Prime Minister Narendra Modi’s promise of acche din is premised on moving away from the erstwhile dole and entitlement model, to one that empowers youth by generating large scale employment. In that context, officially released figures from the Labour Bureau are alarming.
Employment generation in eight labour intensive sectors (textiles, garments, leather, jewellery, BPOs, handlooms, metals and automobiles) was a mere 1.35 lakh during 2015, compared to 4.9 lakh the previous year and a much larger 12.5 lakh in 2009. Worse still, employment in these eight sectors actually declined in the last quarter of 2015.
Admittedly, being confined to eight sectors and a small sample size, ranging between 1,800-2,200 business units, the figures may not reflect the true state of employment in the country. Nevertheless, this must surely be worrying news for those who do not tire of celebrating India’s demographic dividend.
More than any other feature of the economy, employment generation will be the key to Modi’s electoral prospects and indeed to social peace and stability in the country. Tarun Gogoi, in the midst of a tough electoral battle, was quick to jump on the Labour Bureau’s dismal statistics and chastised the government for the lowest job generation in seven years.
The Patel agitation in Gujarat and Jat bedlam in Haryana are symptomatic of rising unrest among the ‘neo-middle class’, which is undoubtedly disappointed with current employment trends. News from management and engineering colleges about student off-take by industry is also disconcerting.
According to some estimates approximately 15 million jobs were created between 2005-12, leaving a backlog of nearly 50 million unemployed youth in those seven years. The situation will get aggravated in the next 10 years when another 80 million will join the workforce. Given declining exports, little pickup in foreign tourist arrivals and persistent weakness in private investment, employment prospects do not look bright. This trend must be reversed.
To begin with, we must try and get a clear picture of emerging employment trends. In the absence of up to date official data on unemployment – a thoroughly unacceptable state of affairs – we need to look at other estimates. Two such estimates are available, albeit from private corporate sources. The Monster Employment Index for March 2016 – put out by Monster, India’s leading online recruitment and employment portal – has risen by a whopping 42%, reflecting buoyant prospects for fresh hiring by the group of 13 service industries.
Team Lease’s Employment Outlook Report for the second half of 2015-16 also has positive news. Of 616 employers surveyed, 93% expected to generate net employment during that period. According to this report, the employment cycle may well have turned the corner for the better.
The catch, however, is that manufacturing remains one of the lagging sectors. Secondly, we have no idea of the scale of employment that will be generated. Moreover, the large majority of new jobs are expected in the metros and tier 1 cities, with tier 2 and 3 cities and rural areas showing very sluggish and virtually stagnant employment prospects.
This trend will aggravate regional inequality and a two-speed economy, with the usual deleterious consequences of rising and often unbearable pressure on infrastructure in a handful of large cities and persistent backwardness in large swathes of the country. This should be unacceptable as it goes against inclusive growth.
Thankfully, the budget had, for the first time, some direct fiscal measures for employment expansion. The Stand-Up and Start-Up programmes, launched in the first quarter of 2016, shows the government is cognisant of the issue. However, Start-Up’s focus is predominantly on the low employment intensive IT sector while Stand-Up caters largely to artisans and family units in the local and informal economy. They are not going to suffice: the former will simply not generate the needed numbers and the latter will not create formal sector jobs that young Indians now aspire for.
More needs to be done urgently. And a necessary condition for success is that fatalistic talk of the economy’s supposed inability to generate the needed jobs must be firmly discouraged and debunked.
It will be useful if our political leaders, government’s economic honchos and BJP spokespersons desisted from preening about India’s high GDP growth rate and instead focussed on giving out good news on fresh employment generation in their regions and sectors. That will engage young job seekers and make the government look both credible and empathetic to the genuine concerns of people.
Modi may want to jettison all his other goals, priorities and programmes and focus laser-like on maximising employment generation. If successful, rapid growth will necessarily follow.
There has to be greater focus on export-oriented industries, small and medium enterprises and agro-processing industries, with their relatively higher employment intensities and more robust growth prospects. A special task force that brings together all concerned agencies and departments in pursuit of this critical objective should be immediately constituted. There is no time to lose.