India is facing a crisis of Jobs. I should correct myself, a crisis of productive, respectably-paying jobs. Further correction. Jobs and labour market the world over are facing a crisis. What’s worse is that the crisis is both circumstantial and structural in nature and origins and this has epochal societal and political ramifications. Let see what all is being implied here.
The ILO recently released its annual World Employment and Social Outlook trends report. It merits a perusal for its got insights on, with atavistic accuracy, a lot many emerging trends and persistent fault lines in hiring practices and employment outlook the world over. Speaking of the conditions in India, to begin with, according to official figures the unemployment rate in India decreased to 4.90 percent in 2013 from 5.20 percent in 2012. Unemployment Rate in India averaged 7.32 percent from 1983 until 2013, reaching an all-time high of 9.40 percent in 2009 and a record low of 4.90 percent in 2013. Our unemployment rate hovers somewhere around 4% at present. The statistics are painting a picture which is false.
From the figures cited above, it becomes evident that at present what we need to worry about is the absolute lack of jobs at large. What should be a lot more worrying is the lack of well-paying productive jobs which actually are meaningful, engage the employee in productive work and contribute to growth in some form, instead of having people employed just for the sake of it whilst ensuring bare minimum survival and nothing more. What’s even more interesting is how governments define employment. The definition is laced with vague terms like “actively seeking jobs” and “working age population”. Such subjectivity in definitions is something those in power adore given the room they allow to be played around with and selectively interpreted to escape accountability.
Official government reports suggest those earning below Rs.47 a day in cities and Rs.32 a day in villages be considered poor. Works out to around 1400 a month in cities and barely a 1000 rupees a month in villages. Also remember that in large swathes of the country this income might actually translate into the earnings of an entire household, so it further gets divided amongst at least four more people on average. Would be nonsensical to term even those earning double this amount as not poor. It’s this variant of chronic, poor-quality employment that helps cook up the rosy employment figures where none exists, comforting policymakers and helping none.
Contemporarily, below potential economic performance in 2016 and the down-trend outlook for 2017 raises concerns about the ability of the economy on a lot of fronts. Be it generating the sufficient number of jobs urgently needed, or an improvement in the quality of already existing employment alongside ensuring that the gains of such growth are secularly shared in an inclusive manner given wider ramifications.
Unemployment in India is projected to increase from 17.7 million last year to 17.8 million in 2017 and 18 million next year. In percentage terms, unemployment rate will remain at 3.4 per cent in 2017-18. The government’s facing the twin challenges of repairing the structural damage caused by emerging global economic and social crisis and creating quality jobs for the tens of millions of new labour market entrants every year simultaneously.
Presently in India, employment laws for companies that have more than about 100 staff are stricter than all but two of the 34 countries in the Organization for Economic Cooperation and Development, resulting in a disorganized economy composed mostly of small businesses where employees have few rights. Imagine the irony, you enforce stringent regulations on businesses and employers \if they employ more people and relive them if they remain small and inefficient and employ fewer people!?
India’s 44 federal labour acts—the oldest of which dates back to 1923 when the British ruled the subcontinent—and more than 150 state laws govern how workers can be hired and fired, their safety and compensation. There are laws on how many times a factory must be painted, how the toilets must be tiled and the correct place for an employee to spit.
The government should on a priority basis legislate to ease some of those rules in a given framework whilst not compromising on worker rights at the same time.
“Revamping labour laws and encouraging urbanization could add as many as 110 million jobs over the next 10 years,” Goldman Sachs Group Inc. estimates. “That’s enough to absorb the 100 million Indians that the United Nations says will enter the workforce in the coming decade, a demographic that Goldman estimates could contribute as much as 3 percentage points to annual economic growth from 1.7% now.
About 94% of Indian workers are in what the government describes as informal sectors, including agriculture, construction, or home-based activities like pickling and tailoring. Most of the country’s labour rules don’t apply to these small businesses, leaving millions with little or no protection to speak of. “Too many small firms stay small and unproductive,” the government said in its Economic Survey 2012-13. “Too many large profitable firms prefer relying on temporary contract labour and machines than on training workers for longer-term jobs.” A logical progression of ill-planned regulation.
At present, achieving the right policy mix is essential. In tune with it, policies that address both the root causes of secular stagnation and structural impediments to growth need to be incorporated into macroeconomic policies and placed at the forefront of the economic policy agenda. Well-planned, coordinated efforts and policy interventions, including but not limited to – Increased public investment, Enhanced capacity utilisation and stimulating private demand would definitely provide the much-vaunted push the job-cycle needs today, alongside complimenting and consistent structural reform process.
Having taken an overview of the India-specific jobs and employment scenario in this part of the essay, in the next part we shall delve deeper into global perspectives on the same and the political and societal ramifications of chronic employment and unemployment the world over.