Jobless growth

Two primary factors played their part in the Congress-led United Progressive Alliance’s defeat in the 2014 general elections—allegations of corruption and jobless growth. One of the central themes of the Bharatiya Janata Party’s victory slogan, “acche din”, was the promise of more jobs. After two years in office, has there been any improvement in this regard? The latest figures posted by the Labour Bureau have brought home a sobering reality. Numbers indicate that employment in labour-intensive sectors dropped the most in 2015 since 2008. Only 1.35 lakh jobs were created last year, as opposed to 4.9 lakh new jobs in 2014. What’s worse, the final quarter of 2015 saw the loss of 20,000 jobs. In the last quarter, only the textile sector created jobs, while the IT/BPO sector recorded the sharpest losses in jobs. At a time when 12 million join the labour force every year, experts are worried about the implications jobless growth could have on India’s social fabric. The economic reforms of the early ‘90s, which saw India take its first steps towards liberalisation, sought to encourage the growth of labour-intensive industries, job creation and reduce income inequality. Even though the first decade of this millennium saw the fastest rate of growth ever for the Indian economy, the rate of job creation was abysmally low. Prima facie, high economic growth should translate into greater employment opportunities. But what we have instead is jobless growth. Despite the temptation, one cannot dump the problem of jobless growth either at the door of the NDA or UPA government.

The bubble of the Indian growth story had burst with the release of the 66th round of the National Sample Survey Office (NSSO) data on employment in 2011. It showed that between 2004-05 and 2009-10 only 1 million jobs were added per year. This was at a time when the economy grew at an average of over 8 percent. During this period over 55 million people joined the labour force. Simple mathematics tells us that an incredible 50 million failed to find gainful employment during this period. 

Was it a factor in the Congress-led UPA’s subsequent drubbing in the 2014 elections? Yes, especially since the previous Atal Bihari Vajpayee-led government saw greater employment generation. NSSO data for the period between 1999-2000 and 2004-05 showed that approximately 62 million jobs were generated. But this is a misleading figure if you take into the quality of employment. Low-end jobs, primarily in the construction sector, welcomed a large share of the workforce during this period. More than quantity, the Narendra Modi-led government must focus on the quality of jobs. 

The manufacturing sector has been pegged as a savior for greater employment generation. But the nature of Indian manufacturing today is such that it is automated. According to the Sixth Economic Census, the proportion of workers across agricultural enterprises in rural India has increased while the proportion of those working non-agricultural jobs has declined. It is a worrying trend. 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.

A booming manufacturing sector will contribute to higher growth, but not necessarily more jobs. Moreover, any employment in today’s manufacturing sector is highly-skilled. To acquire such a job, good quality education is mandatory. Unfortunately, the education system in India has been a massive failure. Experts have cried out for a complete revamp of the system. It has failed miserably in its bid to deliver quality education to India’s young populace. For example, an Annual Status of Education Report (ASER) published by the non-profit Pratham Education Foundation in 2014 revealed that only one in four children in Class V could solve a three-digit by one-digit division problem. For those interested, the ASER report has detailed other such findings, painting a dismal picture of the state of education in India. Structural fixes, such as the NDA government’s much-vaunted labour reforms, are required to address the problem of job creation. But will it have the necessary political will and capital to push them through Parliament? For the time being, the Centre has arrived at a stop-gap solution with its focus on encouraging small enterprises by facilitating loans. The “Stand Up India” programme, which specifically targets women and Dalits, is one step in that direction. But it isn’t enough. Beyond the cacophony leading up to the 2019 elections, the fate of the NDA government will depend on its ability to generate jobs.