Chasing a mirage?

A rise in unemployment rates is not necessarily an indicator of the performance of an economy, though, for a layman, it is. Unemployment, theoretically, is a state where a person is willing to work and actively searching for a job but is unable to find one. However, it is not that simple to categorise people as unemployed since 'willingness' and 'search' for jobs depend on one's personal choices, qualifications and other sociocultural factors. There are various kinds of unemployment. For example, major economic factors such as depressions (1929), and recessions (global Meltdown of 2008), create structural changes in the economy leading to 'structural unemployment'. It takes years for the economy to stabilise and absorb the marginalised workforce. 'Frictional unemployment' is due to switching between jobs voluntarily while 'cyclical unemployment' is a result of changes in business cycles. These are normal in any economy as they get rectified after brief intervals. The recent layoffs of thousands of employees in Facebook, Instagram, Whatsapp and Twitter, and reduced hiring by Indian IT Companies belong to this category. Fears of the US recession is one reason, inter alia. But it is predicted that the technology sector will correct the anomalies soon as the demand for talent is going to rise in the last quarter of 2022-23. The phenomenon of unemployment is so complex that premature conclusions are avoidable mistakes.

In the US, unemployment rates are estimated on the basis of monthly Current Population Survey (CPS), Census data and unemployment insurance claims. Varying definitions as to who is unemployed and who is in the labour force are applied in identifying target groups. Employment in India is defined as 'engaged in any economic activity' and the unemployment rate is a ratio of the total unemployed persons above 15 years, to the total estimated labour force employed. NSSO conducts sample surveys in three ways; the usual 'status approach' (no gainful work for 365 days), the weekly status approach (no gainful work for a whole week), daily status approach (no work for a particular day). The methodology provides a broad framework to assess unemployment but the findings may not be truly representative of ground realities. A person 'engaged in an economic activity' can mean anyone from a street vendor or a wage earner in the informal sector to a CEO in the corporate sector. Concomitantly, lack of jobs cannot alone be the reason for the rise in unemployment rates. It is hasty, therefore, to conclude that a rise in unemployment rates indicates poor health of the economy, no less than judging that fall in the said rates is indicative of exponential growth.

Conversely, even when job opportunities exist, the absence of willingness works as a negative factor. For example, more than 1,07,000 posts are lying vacant for years in all three armed forces, with 86,000 unfilled vacancies in the Army alone. Attitudinal and cultural factors coupled with comparative career prospects are seen to dissuade the youth, though considerable leniency was permitted in the selection process. There are similar situations in other sectors also where vacancies outnumber the aspirants due to the dearth of talent necessary for the job. Though hundreds of ITIs are in existence with elaborate logistic support and funding by the government, only less than 50 per cent of seats are filled. It points to the fact that not only willingness to seek jobs but 'willingness' to acquire skills is also a factor. That said, we cannot either ignore the sociocultural factors such as caste, faith, gender, family bonds, and perceptions which adversely influence the employment market. The dignity of labour is still an alien concept in traditional societies. White-collared jobs are preferred to blue-collared ones even if the latter carry higher pay and benefits. Such a situation thwarts the schemes of the governments meant for employment.

Certain issues persistently are of serious concern. Firstly, agriculture has the largest share of employed people in India, but due to its seasonal nature migration of farm labour to urban areas in millions annually, swells up the working population in informal and unorganised sectors which is mostly unskilled labour with low wages and inadequate social security. Secondly, even in the formal sector today, in industries such as IT, health care, hospitality, and financial services, which provide well-paid jobs, the employable talent is not more than 46-50 per cent. 'Periodic Labour Force Survey (PLFS 2019-20)' shows that 86 per cent between 15 and 59 years are devoid of skills while the rest 14 per cent acquired skills through formal and informal sources; compared to 52 per cent in the US, 80 per cent in Japan, and 96 per cent in South Korea, the gap is alarming. According to CII estimates, there will be a demand for about 30 crore skilled manpower by 2023. The skill crunch reflects a mismatch between education and the job market but not necessarily the incapacity of the economy or the inability of the government to create jobs.

Thirdly, 'economic inequalities' and 'income inequalities' (two different aspects) also impede employability for the vast majority of people. For example, even as the per capita income has risen from Rs 72,805 to Rs 94,954 (30 per cent) between 2015-2019, unemployment also has risen from 5-7 per cent during the same period. It indicates that a rise in per capita income doesn't mean equitable distribution in social and demographic terms. A survey by People Research on India’s Consumer Economy (PRICE) 2021 shows that the majority of households in cities remained in the 'aspirers category' (Rs 1.25-5 lakh annual income) whereas the middle classes (Rs 5-30 lakh) earned twice the income compared in 2005. Cities with more than 10 lakh population house 27 per cent of the middle class and 43 per cent of the super-rich of the country. It implies that while inequalities obstruct job mobility for the poor, education combined with talent helps the middle class and the rich to grow further. So, not only job creation but addressing inequalities and contradictions also needs to be a focus in the employment schemes.

The policies of the government are certainly in tune with the demands of the growing economy and a lot of schemes were rolled out. A total of 997 Employment Exchanges across India facilitate placement, career counselling & vocational guidance along with market information. The National Career Service (NCS) Project aims at transforming the National Employment Service in partnership with States and UTs by providing a variety of services like job matching, information on skill development courses, apprenticeships, etc. It is no mean achievement that 1.35 crore active job seekers and 1.75 lakh employers were registered until 2021, with a total of 92,12 lakh active vacancies mobilised. The Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) 2016, and the Aatmanirbhar Bharat Rojgar Yojana (ABRY) are milestones for they encourage the employers through state contributions to EPF, EFP and EPS. Skill mapping through Apps and portals is a massive drive in most states today to reduce the gap between the demand and supply of skilled manpower. However, constant monitoring is essential to ensure desired outcomes.

The fight against unemployment is a war room situation where each battle matters. Robust economic growth helps reduce unemployment, but employability depends on equal access to skills and qualifications. Addressing inequalities, reducing the digital divide and focusing on attitudinal transformation should be the priorities to ensure a better ecosystem for the knowledge economy. Integration of education with skills is of paramount importance to bridge the gap between demand and supply. Hopefully, the NEP-2020 will ensure promising results in this direction.

The writer is a former Addl. Chief Secretary of Chhattisgarh. Views expressed are personal