A few weeks ago both the BJP and the Congress parties were busy taking pot shots at each other after the CSO came out with its routine back series on growth estimates. There was considerable hair-splitting among politicians as well as economists and the media over the CSO findings. The Congress party patted itself on the back when the CSO findings showed that GDP growth had topped 10 per cent twice during the UPA regime.
But one area where there is a remarkable convergence in the performance of both parties is employment growth (jobs creation), or rather, its absence. Even during the boom years, the early to mid-2000s, when growth rates were soaring, the spectre of “jobless growth” always haunted the then government. There were frequent murmurs among economists and other analysts that growth was not leading to a commensurate increase in jobs. This issue of “jobless growth” was serious enough for the then government to notice. Montek Singh Ahluwalia, Deputy Chairman of the now defunct Planning Commission, and an important member of Manmohan Singh’s economic team, was candid in admitting to this problem.
Jobless growth
A recent report further confirms this concern over jobless growth. Azim Premji University’s Centre for Sustainable Employment came out with a report titled ‘State of Working in India’, which makes some startling, and worrying, revelations.
The first important finding that lends weight to the “jobless growth” hypothesis is that “growth creates fewer jobs than it used to”. The data are startling. During the boom period of 2004-09, when growth averaged 8.7 per cent, jobs growth was a mere 0.1 per cent. The report goes on to add that “between 2013 and 2015, total employment actually shrank by seven million”. And there is no reason to believe this trend has not persisted post 2015, says the report. These startling facts prove that the allegation of jobless growth was no empty one.
The report adds that unemployment has been of a more “open” nature and not “underemployment”, as often assumed. The open unemployment rate is put at 5 per cent and, more worryingly, the open unemployment rate among the youth and the higher educated class is at a depressing 16 per cent. Clearly, the country’s “demographic dividend” is not being reaped by our youth. Though the unemployment trend is visible across the nation, it is more severe in the north.
Wage rates, contractualisation
To compound matters further, wage rates too have been stagnant, or ‘sticky’, with a paltry three per cent growth per annum. Another crucial finding of the report is that “67 per cent of the households reported monthly earnings of up to ₹10,000 in 2015”. This is much less than the Seventh Central Pay Commission recommended minimum wage of ₹18,000. The report rightly observes that given this wage disparity, the clamour for government jobs is hardly surprising. There is enough anecdotal evidence to support this. We routinely come across newspaper reports of lakhs of candidates applying for a few hundred Class IV government jobs. Many of these applicants are often grossly overqualified, with even engineers applying for a peon’s job in a government department.
The report also confirms the now well-known trend of growing “contractualisation” of jobs in the formal sector. The report estimates that contract workers form almost 30 per cent of the total work-force. Many of these contract workers perform the jobs of permanent employees at a fraction of the wages. The formal manufacturing sector has found an effective way of getting around the country’s “rigid” labour laws. Given the rising trend of contract employment, it is ironic to hear industry lobbies constantly moan about “rigid” labour laws and seek their reform.
Services sector
The report says that despite the manufacturing sector’s impressive performance, it is the service sector that has created more jobs. The jobs created by the IT and BPO sector are widely celebrated, with the report stating that much of the service sector is still dominated by petty trade, domestic work and small-scale and informal manufacturing where wages are typically low and working conditions precarious.
When it comes to gender, the disparities are seen not only in work participation rates but also in wages. The report shows that women’s work participation in the Southern and North-Eastern States are much higher than in the Northern States. Schemes such as MGNREGA and ASHA have played a crucial role in enhancing women’s employment — a fact that will gladden the supporters of the UPA.
Another interesting finding of the report is the crucial role played by crafts in rural non-farm employment.
With the general elections just a few months away, it would be interesting to see whether the issue of jobs will dominate the political agenda and rhetoric of the major political parties battling it out for power at the Centre. Will the issue of job creation figure prominently in party manifestos?