Perceiving jobless growth, its impact

With greater technological changes, while more goods are being produced, labour absorption is lessening.

India is afflicted with the problem of jobless growth for many years now. Even though there has been considerable growth over several five year plan decades, jobs are not growing in numbers and kind as expected.

The labour force is roughly 40% of the 130 crore population and thus amounts to about 52 crore. As population increases, this number increases and additional efforts are needed to generate employment and incomes — one crore and more additional jobs are required to be created every year.

Out of this 52 crore, hardly 10% or less constitute the organised sector or the good jobs sector, entailing many kinds of worker benefits, security of incomes and tenure, health, old age, insurance, provident fund and pension facilities.

The rest of the work force, numbering nearly 47-48 crore are facing many kinds of vulnerabilities, low incomes, frequent loss of employment and getting forced into entirely new places and unfamiliar working conditions etc. These unorganised sector employees have to be the focus in the country’s thinking as well as action.

Despite low growth of empl­oyment, according to the International Labour Organisation, the proportion of unemployed in India is just about 3.4% in 2017, an increase of 0.1% over that of last year. This is not alar-ming when compared with the world unemployment of 5.8% and that of the US and Europe at 5.1% and 9.1% respectively. But this is poor consolation and the problems are immense.

Production of goods and services entails two components, labour and capital broadly and their sub varieties. With increasing technological changes, more and more goods and services of wider varieties are being produced and labour absorption is lessening.

Complementarily, eagerness for and availability of national and international capital are increasing manifold; savings in the economy are increasing even as incomes are. Older methods or technologies are losing vogue giving rise to newer methods, called ‘creative destruction’; typewriters have gone and computers and robots have come, mud pitchers have vanished being replaced by more durable plastic pitchers.

With emphasis on new technology and capital use, labour absorption is getting less and less proportionately. Moreover, labourers are generally found wanting in training and abilities to use new technology, and therefore are gradually a less preferred component of production.

For every unit increase in production, less and less labour is getting absorbed, a state of low incremental labour-produce ratio, theoretically comparable to incremental capital output ratio or ICOR. Rather, this is the core in the meaning of jobless growth.

We have to include vulnerabilities in the fabric of employment to the meaning of jobless growth. Persons without security of incomes and tenure and without retirement and such other benefits are a great proportion all across; included here are a lot of self-employed people.

According to ‘World Employment and Social Outlook, 2017’, in developed countries, 42% are with this vulnerability and in emerging economies like Russia and east European countries, this number is 50%. In India and other south Asian countries —  all in the developing countries category — these vulnerable labour are 80%.

Particularly in India, we have to factor in the recent slowdown in the economy resulting from demonetisation of 86% of value of currency in circulation in the country’s largely inevitable cash driven economy. This was given effect to on November 8, 2016 by the NDA government at the Centre. The issue of note ban is in addition to slowed down export market in the aftermath of the 2008 recession that afflicted economies of Europe and America. Labour intensive textile and leather industries have been hit hard.

Migration, uncertainty
Vulnerability of unorganised sector labour includes forced migration to urban areas, misery, uncertainty and the general leaving out of women from employment, all with a decreased or non-expanding activity prospect in villages. Anti-poverty programmes like the rural job scheme hold a definite welcome hope against this aspect of jobless growth.

The government is reported to be reducing inefficiency in this scheme by weeding out fake job cards; reducing them to 12.48 crore from 13 crore. Active workers have come down from 11.04 crore to 10.85 crore. These workers have to be paid regularly without any scope for delay and their wages have to be cushioned with dearness allowance increases so that their wage security gets ensured.

Women will be particularly more enabled to send their children to school while meeting the incurred opportunity cost. This year’s release is said to be Rs 40,869 crore and may be increased further to enable works like village tank repair, forestation and greening of fallow lands etc.

Migration to cities thus reduced will make village life wholesome by retention of youth and possibly increasing rural investment. Rural investment augmentation will mean increased jobs and incomes in one’s own native location, a sure measure against jobless growth.

(The writer was professor, Maharaja’s College, University of Mysore)