As 2019 LS poll approaches, job creation takes centre stage

Unlike other state elections, the usual  Bijli, Sadak, Paani  were not the key issues raised in the recent Gujarat election as these issues no longer trouble Gujarat. However, the topic of unemployment was often mentioned by the opposition party, even though the state has registered the lowest unemployment rate in the country. Going forward, job creation will be the big challenge for governments and one of the main issues in the upcoming general election in 2019. It is estimated that about a million Indians reach employment age every month. It is a daunting task for any government to meet the aspirations of this young workforce.

According to the Asia-Pacific Human Development Report released last year, the Indian economy was able to absorb less than half of the new entrants into the labour market between 1991 and 2013 -- the working age population increased by 300 million, while the economy could employ only 140 million in this period.

The scenario has not improved under the Modi government. According to the government's own Labour Bureau data, job creation has been at dismal levels. In the December quarter of 2015, no new jobs were created but there was actually a decline of 20,000 jobs across eight labour-intensive sectors. In the fully calendar year 2015, job creation across those eight sectors was at its slowest pace since 2009.

The Indian economy has been one of the fastest growing major economies in the world, but this growth has not been able to fire up the job market. This has led some to term it as 'jobless growth'. The rise of demands for caste-based job reservations in several states is just a symptom of the disease. There is a need to generate not just any jobs, but well-paid ones with good work environments.    

However, there are several problems with the Labour Bureau's Quarterly Employment Survey (QES). The QES report for September 2016 states that a majority of workers in the sample are regular (more than 80%) and full-time (96%) –- which goes against conventional wisdom. A more reliable NSSO (National Sample Survey Office) survey of 2011-12 shows that almost 86% of workers in the private sector and 50% in the public sector were in units that could be designated as unorganised sectors. This underlines the fact that the QES sample is too small to be a true representative of the Indian workforce. Moreover, credibility of QES is questioned as the reports are based on unverified records of firms, in contrast to NSSO data which is based on household survey.  

With more than 80% of the workforce in the informal sector, it is extremely difficult to generate credible job  data by sector. The unorganised sector was the worst hit during demonetisation in the December quarter of 2016. However, this impact does not get captured in government data as the unorganised sector is hard to map.

India lacks reliable high-frequency employment statistics. At present, employment generation is estimated through multiple surveys such as the NSSO survey, annual labour force survey, population census, annual survey of industries, quarterly employment survey, and MSME census. Most of these data are announced with considerable time-lag. That lack of reliable high-frequency employment data is a major stumbling block for policymaking. The government has realised the need for comprehensive real-time employment data and is strengthening both the Labour Bureau and NSSO by overhauling the data collection process.  

A number of flagship schemes, such as 'Make in India', 'Start-up India', 'Stand-up India', 'Skill-India' and 'Digital India', have been launched to spur labour demand and job creation.

The government hopes to create 100 million new jobs by 2022 with its 'Make in India' programme through the manufacturing sector. The idea is to emulate China's export-led growth. However, the world today is very different from the pre-financial crisis times. Global growth is tepid. Governments in developed economies are facing a backlash against globalisation and are trying to re-shore some manufacturing activities. According to Richard Baldwin, automation in the manufacturing sector will replace all low-skill jobs. Many automobile plants in Gurugram have also moved towards automation. However, labour is still cheap in India and it may take another 10 -15 years for robots to completely replace labourers in factories. But it will still not be easy to generate as many jobs through manufacturing as China did over the past few decades.

Finding opportunities

India's large infrastructure gaps provide opportunities for the government to increase public investment in roads, railways, power, telecom, low-cost housing, along with other social sectors like healthcare and education. This will generate work opportunities for millions of workers at much higher wages, compared to average farm workers. Investment in tourism and hospitality sectors will have a multiplier effect.

According to Nasscom, India's 'Start-Up' scheme is gaining momentum. The success of e-commerce start-ups has caught the imagination of young Indians. A lot still needs to be done to create the ecosystem to nurture entrepreneurs, including access to institutional finance.

The Skill India initiative is a step in the right direction. There is a huge mismatch between jobs available and the quality of education imparted. Many existing vocational training programmes are outdated, with no demand for them. Vocation training schools require a complete revamp with adequate infrastructure and suitably trained faculty. There is a need to first identify the sectors where there is a need for workers and then design accordingly the vocational training programmes to increase employability.

Despite various schemes and sound policies, the government may need time to achieve some traction on the ground. Private sector investment is tepid, while the informal sector, the largest employer in the country, is just reviving after demonetisation. The government's dream of 'New India' by 2022 -- with the promises of pucca houses, doubling of farm income, access to electricity, healthcare, sanitation and education -- will remain just a dream without increased expenditure on infrastructure and job creation.