Manish Sabharwal: India’s Problem Is Not Unemployment But Low Wages. Here’s How To Fix This.

Modest wages have been taking cover in the much-debated problem of unemployment in India.

The real problem lies in lower wages and not unemployment, the reason why the official unemployment rate of 5 per cent cannot be challenged, Manish Sabharwal writes in a report in The Indian Express.

The generation of high-paying private sector jobs is hitting a brick wall due to three ill-founded arguments based on wages: government vs private, nominal vs real and gross vs net.

The economic wastelands of Mumbai, Delhi and Chandigarh are a far cry from job magnets like Gachibowli, Mohali, Gurgaon and Bangalore because the new clusters combine an infinite supply of mixed-use commercial and residential real estate (happiness economists suggest that commute time is a key component of happiness).

Sabharwal puts forward three regulatory interventions that can turn the situation around: faster urbanisation, lower regulatory cholesterol and broader human capital.

As the long-term plans for formalisation, urbanisation and human capital yield results, Sabharwal suggests measures for a time-bound monitoring of the three interventions.

1. We must overrule its self-serving case for an Establishment Number and replace the 27 different numbers issued to every employer with a single Universal Enterprise Number.
2. We must set a date for 100 per cent paperless, presence-less and cashless compliance for all state and central labour laws.
3. We must end the shameful stonewalling of the ministry of labour of the provident fund and ESI reforms announced in the budget. This can be done by making employee contribution to the provident fund voluntary and creating competition for ESI and EPFO by allowing employees to choose alternatives like NPS and health insurance.