Improve lives of poor
The Tribune Debate Employment crisis
THE most telling response to the ‘India Employment Report 2024: Youth employment, education and skills’, brought out by the International Labour Organisation and the Institute for Human Development, came from Chief Economic Adviser V Anantha Nageswaran. He said while releasing the report that it was not for the government to keep creating jobs, and that private enterprises must do it. It might appear as a stark statement, which both hides and reveals the failure on the economic front of the NDA government, which boasts of a high growth rate, relatively speaking, and India getting to be among the top five economies in the world. India is heading to be a $7-trillion economy by 2030. One would assume that a prosperous, vibrant and growing economy would also mean that most of the working people are employed. During the UPA rule, critics carped about jobless growth.
The report says that the growth in employment from 2000 to 2019 was stagnant, and it was the Covid-19 pandemic and the post-pandemic period that saw an increase in employment. The paradox of an increase in employment during the pandemic years is obvious. Open unemployment — which is not a suitable indicator to measure the underutilisation of the labour force in developing countries like India as not many people can afford to remain unemployed — has become rare. The key concern is underemployment, where people work for lower wages and in jobs for which they are overqualified. During the pandemic and post-pandemic years, there has been an increase in rural employment, especially in agriculture. More women were working as part of the rural resurgence in employment, whereas the general trend in the first two decades of this century was a decrease in rural employment because people migrated to cities for jobs in construction and service sectors. And women’s participation in the labour force has been lagging behind that of men.
In 2022, underemployment stood at 7.5 per cent compared to 8.1 per cent in 2012 and 9.1 per cent in 2019. The year 2022 stands out as an unusual period, as can be seen in the labour force participation rate (LFPR). There was a decline in the LFPR from 61.6 per cent in 2000 to 50.2 per cent in 2019. The LFPR climbed to 55.2 per cent in 2022. The trend is partly reflected in the figures for the labour force and the workforce — the number of people who have the potential to be employed and the number of people employed. The labour force figure was 39.63 crore in 2000 and 49.5 crore in 2019. While the labour force grew by nearly 10 crore in the 19 years, the workforce increased by 7.94 crore, leaving 1.98 crore ‘openly unemployed’. The number of those unemployed was steep at 1.86 crore between 2012 and 2019. The workforce increased from 46.65 crore in 2019 to 54.4 crore in 2022, an increase of 7.8 crore. The pandemic has been a major pivot in employment trends that need to be studied closely. It shows how the rural sector helped poor people more than any government intervention, something that Prime Minister Narendra Modi and his team would be reluctant to acknowledge.
The gender gap in employment is glaring, and it contrasts with the rhetoric of successive governments in the last two decades. The labour force participation rate for men in 2000 was 83.6 per cent; it fell to 79.8 per cent in 2012 and further to 75.5 in 2019 before rising modestly to 77.2 in 2022. The figures for women were 38.9 per cent in 2000, 31.2 in 2012, 24.5 in 2019 and 32.8 in 2022. The gap is too wide.
There are other aspects of the job challenges that India faces. From 2000 to 2022, employment decreased in rural areas and in agriculture. The pandemic reversed the trend temporarily, and employment increased in urban areas. This was in the services and construction sectors, not in manufacturing. Employment in the manufacturing sector remained stagnant in the two decades. And the report emphasises the fact that it is the manufacturing sector that creates the maximum number of jobs, despite the digitalisation of the process. It also says that the majority of the younger segment of the youth are better educated than before, but they aspire to have white-collar jobs. Very few among the youth choose vocational training. The older youth with lower educational qualifications continue with low-paying, semi-skilled jobs.
An important finding of the report is that the informal economy and informal employment are predominant trends, and that even in the formal sector, it is informal employment that is the norm. It is a fact that wages in the informal sector are low compared to formal employment. This is likely to be explained by pro-government economists as a social characteristic of the Indian economy because the GDP growth is good enough for the ruling class to thump its chest. The irony would be that India could become the third largest economy after the US and China, but it will remain a low middle-income country where people have to struggle to eke out a living. It may be impractical to expect that a growing economy will provide well-paid jobs for all. At the same time, it would be rather immoral to boast about national glory when most of the people are at the bottom of the heap. This is less about inequality and more about basic livelihood. The question remains: is a vibrant economy meant to improve the lives of people, or are the people there to make the economy grow while they remain on the margins?
