- May 21, 2019
- Posted by: Mahika Bhardwaj
- Category: Featured, INDIAN ECONOMY, Latest Work, UNEMPLOYMENT, WORKFORCE DEVELOPMENT
“Employment creation will be one of our greatest challenges for the next decade”. This irreproachable statement by Jayant Sinha accurately captures the current scenario of the job market in India. Fueled by the factors of demonetization, implementation of GST, slowing global growth and political influence, it remains a rampant issue in this emerging market. This era is the era of jobless growth for the Indian economy, given that the economy is growing at a fast pace in the face of rising unemployment conditions.
Under the Modi government, the economy has been able to show signs of higher economic growth in the face of rising unemployment, consistent with Okun’s Law which explains the negative relationship between these two economic variables. Thus, we may infer that the government has failed to deliver in terms of employment generation.
On the other hand, Rahul Gandhi promises the provision of a minimum income through NYAY to tackle issues of poverty for the rural population. However, when looked at it technically, this scheme may not be financially viable for India in the current scenario. To reach the target population, it is imperative that the data on income is reliable on each household. The government can initiate this kind of survey; however, recent mishaps with NSSO data on wrongly calculating unemployment rates, may misguide and thus delay in providing data on those requiring schemes such as NYAY. To provide a minimum income to those people, the government needs a certain amount of funding to implement the scheme, and this would require them to impose a certain degree of tax to accumulate sufficient government revenue. This scheme, if implemented, would increase unemployment as a rise in wages would lead to laying off workers.
The stated that the size of employment in the economy is determined by effective demand, which in turn is determined by household income. Once the household income increases, inflation increases as a result of increased disposable income. It also stated that total income and total employment are directly proportional and thus if the government focuses on employment generation rather than increase in disposable income, the government may be able to tackle unemployment and inflation indirectly, to some degree without the imposition of tax.
Amartya Sen, in an article, explained how the UPA marginally addressed essential issues affecting the country however the NDA failed to address the critical issues affecting the country as a result of manipulation of the data and negligence. Regardless of the party’s guarantees and address of the issue at hand, unemployment remains the epitome of the problems faced by the citizens, and it is essential to address this problem before it becomes damaging to the underprivileged.
The problem
Unemployment was first addressed in the 5th Five Year plan during the years 1974-79. This was addressed because the unemployment rate in the country reached as high as 5.18% which was the result of the aftermath of the Indo-Pak war and the global oil shocks which affected the markets and hence the oil imports. It was emphasized in the 9th Five Year plan between 1997-2002 in the form of productive employment and in the 11th Five Year plan in the way of funds (7 crores) directed towards generating employment. The 11th Five Year plan focused on generating employment as the GDP growth rate peaked at 7.8% in 2009 despite the Global Financial Crisis. Unemployment, as of March 2019, has reached a rate of 6.1%.
As data shows, India is a country with a vast majority of individuals below the age of 35. It results in a condition where a large chunk of the population in the age group of 18-35, to be unemployed as new entrants to the labour market. This was referred to as a “demographic disaster” by Arup Mitra and Sher Verick in the working paper published by ILO, “Youth employment and unemployment: An Indian perspective”. The paper presented displayed various sectors such as Rural-Male, Rural-Female, Urban male and Urban Female as separate categories. It also shows data on Youth Worker Population Ratio and how this ratio decreased for 2009-10 for rural female workers and was consistent for males in the age group 25-29 which might have been the result of the patriarchal system.
Youth unemployment rate currently stands at 12.1%. Among rural females, self-employment was found to be higher, and among urban females, self-employment was prevalent if found that the individual has opted out from pursuing further education whereas urban-male dropouts were found to work for casual wage employment. In terms of sector-wise classification, the majority rural population profoundly worked for the primary sector, and a vast majority of the urban population worked for the tertiary sector. Notably, the urban female population showed the highest rate of unemployment. This may persist as a result of gender inequality. This continues not only in terms of unemployment but also in terms of earnings. This gap tends to reduce among agricultural workers and regular workers. This gap, however, has successfully reduced in the job market over the years, however, persists. It was also shown in the LB-EUS 2015 data that unemployment was higher among those who are graduates and postgraduates than those who were illiterate or barely literate as the latter picked menial jobs from time to time.
The thirst for government jobs as well today is highly prevalent; however, the availability of such jobs remains scarce. The private sector too fails to provide enough jobs for the youth as a result of the skill gap in that age group. It has been observed that the number of youths being educated has increased over the years; however, the proportion of the youth being absorbed into the job market is comparatively less and is decreasing.
Sources and consequences of unemployment
Unemployment in India stems from a variety of sources ranging from caste system to insufficient economic planning. It is caused by economic factors such as inclination toward government jobs, demographic trends, technology trends, globalization, inflation, fiscal policy, education, skill gap, government hiring trends and policies regarding full employment; Political factors such as demonetization and implementation of GST and labor laws; Social factors such as caste system and gender inequality.
The problem of unemployment results in increased crimes, poverty, loss of output, loss of skill, increase in budget deficits, increase in funds allocated toward reducing unemployment, reduction in profits, increased periods of unemployment, reduction in income and reduction in government revenue.
Possible remedies
One way of tackling unemployment in a country like India is to use feasible and realistic measures that produce effective results. The government has implemented schemes such as MGNREGA and PMRY however, the funds allocated toward these government schemes have been insufficient in delivering the expected results. It is imperative to address skill enhancement in the face of technological advancements as millions of jobs relating to manual labour may be redundant shortly. As the majority of the youth remain unemployed, schemes must be initiated by the government to improve the skill of graduates before entering the job market as they may be effectively absorbed as a result of bridging the skill gap. Government schemes directed towards employment of women in the workforce is necessary as a large proportion of women remain unemployed in urban areas. As a result of this need, the NSDC (National Skill Development Corporation) successfully coordinated with Amazon and Google to promote initiatives for meeting the requirement of reaching higher employment rates by utilizing the higher proportion of youth in the country. Scalable projects brought forth by the organization focused upon improving the role of women in the workforce by collaborating with the Ministry of Women and Child Development.
For the rural population, remedies such as MGNREGA that ensures 100 days employment along with schemes that promote maximum utilization of resources would be helpful to combat this problem. The unemployment problem would also be reduced with a lesser population, and thus information, education and practice of family planning measures are necessary for the community.
Government agencies, as well as private agencies, must be promoted to facilitate those that are actively seeking jobs in different sectors. It increases awareness about the jobs in the market, and more people may be able to apply for various jobs, thus leading to improved labour productivity as the candidate’s skills are matched to the appropriate job position.
Concluding remark
Unemployment in the economy continues to be a significant barrier as far as development is concerned. Remedial measures initiated by the government is of the essence in terms of youth employment as a vast majority of the population constitutes the young adults. There are 15 million new voters in the 19th Lok Sabha election, and the new government will play a crucial role in fixing this problem of unemployment that they might face in the near future. Their votes will form the crux of the future of jobs as they anticipate their entry in the job market. Therefore, it is imperative that the government takes actions in this regard rather than throwing money in the face of unemployment. It is essential for the government to focus on the problem rather than toy with the numbers to conceal the stark reality.
References
Arup Mitra, S. V. (2013). Youth employment and unemployment: An Indian Perspective. International Labor Organization.
Sinha, P., (2013). Combating Youth Unemployment in India. Friedrich Ebert Stiftung.
Krishna, R., (1973). Presidential Address: Unemployment in India. Indian Journal of Agricultural Economics, 28(902-2018-2184).
