Unemployment red alert!
At a 45-year high, joblessness has gripped India and the crisis is now reaching a stage of social explosion
The latest controversial report prepared by GOI's National Sample Survey Office (NSSO) brings to the fore several loopholes which had prevented the survey from being released earlier and had also led to the resignation of two top members of the National Statistical Commission. The report has exploded the myth of high job generation in the country – as has been claimed by the Centre and several of its affiliates in recent days to influence people just ahead of the scheduled Lok Sabha elections.
The NSSO report has shown that the unemployment rate is at its highest level since 1972-73 now and in 2017-18, with the joblessness rate among youth standing significantly higher compared to previous years, and much higher compared to the overall population. For instance, the rate of joblessness among rural males in the age group of 15-29 years, jumped more than three times to 17.4 per cent in 2017-18 compared to 5 per cent in 2011-12. Similarly, the unemployment rate for female youth in rural areas stood at 13.6 per cent in 2017-18, compared to 4.8 per cent in 2011-12. The unemployment rate for urban youth was more than their rural counterparts – 18.7 per cent for males and 27.2 per cent for females.
This grim scenario has not been created in a day. It has been a continuous process and, ever since 2014, there has been more talk on new schemes and limited focus on the generation of jobs. On the contrary, the sudden decision of demonetisation announced in November 2016 destabilised the informal economy, leading to the loss of lakhs of jobs rather than creating new jobs. That is why, we can assume, the government was most reluctant to come out with the findings of the real ground situation in the employment market.
The findings of this NSSO report are of great significance as this is the first survey on employment conducted by a government agency since 2016's demonetisation. The informal sector employs huge numbers of people and this sector was affected most adversely after demonetisation. There was no survey of job losses in this vital sector of the economy. This survey, for the first time, tried to conduct an assessment in totality. The survey shows that the labour force participation rate (LFPR), the proportion of the population working or seeking jobs, declined from 39.5 per cent in 2011-12 to 36.9 per cent in 2017-18. LFPR has been declining since 2004-05 but the dip was at a higher pace in 2017-18 compared to 2011-12.
According to senior economists, there is no reliable data to assess the state of joblessness in the informal sector. The magnitude of the hit endured by MSMEs, following demonetisation, has also not been assessed and the government has no policy prescription since it does not recognise the existence of any big problem in the informal sector. Trading in the informal sector is basically done through cash. Following demonetisation, there was a serious breach of channels through which businesses are conducted in rural areas. According to the economic census, there are 56 million non-agricultural enterprises and, if 72 million farmers are added, the number of entities will touch 128 million. This sector has the largest employment share in the country and, if this sector is in distress, how can additional jobs be generated? The government has focused on generating jobs in industry and high-tech areas where the scope of additional jobs is low. This policy has failed, as the NSSO report exemplifies.
The immediate task is to organise and revamp the MSME sector and agriculture, so that new jobs can be generated. It must be ensured that MSMEs move from employing two people to five or ten or from ten people to 20 or more. Policy has to be tweaked so that 128 million entities are assisted by government policies and contribute to additional job generation. Corporates can only create limited jobs, the bulk of new jobs have to be created in the MSME sector. Latest figures also show that employment growth in corporate India has fallen off sharply over the last decade – from around 5 to 6 per cent per annum to around 2 to 3 per cent today. Big corporates are resorting to automation and artificial intelligence, leading to job losses in many industries; though new areas are being developed for job generation. But there, the number of jobs are few and limited to only requiring specialised skills.
National political parties have to take up job generation as the core of their election manifestos for the 2019 Lok Sabha elections. Congress under Rahul has to work on an ambitious job generation programme which really can impart a big dynamism to the present course of jobless growth in the country. During the next five years, the total number of people looking for jobs will total 70 million. The programme of providing jobs to this huge number is a massive task and job policy has to incorporate so forth untested innovative ideas. A high-level panel including internationally-known economists like Dr Amartya Sen and Dr Pranab Bardhan can be consulted to draw the composite programme. Apart from a minimum income guaranteed programme, this job generation programme should form the core of the opposition's CMP in its battle for Centre.
(The author is Editor-in-Chief, IPA. The views expressed are strictly personal)