From boom to bust

Let's talk jobs. And let us begin the talk with Rajendra Kumar. 36-year-old Kumar gets ready for work each weekday, picks up his lunch box, says goodbye to his wife, starts his scooter and heads out to work. Once in the office, Kumar greets the guards, heads to the reception area and settles down on the couch in one corner. Cometh lunch hour, he heads to the pantry and then returns to his couch till closing hours at 6 pm. He then heads back home.

Kumar has been doing this for 14 years now, the difference being that for the last four months, he does not go inside the office to his workstation, for he has lost his job. Out of embarrassment and shame, he has yet to inform his family, choosing instead to live a life of lies and denial.

Faced with stagnating revenues and a sagging bottom line, the financial services firm Kumar was employed with sacked over 1,000 employees—around 30 per cent of its workforce—four months back. Five of those former employees still come to work every day, one of them Kumar, while they continue desperately to look for employment in a rapidly-shrinking Indian job market.

Barely a decade ago, India's jobs scenario was at an all-time high, with increments touching incredible levels of up to 25 per cent year on year. Today, the country's national unemployment levels are at a 45-year staggering high of 7.7 per cent. Urban employment levels are even worse, at over 9 per cent. A Center for Monitoring Indian Economy (CMIE), which the authorities declined to share publicly but was anyway leaked to the media reveals some startling numbers. The urban unemployment rate rose from 8.89 per cent in November to 8.91 per cent in December 2019.

The reasons behind the alarming state of the job market are deeply disputed. A section of analysts believes that the country's economy, which was anyway slowing down due to the global economic slump of 2015-16, was dealt a death blow by the Indian Government's decision to demonetise large-value banknotes in November 2016. Intended to clamp down on the informal untaxed economy, demonetisation ended up doing something drastically different. It crippled smaller businesses and traders and saw India's massive unorganised business sector being brought

to its knees. The last two quarters leading up to 2020 tell their own story, India's Gross Domestic Product (GDP) growth dropped to below 5 per cent on the back of weak demand and a sharp slump in foreign investments.

Analysts also say that the trend of rising unemployment increased sharply after the introduction of the Goods and Services Tax (GST), which crippled the country's small and medium enterprises (SMEs), employing well over 100 million skilled and unskilled workers. "GST's inverted levy structure was clearly not thought through by the Government. Why would anyone, anywhere in the world introduce a taxation mechanism where the levy on raw materials is higher than that on finished products? This critically reduces competitiveness and sees the cost of capital zoom. Add this to a slowing economy and you have an instant recipe for an economic slump, sagging industry segments, sharply lower revenues and profitability—and eventually job cuts," says a senior analyst.

And it is not just about Indians losing jobs after years of working. The CMIE report also raises a notable alarm- only 2 out of 3 youths entering the job market after completing their education are finding jobs. In the 20-24 years age group, the unemployment rate is nearing 40 per cent. Scarier still, graduates in this age group have reported a frightening alarming unemployment rate of over 60 per cent. The year 2019 was the worst year for young graduates, with unemployment rates nearly touching 64 per cent.

For those with steady and once lucrative jobs, 2019 was possibly the worst year, ever. In the first quarter itself—from March to June 2019—millions upon millions of Indians lost their livelihoods. These three months saw India's Automobile sector shed over 200,000 jobs, while the Information Technology sector laid off over 1,000,000 employees. The Aviation sector fared no better, laying off over 100,000 of its employees, direct and indirect.

There is a paradox, a vicious cycle at play here. With joblessness going up, demand for products and consumption is declining. Consumers—both with and without jobs—are clutching on tightly to the money in their bank accounts. This decrease in consumption is seeing manufacturing industry performance being impacted sharply. And with performance and profitability taking a hit, manufacturers are cutting back on capacity utilisation as their inventory of ready goods stored in godowns, or out in the retail space, increases. Against this backdrop, there is no question of new investments and capacity expansion. Therefore, there is no question whatsoever of new jobs being created. Certainly not when survival and continuity demand that existing ones be pruned heavily.

The problem for both the Government and corporates is that the wounds already inflicted on the system—on corporates large and small, on farmers, on labourers and unskilled workers, etc.—are so deep that nothing short of a miracle can restore good health anytime soon. The last economic card that the Government had, of lowering corporate taxes, has already been played, a move that will see tax collections go down by over Rs 200,000 crore. That is another sledgehammer blow to India's GDP, fiscal deficit and economic growth.

In 2020, India will become the youngest country in the world, with its population and the number of youth increasing fast, leading to more and more new job applicants and therefore, more rejections and greater joblessness. By 2027, India is likely to overtake China as the most populous nation on Earth. Unless some bold and radical measures are taken and fast, a frightening future and perhaps civil unrest awaits this 'Young India'.

An old Hindi adage comes to mind "Berozgaari shaitan ka carkhaana hai (An idle mind is the Devil's workshop)". Youngsters (and older people who have lost their jobs) sitting at home are akin to a ticking tome-bomb. To keep home and hearth running, man has been adaptive and creative, even destructive when desperate, for centuries. Such desperation may see an increasing number of people walking down paths they would hitherto never have considered. Petty crime rates are already increasing.

And there are worse and more worrisome developments. In a report released in January 2020, the National Crime Records Bureau (NCRB) shared data of 'Indian Corporate Suicides' for the Year 2018. Each day of that year, an average of 10 Indians (9 men and 1 woman) committed suicide, either because he/she lost their jobs or he/she could not find one.

The writing is on the wall, and the clock is ticking.

Views expressed are strictly personal