The Jobscape

Hide the Data

This is the tenth edition of The Jobscape, our weekly round-up of news and opinion on the state of employment and job creation in India. In this edition, we look at the official job numbers from the National Sample Survey Office (NSSO), the interim budget, universal basic income and lessons from China.

Explosive statistics from the NSSO data

In a series of blistering articles, Somesh Jha of Business Standard exposes why the government wanted to hide unemployment data. The official (NSSO) unemployment rate is at a 45-year high and some sections of the population face very high rates of unemployment: urban females have an unemployment rate of 27.2% The overall labour force participation rate (LFPR) declined from 43% in 2004-05 to 36.9% in 2017-18. Worse, the female LFPR crashed from 29.4% in 2004-05 to a shocking 17.5% in 2017-18. Just for comparison, in Saudi Arabia, that bastion of women’s rights, female LFPR was 22% in 2017. This trend of rising unemployment is across all religions and social groups, with women and the scheduled castes being worst off.

When the government refused to release the data officially, the acting chairman, PC Mohanan and another member of the National Statistical Commission resigned. Mohanan said he had no regrets and was standing up for the integrity of the NSSO. He later clarified that the jobs report was not a draft, it was finalised by him before resigning.

The (interim) union budget and jobs

The 2019-20 interim budget seems to skip the jobs issue. Despite all the news about the highest unemployment rate since 1973, Interim Finance Minister Piyush Goyal did not recommend any new scheme or plan to create employment. The minister mentioned jobs barely five times during his speech. Additionally, the budget allocation for the Mahatma Gandhi National Rural Employment Generation Act (MGNREGA) was cut to Rs. 60,000 crore, which is less that the revised estimate of Rs 61,084 crores for 2018-19. Self-employment schemes like MUDRA, Stand Up India and Start Up India fared worse, with only Rs. 515 crore allocated to them. And the government refuses to answer how many jobs have been created under MUDRA.

Six leading Indian economists agree that the budget has done very little, if anything, to address the jobs crisis. (As an aside, getting two economists to agree on anything is big. Getting six to agree is positively Herculean!)

Unhappiness over the budget is widespread with it being viewed as a populist political exercise, largely giving sops but doing nothing to fix structural issues like poverty and unemployment. Underemployment may be a bigger problem than just unemployment and the budget completely ignores it. Students are protesting the lack of employment and are marching to Delhi to protest the budget’s silence on jobs, education and minimum wages.

Job creation news

So what if the economy hasn’t generated jobs? The government has done its bit, by creating 379,000 jobs from 2017-2019 Continuing in that vein, Indian Railways may announce openings for up to 100,000 new jobs.

The central government approved a proposal to set up 12,000 MW of solar power projects. These are expected to create 60,000 jobs in the short term when the projects are being set up. For operations and maintenance, another 18,000 jobs will be created. Additionally, there will be 120,000 employment opportunities for locals in manufacturing solar cells and modules. Defence corridors in Tamil Nadu and Uttar Pradesh should generate 350,000 jobs. Investments worth Rs. 32 Billion have already been made for the Tamil Nadu corridor.

India’s digital revolution has been responsible for the creation of over a million jobs, from ride-share and food delivery aggregators to manufacturing of mobile phones. Digital innovation in the “last mile” could create as many as 30 million jobs, according to the chairman of Tata Sons.

Universal basic income

For the poor, the lack of jobs has been excruciatingly painful. Is a Universal Basic Income (UBI) a feasible solution? Rahul Gandhi and the Congress party think so: they’ve proposed a Minimum Income Guarantee Scheme for the poor if they come back to power after the general elections. The government has announced a scheme wherein they will give Rs. 6,000 in cash per year to small farmers.

Finland’s experiment with a kind-of Universal Basic Income has had mixed results, improving the personal well-being of those who received the income, but also making them lazier.

Discrimination

If you’re from a lower caste, the system works against you in various ways. For example, India’s convoluted labour laws have created a large number of contract workers, who are paid less than permanent workers, work only a part of the year and come predominantly from lower castes.

Women can now work in underground mines in India. Publicly owned Singareni Collieries Company Limited (SCCL) will be the first to open jobs like pump operator, conveyor operator, coal cutter, electrical fitter, chemist and engineer to women.

News from the states

The Gujarat government is going gung-ho on employment, planning to organise 33 job fairs and hoping to create 60,000 jobs. The state government is also creating a congenial environment for the intellectually challenged, helping them get certified for vocational training and allied jobs.

Madhya Pradesh’s new government has passed a new industrial policy wherein private companies who seek incentive and advantages from the state must provide 70% jobs to local youth. These are reservations with a new name, and it remains to be seen if it promotes investments and creates jobs in the state. But are these reservations for locals just on paper? It seems like the implementation faces roadblocks from industry as well as an absence of enforcement mechanisms on the part of state governments.

In Uttarakhand, villages are being hollowed out, with 50% of villagers leaving in search of better jobs. And youth constitute the highest number of those migrating. According to a report by the state’s Rural Development and Migration Commission, 42% of those migrating are in the age group 26-35.

Himachal Pradesh gets its first mega food park in Una, set up on 52 acres of land at a cost of Rs. 1 billion. An additional investment of about Rs. 2.5 billion in 25-30 food processing units in the park will generate a turnover of about Rs. 5 billion annually, providing employment to 5,000 persons and benefiting about 25,000 farmers.

Tamil Nadu’s Chief Minister, E. K. Palaniswami inaugurated the Codissia Industrial Parks at Mopperipalayam and Kallapalayam. The parks are expected to boost local small industry and generate around 30,000 jobs in the area. Staying in Tamil Nadu, the lure of a government job, however menial is still strong. There were around 4,600 applicants, many of them with advanced degrees, for 14 sweeper jobs.

Work has started on the Machilipatnam port project in Andhra Pradesh, which will create 80,000 direct and indirect jobs. Kia Motors plans to create 10,000 jobs in the state and has started a trial production facility in Anantpur.

Jobs and politics

Two major issues in the recent assembly elections in MP, Rajasthan and Chhattisgarh were jobs and farm distress. Devangshu Datta shows that they’re connected. Farm distress will only be solved with more jobs in the non-farm sector.

The next general election is barely a few months away and unemployment is becoming the major issue for the polls.

The youth of the country want jobs. Correction—they want government jobs and they’re willing to boycott the 2019 election if they don’t get what they want. It’s sad, because they’re missing out on other opportunities, and sadder because those opportunities may be shrinking.

The Prime Minster is being exhorted to own the jobs crisis like Indira Gandhi’s government did in 1974 when it stated (in the Economic Survey of 1973-74) “There is no other aspect of our development experience which is a matter of greater concern than the failure to generate sufficient employment opportunities.”

However, in Parliament, Mr. Modi was in a combative mood, attacking the Congress party and claiming that there was no jobs crisis in India. When confronted with the figures, his excuse was to blame the system of collecting data on job numbers. The PM’s economic advisory council chief, Bibek Debroy stated that the government will conduct a new survey on employment to show that substantial number of jobs have been created.

Jobs policy discussion and debates

Perhaps the strongest number that exemplifies the jobs crisis is that of decreasing manufacturing jobs. There were 14 million fewer manufacturing jobs in 2017-18 than in 2011-12. And numbers of those not in education, employment or training (NEET) between the ages of 15 and 29 rose from 70 million in 2004-5 to 115 million in 2017-18, a 64% increase!

For an overall view, Mahesh Vyas surveys India’s unemployment numbers.

From the government, Minister Piyush Goyal opines that the job crisis has lessened and that many jobs like the 60 million retail traders are simply not being counted. The Economic Affairs Secretary in the Government of India thinks the real shortage is that of capital, not jobs.

Ajay Chhibber of FICCI looks at a trilemma: India’s competitiveness, employment generation and sharing our prosperity with the goal of increasing happiness.

Enrolment in Employees Provident Fund (EPF) cannot be considered evidence of new job creation as it could simply be the formalization of an already existing informal job. And informal jobs may be increasing, not decreasing, even with the government’s push toward formalization.

Jobless growth may not be our only problem – it seems like we also have profitless growth with India Inc’s profits as a share of GDP at 2.8% — a 15 year low.

The RBI’s consumer confidence survey has shown an uptick recently – and no one knows why.

Is it a false hope or a harbinger of better times?

Lessons from China

China’s Global Times opines that Chinese investment in India’s traditional labour intensive industry will help create jobs in India and New Delhi should not restrict Chinese investments on political grounds.

It doesn’t matter if Rahul Gandhi is right or wrong. Official Chinese figures show that China creates nearly 14 million jobs a year. And India is creating far fewer jobs.

And if you want a high paying job, it’s better to learn Mandarin instead of the old favourites: French and German.

Other stories

Liberalizing rules and regulations help create jobs. One small rule change led to a 42% increase in shipping jobs for Indian seafarers.

Non-resident Indians remit nearly $80 billion a year, more than any other country, including China. However, Indian migrant workers on the lower end of the scale face a lot of problems, especially when they return to India.

The supreme court has refused to stay the government’s 10% reservation for economically backward classes. It has agreed, however, to examine the validity of the law.

As part of his global trade war, President Trump may rescind the zero tariff that India enjoys on $5.6 billion worth of exports to the US. Not good news for Indian manufacturers and this may lead to job losses.

For more on India’s jobs crisis, follow our twitter handle @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.