When It Comes To Jobs, ‘Achche Din’ Seem Elusive

The single most important factor that will determine the fate of the Narendra Modi government in the 2019 elections will be jobs. Keeping the youth productively employed is the best way to keep them out of trouble and perhaps the best solution to growing social tensions and crime. But this is also the one issue where the fabled achche din seem to be eluding the government.

The latest annual Employment-Unemployment Survey for 2015-16 conducted by the Labour Bureau shows a drop in people joining the workforce (the labour force participation rate or LFPR), an increase in unemployment and no improvement in underemployment between 2013-14 and 2015-16. Even the quality of available employment is distressing.

Take LFPR, which includes people looking for work as well as in jobs. After increasing from 53.1 per cent in 2012-13 to 55.6 per cent in 2013-14, it dropped to 52.4 per cent in 2015-16. In rural areas, the LFPR dropped from 58.8 per cent to 55.8 per cent between 2013-14 and 2015-16, and in urban areas from 47.9 per cent to 43.7 per cent over the same period. The standard explanation is that people are opting for higher education and the sharp drop in LFPR among urban men and women is often cited as proof. But could this also be the case for a drop in rural women in the LFPR? This whole issue needs closer study.

The figures are based on the usual principal and subsidiary status (UPSS) approach to measuring labour force movements. This covers the job that takes up most of people’s time as well as any other employed work that they take up.

The unemployment rate also merits concern. It dropped from 4 per cent to 3.4 per cent between 2012-13 and 2013-14 but went up to 3.7 per cent in 2015-16. Rural unemployment was what pushed this up – it increased from 2.9 per cent to 3.4 per cent, after dropping to 2.9 per cent in 2013-14. In urban areas, however, unemployment has been declining continuously – from 5.3 per cent in 2012-13 to 4.9 per cent in 2013-14 and to 4.4 per cent in 2015-16.

There’s been no improvement in underemployment. The Labour Bureau started putting out statistics on underemployment only in 2013-14 and the figures relate to people who worked for the entire 12 months of the survey period, those who worked for between six and 11 months, those who worked for between one and five months and those who did not get any work.

The number of those who were employed through the year has gone up from 60.5 per cent in 2013-14 to 60.6 per cent in 2015-16. This slight improvement is driven by the urban areas, where this category increased from 78.5 per cent to 82.1 per cent. In the rural areas, those employed for 12 months dropped from 53.2 per cent to 52.7 per cent, no doubt a result of the two consecutive years of drought.

This is also perhaps the reason why the number of those who worked for between six and 11 months in the rural areas also dropped (from 42.2 per cent to 42.1 per cent) and the number who did not get any work at all increased from 3.2 per cent to 3.8 per cent. In both these categories there has been a reduction in the urban areas, which shows an improvement. The numbers of those who worked for between one and five months remained the same during the period – 1.1 per cent.

The jobs that people get also have little to offer. Job insecurity runs high - the survey reports that 64.9 per cent of those in regular/wage employment and 67.8 per cent of contract workers did not have a written job contract. Besides, 57.2 per cent of those who had regular/wage employment took home Rs 10,000 or less a month. As for contract workers and casual workers, 38.5 per cent of the former and 59.3 per cent of the latter got only Rs 5,000 or less a month.

The fact that unemployment is rising even as the percentage of people in the labour market is falling shows adequate number of jobs are just not being created, even as the economy is doing better. This appears to indicate that jobless growth is a reality.

Much of the growth in gross domestic product (GDP), explains Pronab Sen, former head of the National Statistical Commission, is coming from an increase in efficiency, while growth in production is muted. “Since employment is linked to volume growth, it will grow only when volumes increase.”

The nature of jobs is also changing. Dilip Chenoy, former managing director and CEO of the National Skills Development Corporation, points out that data may not be capturing jobs created in several new areas like logistics. But he concedes that jobs are not being created at the same pace as people entering the labour force. A lot of investment is coming into capital-intensive and high technology manufacturing, which may not employ huge numbers, Chenoy notes, pointing also to a large skills-jobs mismatch in high-end niche areas.

This is not just about companies not finding people adequately skilled. Often job seekers are also not satisfied with the jobs they get. The Employment-Unemployment Survey shows that 58.3 per cent of job-seeking graduates and 62.4 per cent of job-seeking post-graduates were unemployed because they did not find jobs matching their education and experience.

Is the government not doing something right? Sen feels the government has been wise in amending the Apprenticeship Act (these changes encourage companies to take in more apprentices) and in focussing on the micro, small and medium enterprises through the MUDRA, Start Up India and Stand Up India schemes. The large companies will go for only efficiency improvements, it is the small companies that will generate jobs. This group, he says, needs encouragement right now, since as efficiency improvements start deepening, the pressure on employment will only increase. Greater investment in infrastructure is also necessary, he points out, since this sector right now is hobbled by lack of power, roads and the like.

Chenoy feels the focus on two employment-intensive sectors - food processing (into which got 100 per cent foreign direct investment has been allowed and textiles (through the textiles revival package) - will help a great deal.

The dynamic nature of the job market – it appears to be changing by the hour – makes it difficult for any government to respond nimbly, but the government should clearly do whatever is in its hands to do.

See also:

-The Indian jobs machine is faltering and here’s how to fix it

-Jobs growth: Modi may be on the right track but he could trip on execution

-No jobs nirvana: India may have misses the manufacturing bus altogether

-Modi sarkar’s latest labour law reform can help create millions of low-skilled jobs

-Who took my job: 7 potential job killers you should look out for