Growth sans jobs

In the backdrop of the current global economic environment, India will have a hard time clocking double digit growth rates. So said Union Fince minister Arun Jaitley recently, and latest growth figures bear him out. In the April-June quarter this fiscal, the country’s GDP grew at 7.1 percent. What is worrisome is that at this rate, the country’s economy is simply not growing fast enough to create sufficient jobs. Prime Minister rendra Modi has been promising to create 25 crore jobs over the next decade, and he will have a tough time delivering on his words. The dimensions of the challenge can be gauged from the fact that at present, around 7 lakh people every month are entering the job market to look for openings. This figure will soon rise to 10 lakh, so the NDA government will have to apply its mind about what to do in the situation of a growing army of people entering working age with ever fewer jobs to go around. While there are no recent official statistics about unemployment rates, the Labour Bureau’s quarterly survey conducted in September last year, showed that job creation in eight labour-intensive sectors fell to a six-year low in the first nine months of 2015, only 1.55 lakh new jobs. This was just about half the number of jobs created (3.04 lakh) in the corresponding nine months in 2014. However, recent studies conducted by BSE and CMIE claim that unemployment rate has already risen to 9.84 percent in August this year. The malaise was seen across both rural and urban regions, while there has been a slowdown in hiring in key sectors, including IT and e-commerce. Seeking to articulate workers’ angst in the labor unions strike on Friday, CPI(M) leader Sitaram Yechury took a pot shot at the NDA government for allowing urban unemployment rate to rise to 11.24 percent presently.

While India continues to be one of the bright spots in a stagting world economy — it has been found to create fewer jobs with every percent increase in GDP compared to other growing countries. An HDFC Bank alysis has shown that for every percentage point the Indian economy grows, employment is adding just 0.15 of a percentage point, which is down from 0.39 in 2000. Its conversion of GDP growth to jobs is only two-thirds the average of other Asian countries. Five years ago, the 2011 census itself showed that while the country’s economy was growing at average 7.7 percent rate every year, employment was growing at a mere 1.8 percent rate. And the situation has hardly changed for the better, despite a change in government at the Centre. The Intertiol Labour Organisation (ILO) in its Labour Market update for India in July this year has pointed out that most of the jobs created in the organized sector are informal and lacking quality. Is it at all surprising if lakhs of candidates are applying for few government posts of peons and sweepers in such a scerio? Fince minister Jaitley has bemoaned low private investment, but independent alysts believe that the problem is more about lack of demand. They also ascribe such jobless growth to be the outcome of other factors like low capacity utilization, continuing slowdown in farm and construction sectors which normally absorb many unskilled workers, and rigid labor markets giving employers little flexibility to hire. But there are two major factors the Central government has to address if things are to improve. First, it has shown a tendency to withdraw from a sound public education system and leave it at the mercy of private operators. It has then sought to repair the damage by the PM’s pet skilling programmes, but such interventions to improve employability after high dropout rates will yield little benefit. Second, the small and medium enterprises (SMEs) still continue to figure low on the government’s radar, despite employing around 40 per cent of the country’s workforce. While their access to credit is yet to improve, whatever little government support they once enjoyed have been steadily whittled away. With change accelerating in various economic sectors, Central and state governments will have to think deeply about imparting life-long learning and quick adaptation skills to the future workforce, while paying more attention to bring some order into the unorganized or informal sector where over 90 percent jobs are being created.