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  • No clear picture on unemployment in India

    Posted On February 10, 2019

    By Karan Thapar

    I’m not surprised the jobs and unemployment situation has hit the headlines two months before the elections. After all, if it’s as serious as the opposition and analysts claim it will have a determining influence on the elections. Unfortunately, it’s also true we don’t have a clear picture. Instead what we have are two angry and polar-opposite viewpoints.

    A leaked National Sample Survey Office report says in 2017-18 the unemployment rate was 6.1% and the highest in 45 years. The Centre for Monitoring the Indian Economy, relying on its own surveys, says that by December 2018 the unemployment rate had shot up to 7.4%. If this data is correct the situation is both worrying and steadily getting worse. This also explains why when the railways last year advertised 89,400 jobs over 23 million people applied. So do we have a real and growing hunger for jobs?

    The government, of course, dismisses this analysis. If the situation is so bad, Arun Jaitley asks, how come we haven’t seen widespread social unrest? Indeed, if there’s a catastrophic collapse of jobs, how come till December 2018 the BJP won an unprecedented 21 states including a sweeping victory in UP?

    The government also claims that an economy cannot be growing at 7 and 8% – whilst investment is declining and exports are stagnating – without creating jobs unless there’s a miraculous explosion in productivity which clearly hasn’t happened. So, to buttress the belief that enough jobs have been created, the Finance Minister points towards a 2 crore increase in EPFO membership and the fact 15.56 lakh people have received Mudra loans totalling 7.23 lakh crores which have converted job seekers into job creators. The government also argues that the concept of employment has altered. Uber and Ola are two examples of the new types of job. So too are Amazon and Flipkart delivery boys.

    Unfortunately, significant parts of the government’s arguement doesn’t hold water. EPFO membership reflects formalization of jobs not the creation of new ones whilst 90% of Mudra loans are of sums under Rs. 50,000/- and, therefore, can at best facilitate self-employment. They can’t create many jobs. And whilst it’s true we haven’t seen widespread social unrest the agitation by the Marathas, Jats, Kapus and Patidars for reservations is a reflection of the fact they cannot get jobs. Surely one reason is that those jobs don’t exist?

    Data suggests that the worst unemployment is faced by India’s youth. The Centre for Sustainable Employment at Azim Premji University says it stood at 16% in 2018. The leaked NSSO report claims the unemployment rate for young rural males jumped over three times between 2011-12 and 2017-18 whilst that for young rural females increased nearly three times. These are truly astonishing findings and would suggest a huge measure of youth anger. But is that so?

    Step back a bit and you’ll discover another truth. The unemployment rate has been steadily rising since 2011-12. At the same time the labour force participation rate has been steadily falling since 2004-05. So the jobs and employment problem is a concern that stretches back over a long time. It was an issue even under the UPA. It didn’t begin with Narendra Modi although it seems to have exacerbated. But is that too academic a point in the present highly-charged polemical atmosphere? I would assume so.

    So what’s my conclusion? I can see this debate becoming increasingly feverish and contested as we near voting day. Perhaps it will only be decided by the results?

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