Where are the jobs?
The big question mark is over jobs. India’s ability to make the most of its favourable demographics will depend as much on skilling the people as creating job opportunities for the additional millions who will be swelling the labour force by 2022. Converting growth into employment has not been India’s strong point and it is here that the challenge will be particularly tough.
The recently released ‘The India Labour and Employment Report 2014’ by the Institute for Human Development (IHD) has some useful pointers to what lies ahead. It says that although overall unemployment is low, at a ridiculous three per cent, the problem of youth unemployment, particularly that of educated youth, has become a major concern. About 30 per cent of the total unemployed in 2011-2012 were graduates and above, up from 21 per cent in 2004-2005. It computed the rate of unemployment among graduates, and surprisingly among the technically trained at around 18 per cent.
But this is not an India phenomenon alone. The world over joblessness is growing and more young people are becoming idle than ever before. According to estimates by the OECD, around 26 million youths in the 15-24 age group in developed countries are NEET, that is, not in employment, education or training.
It says the rate of youth unemployment has shot up by 30 per cent since 2007. But estimates of worldwide unemployment among the young by other organisations are more dismaying. The ILO puts the figure of the idle young at 75 million while World Bank surveys show that close to 262 million young people in emerging economies are hunting for jobs.
Economist Alakh N Sharma, director of IHD, warns that rising graph of unemployment among the educated in India is a serious worry. ‘This will haunt us in the future,’ says Sharma, who points to a more problematic issue: unemployment among educated women in some states is as high as 55 per cent. In a decade or so, 40 per cent of all girls will be matriculates, adding to a cohort of educated youths who are being denied job opportunities.
Since school enrolment has become universal, the larger numbers of the educated youth will pose a multitude of problems. They won’t want to work in the farms or under MGNREGS and this force will have huge implications for resource allocations, for transport, for the environment. The youth bulge has to be factored in carefully into all development plans, says the lead author of the IHD report.
And there is an alarming forecast from credit rating agency Crisil. It says due to insufficient employment creation in industry and services sectors, more workers will become locked in low-wage agricultural jobs. ‘We estimate that 12 million people will join the agriculture workforce by 2018-2019, compared with a decline of 37 million in agriculture employment between 2004-2005 and 2011-2012.’
One consequence of the lack of decent job opportunities is that the young have been pushed into partial or disguised unemployment. Even those who believe they are skilled, such as Arun Kumar. The 25-year-old from Warangal in Andhra Pradesh is a commerce graduate with a diploma in marketing from a management institute. After the company he was working for folded up, Kumar has taken up a variety of jobs, from cold calling to peddling products at petrol stations. ‘The work is poorly paid and dead end,’ says a hugely frustrated Kumar, who is not sure if the economic recovery will make it worth his while to study further and seek employment later. But for him, the bad news is that jobs in India grew by just 2.2 per cent between 2010 and 2012.
An ILO report, Global Employment Trends for Youth 2013: A generation at risk, highlights the major challenges regarding the quality of available work for young people in countries such as India. ‘In developing economies where labour market institutions, including social protection, are weak, large numbers of young people continue to face a future of irregular employment and informality. Young workers often receive below-average wages and are engaged in work for which they are either overqualified or underqualified,’ it says.
The key issue is whether there will be decent jobs for the young of India. Job data culled from the NSSO report for 2011-12 released in February shows that since 2000s employment in trade, hotels and restaurants rose from 36 million to 53 million. But these were low paying jobs even during a period of high economic growth. Between 2004-05 and 2011-12 when GDP growth peaked to 8.5 per cent per annum, employment grew by just 0.5 per cent annually.
About 92 per cent of India’s 470 million workers are informal workers, forced to take up jobs that are tenuous, are poorly paid and offer no social security.
The main reason for India’s lopsided labour market is that the manufacturing sector, which accounts for just 16 per cent of the GDP, does not offer the bulk of employment as in other growing economies such as China’s.
When Chinese economic policies drew a chunk of labour away from agriculture they were placed in manufacturing jobs. In India, 37 million have left agriculture but have failed to find a cushion in industrial jobs. Besides, the service sector, which contributes the bulk of the GDP (58 per cent), provides only 26 per cent of the employment. India’s growth and employment have been skewed by its unusual model of development. While China and the tiger economies of East Asia were focused on expanding their manufacturing sector, India concentrated on the service sector.