In Gujarat, growth didn't create jobs

Providing productive jobs with decent earnings to all has to be a major goal of any development model. Productive employment not only enables households to access necessary goods and services, it also gives them dignity and self-esteem. Unfortunately, Gujarat has done poorly in this aspect, despite the high rate of growth of its economy.

Gujarat's economy has taken a big jump in its growth rate since 2002-03. However, it viewed productive employment as a by-product of growth, and assumed that growth would create adeq uate jobs for all. The ambition of the state government has been to make Gujarat the fastest growing regional economy in Asia. It has hence focused on improving governance and infrastructure (both for the corporate sector) and has offered unprecedented subsidies and incentives to Indian and foreign investors.

In order to make Gujarat the most attractive centre for corporate investment, the government also invited highly capital intensive state-of-the-art technologies. Though these steps made Gujarat a rapidly growing state, it changed the political economy radically in favour of the corporate sector, left limited funds for the social sector and did not provide a level playing field to medium and small industries, which so far enjoyed an important place in the economy.

Due to the limited funds spent on education (3-3.75% of GSDP as against the required 6-8%), and limited efforts made, the level and quality of education remain low, which did not allow the masses to take part in the ongoing growth process.

Just 6-7% of workers, therefore, got jobs as core workers (regular and permanent workers) and the rest are employed as contract or casual workers. The economy of Gujarat has become a highly dualistic economy with a small high-tech, high-income sector and a large informal and traditional sector.

Gujarat has always had the highest workforce participation rate, after Haryana (for example, 76.4% for male workers above 15 years in 2015-16 against 72% nationally). The argument is frequently made that Gujarat has provided employment to a large number of people. However, the quality of employment was always poor, resulting in a high incidence of multi-dimensional poverty (42% in 2014) compared to other states.

Gujarat's share of informal workers who earn low wages and have poor social security is about 94%. It is the only state to record a decline in the share of formal secured employment over the past decade. Also, the wage rates of casual and regular, rural and urban workers have been almost at the bottom of the 20 major states in India.

Gujarat also recorded the lowest increase in wage rates among the 20 major states in India. For example, the wage rate of regular unskilled workers in Gujarat is Rs 306 (Rs 313 for males and Rs 253 for females) as against Rs 400 nationally (males Rs 412, females Rs 310).

No skill-intensive jobs

Gujarat is experiencing a severe shortage of productive jobs with decent work for the youth. This is reflected in the rising number of job-seekers among arts, commerce and engineering graduates in the past 5-7 years. The highly capital intensive and skill-intensive jobs in the modern sector (productive capital per worker in the factory sector rose from Rs 11 lakh in 2000-01 to Rs 40 lakh in 2015) are not available, except for low-paid casual and contract workers. Also, the recent slowdown in global economy has affected employment adversely as Gujarat is a highly export-oriented economy.

Again, severe depletion and depreciation of natural resources have affected adversely the livelihoods of almost 30-40% of the workforce that depends on natural resources for their livelihoods (farming, animal husbandry, dairying, fishery, horticulture, etc). Low minimum support price, poor crop insurance and low investments in agriculture have reduced productive employment in these sectors and caused large-scale distress migration to prosperous areas.

Productive employment has also been affected by steps like demonetisation and GST. A number of people, small businesses and farmers were affected by a loss of livelihood, closure of business and increasing debt. Many of the employment-generating programmes, including MGNREGA, have not made much of an impact at the macro level. And some of the government programmes seem to have in-built constraints in producing sustainable development.

The Micro, Small & Medium Enterprises sector, which is labour-intensive and can be accessible to many, has suffered as incentives have gone to premium and mega industries. There is a need to support this neglected sector, which was doing well earlier. The government can give support with infrastructure, power, technical assistance, credit and special incentives.

Most labour rights, including core labour standards, are blatantly violated in the state today, largely due to poor commitment to labour. It is a shame that a rich state like Gujarat has 35-40% working poor, living miserably. Strengthening the Labour Department will not only create employment but also will have a positive multiplier effect on the state's economy.

(The writer is Director and Professor of Economics, Centre For Development Alternatives, Ahmedabad)

(The Billion Press)

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