Opinion The Jobscape

Is the Jobs Crisis a Skills Crisis?

This is the second edition of The Jobscape, our fortnightly round-up of news and opinion on the state of employment and job creation in India. In this edition, there’s good news from renewable energy and the gig economy — but with a caveat: the skilling gap.

Job Creation News

We start with the good news. The growth of renewable energy could create 3 lakh (300,000) jobs by 2022.  India’s National Digital Communications Policy (NDCP) 2018 has the potential to generate 40 lakh (4 million) jobs across the country. However, there is a skilling gap as most of these jobs will require highly skilled applicants who are up-to-date with latest technologies.

By some estimates, “the gig economy is set to generate 56% employment in India and going to grow 25-30% per annum. Some of the top paying gig jobs in India include content writing, translations, digital marketing, architecture, accounting, data analytics, consulting, and  counselling.”

Times Now reports on the top five paying jobs in the country. And LinkedIn has come out with a list of top emerging jobs in India. Most of them are in the tech sector. No data was given on how many such jobs were created. Construction, retail, logistics and beauty/wellness sectors are where most new jobs will come from in the next five years according to a new book on the jobs crisis in India.

Indian millennials, apart from simply seeking jobs, may also be changing the jobs landscape. According to the Financial Express:

They are expected to form over 36% of the India’s working age population, account for 61% of its Internet users and 78% of its online shoppers by 2020. […] Their consumption pattern is different from earlier generations and this demographic change is one of the major forces in driving the future of jobs. [This has] created a demand for new jobs which require new sets of skills and expertise. […] The skills and profiles which are seeing a boom in demand due to rise of millennials include VFX artists, computer vision engineers, data scientists, data architects, AI research scientists, digital marketing, e-textiles specialists, cyber security specialists, credit analysts, robot programmers, block-chain architects and digital imaging leaders, etc.

Stricter visa rules has slowed migration from India to the US, UK and Australia, leading to greater pressure on jobs in India.

On a philosophical note, Vivek Kaul asks (by quoting Thomas Sowell) if the government is actually saving jobs by merging three public sector banks: Bank of Baroda, Dena Bank and Vijaya Bank.

 “Sarkari Naukri”

Last fortnight, The Jobscape discussed the lure of government jobs. That story keeps on going. Recently, a million people have applied for 700 jobs in Telangana. There are hundreds of PhDs and lakhs of postgraduates or graduate engineers applying for a job that requires a 12th standard education. Uma Sudhir’s twitter thread talks about the political and education issues behind this.

Anupam Manur delves into the reasons behind this by asking: “What explains the high demand for low paying government jobs? Is it that private job options are few? Or is it a skills mismatch?” And if you’re still interested in a “sarkari naukri” you can learn more about the options and pay scales. But beware: where there’s a need, a scam isn’t far away. In the past few months, Delhi police have busted at least six job rackets.

Productivity and vulnerability

Indians hit peak productivity for only seven years of their working life. India ranked 158 among 195 nations in “expected human capital”, the number of years an individual can work at peak productivity between the ages of 20 and 64. Finland tops with 28 years. China is at 20. Even Sri Lanka is at 13.

According to the 2018 UN Human Development Report, 77.5% of workers in India are vulnerable, i.e. they are self-employed or work for family members, are less likely to have formal work arrangements, and more likely to lack decent working conditions. The global average is 42.5%. Solving this vulnerability puzzle and moving more Indian workers into the formal sector will be key to solving the jobs crisis.

India’s Education and Skilling Gap

There’s a crisis in Indian education: according to a McKinsey report, only a quarter of Indian engineers are employable. The Indian higher education sector is largely mediocre and that results in a “large number of young people with college degrees who are unemployable and, even with time, are likely to remain unemployed or at best underemployed.” Skill development is needed in a fast changing job market – Manish Sabharwal of TeamLease states that “India’s problem is not unemployment as much as it is unemployability”. Is vocational training the answer to India’s “jobs riddle?”

Nearly 60% of India’s labour force are employed in medium skilled jobs, about 27% in low skilled jobs, and only 15% in high skilled jobs, according to ILO data.

And government intervention does not seem to be helping. Devika Kher writes that “Most interventions at the MSME level are not intended to create jobs. Entrepreneurship training is beneficial for business skills but mostly does not result in business expansion or more jobs.”

Even the follow-through is poor: The Congress party claims that only 1.25% of the targeted 40 crore people have been trained under Skill India. And, of these, less than 20% have been placed in jobs.

And it gets worse: The All India Council for Technical Education (AICTE) is proposing a new textbook with a number of pseudoscientific claims. As it is our education sector is lagging. This will make graduates even more unemployable.

Discrimination

Women, Muslims and Dalits have been systematically discriminated against in the job market in India, not just for government jobs but in the private sector as well.

There is a shocking gender divide in India’s workforce. “Women earn between 35% to 85% of men’s earnings. Women are highly over represented in low-paying and low-value added industries and occupations like agriculture, textiles and domestic service and highly under represented among senior officers, legislators and managers.”

Women’s employment is also affected by unintended consequences of laws like the Maternity Benefit (Amendment) Act, 2017, which increased mandatory maternity leave to 26 weeks from 12 weeks. The Union Labour Minister, Santosh Gangwar, confessed that it may have adversely affected women’s employment in India.

Sexual assault takes a toll even in the job sphere for women. For example, only 19% women in Haryana are in paid employment, well below the already low national average of 24%. This is despite the fact that 45.8% of women have completed 10 years of schooling, well above the national average of 35.7%.

“India needs jobs for all, including its Muslims.” According to a recent study, “intergenerational mobility has been stagnant since 1991 for most Indians, but for Muslims, it has actually been declining: e.g. Muslim men have fewer job opportunities and they are hired at a far lower rate for government jobs.”

“Caste based discrimination in jobs is one of the reasons for under-representation of Dalits and Muslims in the corporate sector.” Is diversity reporting the answer to bring inclusivity in India’s private sector?

Artificial Intelligence and its impact on jobs

AI has the potential to revolutionize the world and upend the job market in its wake. We know that AI will lead to some job losses, but will also create new jobs. The question is “how many?”

McKinsey Global Institute estimates 57 millions jobs will be lost due to automation in India. “However 114 million new jobs will be created due to the resulting higher incomes and productivity hikes. But, that only holds if India is able to up-skill workers at a drastic pace.”

“The future of work will need highly skilled human employees to do what AI and robots cannot”. As per a World Bank report, the proportion of jobs threatened by automation in India is 69% year-on-year.

India Inc. is turning to automation faster that its global peers: machines will account for 30% of work over the next three years, up from 14% right now. At the same time 138 million new workers will be added to the workforce over the next decade.

To nurture jobs, the PM’s Make In India initiative needs investments in technology, especially AI and in skill creation.

The future may already be here: AI powered computers are running farms in the US.

The politics of jobs

With the elections just a few months away, the issue of jobs is on everyone’s mind. Ministers laying foundation stones for fancy convention centres talk about jobs! And the opposition Indian National Congress Party will focus on two issues for the 2019 elections: jobs and farmers. The BJP’s own Varun Gandhi goaded the government to “Get on the job of making jobs” in a recent op-ed.

There is a lot of discontent and disillusionment in India over the lack of jobs. According to CMIE, “The government’s failure to create or facilitate the creation of jobs and the perception of this failure amongst will have repercussions in electoral results in 2019. Job seekers are also voters.”

Vrishti Beniwal and Bibhudatta Pradhan in Bloomberg deliberate over the impact of youth unemployment on the elections. “India’s Gen Z, a major swing constituency in the 2019 general elections, has a simple message for politicians: more jobs, please. As many as 130 million first-time voters will go to the polls due by next May. A key issue for this electorate is Prime Minister Narendra Modi’s failure to deliver on his promise of creating 10 million jobs a year.”

Job seekers are acutely aware of the dry trickle of government jobs, and they’ve turned their focus on reservations in the private sector. To pacify them, the Prime Minister’s Office has held its first ever meeting to discuss affirmative action in the private sector. It’s a regressive idea which will lead to entrepreneurs focusing more on automation and thereby create fewer jobs.

Even states are feeling the pressure to create jobs. Tripura, especially in the tribal area, is battling an unemployment and food crisis. The Gujarat Chief Minister wants to bring about a law to force industries to provide 80% of jobs to Gujaratis. A terrible move, it just shows the desperation regarding the employment situation.

India’s largest state, Uttar Pradesh saw its  Gross State Domestic Product (GSDP) decline to 6.4% in the 2017-18 financial year, down from  8.8% in 2015-16. According to the state government, “there were 2.14 million unemployed persons in the state as of June, which was higher compared with the previous year. The 2.14-million figure only includes the job seekers registered at the government’s employment portal. Officials estimate that around 10 million people are currently unemployed in Uttar Pradesh.”

New data and reports

Azim Premji University’s Centre for Sustainable Employment came out with a report on the State of Working India. Many links in today’s jobscape refer to it. Here’s a tl;dr article in LiveMint that encapsulates the main points. However, as Nitin Pai points out, “the answer to slow rate of job creation is not an employment guarantee scheme.”

A key finding in the report is that “after several years of staying around 2-3%, India’s unemployment rate reached 5% in 2015, with youth unemployment reaching 16%.”

Jobs are not the only problem. A large number of employed Indians are not getting a living wage. On average, 82% of male and 92% of female workers currently earn less than Rs. 10,000 ($137) a month. Manufacturing sector pays the most, 5.2% more than the overall median gross salary of India, according to the Monster Salary Index (MSI)

But issues remain with jobs data in India

Do we know how many jobs are created or lost in the Indian economy? Aparna Mathur bemoans the data issues that hinder our understanding.  “India’s employment data sources suffer from inconsistent coverage, lack of representativeness, outdated sample frames, time lags in data availability, infrequent data collection, and lack of comparability across years.”

The government has also been sitting on data. The Labour Bureau of the Ministry of Labour and Employment publishes a Quarterly Employment Survey (QES) and the Annual Employment-Unemployment Survey (EUS). The last QES was published in March 2018 and covered the employment scenario as on October 1st 2017. The EUS for 2016-17 has not yet been released, 18 months after the financial year ended, although the report for 2015-16 was published as early as September 2016.

Where there is data, there is opacity. “Nearly a fourth of the net payroll in the formal sector comprises people who are switching between jobs, the latest data released by the Employees’ Provident Fund Organisation (EPFO) showed. These are not new jobs created.” Somesh Jha has a detailed twitter thread discussing this phenomenon.

Mint reports: “The Union government plans to link details of about 100 million employees with Aadhaar to create a more reliable record of jobs growth and reduce duplication in payroll data.” With all the issues regarding Aadhaar, this may or may not be a good move.

And lastly, if we want “India’s share of the global economy to bounce back to 25%”, our archaic labour laws, created in the license permit raj need to be reformed. “We need laws that are “employment friendly” rather than employee or employer friendly.”

For more on India’s jobs crisis, follow the 20 Million Jobs project on Twitter at @20Mjobs.

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About the author

Yazad Jal

Yazad Jal is Fellow, Economic Policy at the Takshashila Institution.
Previously he worked for McKinsey and IBM in the United States and
before that in the non-profit sector in India, last serving as CEO of
Praja Foundation in Mumbai. Yazad has an MBA from Yale University and
a BA (Econ) from St. Xavier’s College, Mumbai University.