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Hard times

Kaushik Basu, chief economist at the World Bank, recently made an interesting observation. “The erosion of jobs is like climate change,” he said. “It happens slowly and so makes no news but its impact can be devastating.” Many experts are right in pointing out that recent agitations in Haryana and Gujarat are stark examples of how the erosion of jobs can have a devastating impact on the social fabric of a particular region. And data coming out of both international and government agencies confirm fears that such instances of social unrest could become commonplace in the years to come unless there is a drastic change in the Indian job market. 

In a recent report, the United Nations Development Programme assessed that India will need to generate 280 million jobs between now and 2050—the year when the number of people between 15 and 64 (working-age population) will reach its peak. As a recent IndiaSpend analysis of the report indicated, “the country’s demographic dividend could be on the cusp of disaster”. Speaking to the Indian diaspora in New York at the start of his tenure, Prime Minister Narendra Modi referred to India’s demographic dividend as one of its biggest strengths. If recent events are anything to go by, the Prime Minister may have to revisit that claim. But it’s neither the time nor the place to get on the Prime Minister’s back. It is a problem that extends beyond which government is in power. 

In a stunning revelation, less than half the Indians who sought jobs between 1991 (liberalisation) and 2013 got them, according to the UNDP report. And that 22-year period saw India achieve its maximum economic growth. “In China, the number of jobs grew from 628 million to 772 million between 1991 and 2013, an increase of 144 million, but the working-age population increased by 241 million,” the report said. “A wider gap in India than China suggests a more limited capacity to generate employment—a serious challenge given the continued expansion of the workforce in India over the next 35 years.”

In 2015, across eight important industries, India added the least number of formal-sector jobs in seven years. Conversely, the proportion of jobs in the informal sector is all set to increase to 93 percent in 2017, according to an analysis by IndiaSpend—a data journalism website. Despite high GDP growth between 2005 and 2013, this period saw a growing trend in the “informalisation” of employment. In other words, the number of workers who eke out a precarious living from dead-end jobs without either formal monthly payment or social security benefits has increased. And the latest data from the Sixth Economic Census indicates that the problem has only grown worse. Another worrisome indicator is how the proportion of workers across agricultural enterprises in rural India has increased while the proportion of those working non-agricultural jobs has declined. 

In a recent column for Mint, noted financial expert Manas Chakravarty wrote about this worrisome trend for the Indian economy. “The blueprint for economic development, the route out of poverty for developing nations, is one of a steady increase in jobs outside agriculture that not only cures disguised unemployment in farms but also results in higher productivity. But the economic census numbers tell a very different story. In spite of record growth rates in the economy, the share of non-agricultural employment fell between 2005 and 2013. That is not a healthy trend,” he wrote. It is impossible not to draw inferences about the recent Jat and Patel agitations from the above observations. 

In the popular imagination, communities such as the Patels and Jats are largely seen as both socially dominant and economically prosperous. This apparent paradox is resolved when one recognises that certain sections of these socially dominant communities are economically backward. Many among these traditional landowner communities have seen their landholding shrink through generations. In the event of shrinking landholdings, the obvious step is away from the land. But those who move away from it often find that the education they receive is often not good enough for the formal job market. The dismal state of agriculture today, especially for those with smaller landholdings, presents a bleak picture. 

According to a Kotak Securities report, India needs 23 million jobs annually. But over the past 30 years, the country has only created an average of 7 million jobs annually. What makes the job crunch worse is that many companies in the Indian corporate sector are automating their factories. 

Even among those hired, companies often look to cheaper migrant labor. But corporate India is guilty of something lot worse. In Haryana, for example, many farmers sold their land to companies, who promised jobs to the people in a return—a promise that was never fulfilled. Instead of starting projects, many of these companies returned the land it took from the government, but reportedly made a fortune by leasing out the land they directly bought from the farmers to another company. 

Going further, the latest economic census also states that Indian companies are hiring fewer employees. Small companies are obviously in no position to take up the burden of job generation. They just aren’t productive enough. Meanwhile, many large corporate houses are submerged under a mountain of debt, sparking a circle of low growth, low bank credit, job cuts, low output and low growth. These are indeed troubled times.
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