao”, today new slogans have come up including “make in India”, “skilling India” and “swachh Bharat”, Sabka Haath, “Sabka Saath” etc. Unfortunately the current times and discourses are preoccupied by non-issues; hence, there is a danger of disappointment among people at the end of the day. People hope for a better tomorrow. But their hope should not be driven by greed and short sightedness or anger and frustration reflected in voting patterns or violent demands and irrational ways of interest groups (Violent reservation protests, Cauvery water dispute or passion raised by Jallikattu issue). People should force the political parties through their voices and voting to take up the main issues before the country as mission, unemployment being one of the most important ones. They should not allow the politicians to raise passions on trivial or secondary issues, lest people will have to pay the price in future. From the past we know that passions rise and fall, but only the real achievements by honest and hard work through collective efforts remain forever as mark of our true love for the country and its people. The makers of Indian nation from Swami Vivekanand to Mahatma Gandhi defined the great vision of India in order to realise peace, prosperity and progress based on equal opportunity and justice. We must follow that vision resolutely.
The way ahead
In contemporary times, the “trivial” has overshadowed the “main” as exemplified by the current political discourse. The sane voices are joked upon and the extreme and loud voices are heard more in media and elsewhere. The shelf life of irrational passion is not long. In the end it proves suicidal. The government must realise that it is not the time for blame game, but to consolidate the past achievements and build on them rather than seeking to demean those hard earned achievements so as to establish partisan political ideologies and goals. The guiding values of leaders as well as people will determine the quality and effectiveness of governance. In that sense who governs, matters. Governance is an important issue; no less important however, is the value that governs governance. As people we have the responsibility to see that gains of the past in making the Indian nation are not frittered away.
In the next five years India should work assiduously to create productive employment to reap the advantages of demographic dividend, otherwise it will start tapering! And reaping demographic dividends would depend crucially on health and education as well as infrastructure and quality of services. Despite differences of opinions and divergent political ideologies, it is a time when India must hold together and stand up for the values around which the nation was made. If this happens, India can surmount all the hurdles. The challenges are big but the efforts are not so focused and targeted. Time is running out. India should be placed above all considerations. It is the time to remember an old adage- Who will die if India lives and who will live if India dies!
