A relook needed at job generation

Since 2005, only 1.5 crore jobs have been created against the need for employment for 12 crore people.

Economist Arvind Panagariya has, in his opening piece on the newly launched website of the NITI Aayog, said: “Unless workers have the opportunity to migrate to better paid jobs in industry and services sector, they will be unable to fully share in the prosperity experienced by a fast growing economy.” This is exactly what the World Bank has been telling India to do for over two decades now.  

The World Bank in 1996 had directed India to move 400 million people out of rural areas to urban spaces in the next 20 years, which meant by 2015. But what remains unexplained is that despite racing ahead in economic growth, surpassing even China’s slowing economy, India is unable to keep pace when it comes to creating jobs. A survey by the Labour Bureau shows that job growth has declined in the third quarter of 2014-15.

During the quarter of October-December 2014, only 1.17 lakh jobs were created in eight key sectors of the economy. A careful perusal shows that job growth had been steadily on the decline during the first three quarters of the year. From 1.82 lakh jobs created in April-June, it came down to 1.58 lakh jobs in July-September; and further slid to 1.17 lakh jobs in October-December 2014.

The dismally low job growth is being witnessed at a time when economic growth has been revised upwards for the 2014-15 fiscal. The government has pegged economic growth for 2014-15 fiscal at 7.4 per cent. The declining rate of job creation at a time when the economic growth has been on an upswing defies the academic assumption that higher the growth more will be the employment generation.

Recall the period when Manmohan Singh became the Prime Minister in 2004. Between 2004 and 2009, India’s GDP grew at a stupendous rate of over 8 per cent, and clocked 9.3 per cent at its best. Going by the general economic prescription, the high growth rate should have created a large number of jobs.

That, however, didn’t happen. On the contrary, India witnessed a jobless growth when its GDP was galloping ahead. A Planning Commission study shows that 14 crore people left agriculture in the period 2005-09. Those quitting agriculture are generally believed to be entering the manufacturing sector. But even in the manufacturing sector, 5.3 crore jobs were lost.

The question that crops up is: where did the 14-crore who quit agriculture, and the 5.3-crore who were shunted out of the manufacturing sector, finally go to? The only plausible answer is that they joined the ever-growing army of daily wage workers in the cities or became landless farm workers. 

In the 10-year period, between 2004-05 and 2014-15, industry has been given tax concessions to the tune of Rs 42 lakh crore. One of the objectives behind this massive subsidy for the industrial sector is that it will help expand manufacturing, industrial production, and exports thereby creating more jobs. But in the last 10 years, only 1.5 crore jobs have been created against the need for creating employment opportunities for at least 12 crore people. This only shows that the expectation that industry alone will provide jobs has not proved to be correct.

Migration of farmers

More recently, CRISIL, a global analytical company showed in a study that since 2007 over 3.7 crore Indian farmers had abandoned agriculture and migrated to the cities. But in the last two years – between 2012 and 2014 – when economic growth had remained sluggish, an estimated 1.5 crore have returned back to the villages in the absence of job opportunities. This establishes the argument that more and more people are joining the daily wage worker class, whether on the farm or in the cities.

By providing greater workforce with jobs that are akin to daily wagers (dehari mazdoor), what becomes obvious is that the fruits of economic growth are simply not benefitting the common man. It is time to rethink and revisit the economic growth model to see where an economically-secure employment environment can be created. Looking around, I am baffled to find that millions of jobs in the formal sector are lying vacant, and in fact, such vacancies are growing every month. The government as well as public sector institutions are being starved to death in the process.

Appointments in place of those who are retiring are not being filled. Almost all universities and government colleges have anywhere between 40 to 60 per cent of jobs lying vacant. In schools, both primary and secondary, over 5 lakh jobs, as per a conservative estimate, are lying vacant. Add to this the jobs required in hospitals, police department, postal services, and other government institutions, and several million employment vacancies exist.

In addition, moving people out of agriculture into the cities to be employed as cheap daily wage workers is not what employment generation stands for. The challenge should be to make people in agriculture gainfully employed rather than uprooting them from there only to serve the needs of the infrastructure industry which needs cheap manual workforce. If this is what Arvind Panagariya is proposing, then there is an urgent need to take a re-look at what is meant by the employment generation.