A long-awaited report from the National Sample Survey Office (NSSO) on employment generation has put the central government in a tight spot. According to the draft report from NSSO, the job market has dipped to its lowest in the last 45 years. Yet, according to the World Bank, India's GDP is expected to grow at 7.3% in FY 2018-19, and by 7.5% in the following two years. This growth might be attributed to a pickup in consumption and investment in the fastest growing economy in the world but it is questionable whether it will help the employment scenario in the country. In 2013, Narendra Modi had said in the run-up to the 2014 Lok Sabha election that if his government is voted into power, they will create 10 million jobs. In reality, the 2016-2017 Economic Survey based on data by the Labour Ministry stated that the employment growth has been ‘sluggish’.
Raghavan Jagannathan, a senior journalist in his book ‘The Jobs Crisis in India’, has researched on the reasons of this ‘jobless growth’. According to him, one of the main reasons behind this crisis is the fact that productivity in India is fast outpacing demand and India produces 0.18% extra jobs for every 1% growth in GDP. The looming threat of automation poses serious challenges for the Indian job market as well. The book also explores in detail the case where growth in India has been steadily delinking from employment.
In the last five years, India has had a dismal job market. The Prime Minister’s Employment Generation Programme (PMEGP), aimed at generating employment in rural and urban areas, took off well but missed its target. The scheme created less employment opportunities. The decline was about 24.4% - from 428,000 in FY 2012-13 to 323,362 in FY 2015-16. The total number of jobs that were created in the first three years of the NDA government until October, 2016, was 1.51 million. This figure is around 39% lesser than the 2.47 million jobs, which were created during the previous three years. Simultaneously, the labour force participation rate has declined steadily in the Modi regime. The demonetisation onslaught has also been calamitous. It created a sudden economic crisis. According to a report published by the All India Manufacturer’s Association, the demonetisation drive led to a job loss for about 3.5 million people. In India, where over 90% of transactions are done with banknotes, it was evitable that a decision like demonetisation would spell doom for the expansive informal sector.
Reason behind the crisis
The current crisis in India is reflected by unemployment and job cuts. According to a section of economists, the capitalist system was initially a production-centric system, which created formal employment. But the system has evolved into a more consumption-centric system, which has reduced its employment generating capacity. The heightened dependency on the service sector has also complicated the situation as the service sector is less capable of generating employment as compared to the manufacturing sector. Despite repeated attempts from the central government in the shape of policies such as ‘Make in India’, the manufacturing sector has failed to grow as expected. The target for the scheme was to increase the share of manufacturing to 25% of GDP by 2020 from 15%- which under the present circumstances seems to be a far cry. The agrarian crisis has worsened this. The agricultural sector employs more than 50% of the country’s population and is currently reeling under various constraints. It is in dire need of focused policy interventions. Automation and consolidation of jobs in the BFSI, IT and telecom sectors, have resulted huge jobs loss in India.
The sheer weight of demographics on the Indian job market is also stifling. At a time when there are an estimated 17 million people entering the workforce every year, only about 5.5 million jobs are being created. Additionally, there were around 412,752 vacant posts till March 2016 in various government departments.
A swift shift from permanent jobs to casual and contractual employment due to the crisis in the job market is exposing the young Indian population to grave risks. This trend negatively impacts wages, stability and job security. According to recent NSSO estimate, only 15.6% people joining the service sector (which contributes more than 50% to the national GDP) are joining as regular or salaried employees. The participation rate of women in the job market was 22.5% in 2011-12 and is 17.5% in 2017-18. Lesser participation women in the work force will definitely lead to higher unemployment levels.
Job crisis will lead to decreased social security
India has woken up to the GPS storm. From finding hotels and cabs to doorstep grocery delivery, the urban Indian economy is using various GPS-enabled service providers. Often, the delivery executives employed at the bottom layer of this system lack basic social securities, work under stiff delivery deadlines and stretched working hours. These service providers are providing quick employment but that employment is often at the expense of social security. The trend of over-qualified individuals applying for menial government jobs is also increasing. It can be seen as a desperate attempt to garner some security that comes with government jobs.