Jobs Jobs Jobs

The government is obsessed with economic growth. Employment is bound to follow, it claims. That's a delusion. The swelling numbers of unemployed continue to clamour for

Published: Tuesday 30 November 2004

Jobs Jobs Jobs

Down to Earth
Jobs are what all Indians want. Governments know this. But they do not know how to create jobs. The problem is that the much-touted mantra of economic growth does not generate jobs. In fact, the reverse is quite true: India suffers from the growth-without-jobs syndrome.

Therefore in the last decade (between 1993-94 and 1999-2000), even as the gross domestic product (GDP) growth rate increased, the growth in jobs declined. The employment growth fell to 1.07 per cent per annum between 1994 and 2000, from 2.7 per cent between 1983 and 1993. This, when the GDP growth accelerated to 6.7 per cent from 5.3 per cent. "The capacity of job creation per unit of GDP output has gone down by about three times compared to that in the 1980s and early 1990s," says S P Gupta, a former member of the Planning Commission who headed a special group on employment generation set up by the last National Democratic Alliance (NDA) government.

The NDA spent its five-year tenure on the job-drawing board. In 1999, it set up the 'Task Force on Employment Opportunities' under Montek Singh Ahluwalia, who ironically is the deputy chairman of the Planning Commission now. The Ahluwalia task force, which was charged with suggesting strategies for providing employment to 100 million in 10 years, or 10 million jobs each year, submitted its report in July 2001.

But even before this report was submitted, the NDA government formed yet another task force: the 'Special Group on Targeting Ten Million Employment Opportunities Per Year.' Gupta headed this group, which submitted its report in May 2002. For the next two years, the two reports did rounds of various ministries; there was very little action besides that. In December 2002, in another ambitious document called India Vision 2020 the government reiterated its commitment to create 10 million jobs a year over the next two decades. This document with its grand promises ultimately took shape as the now infamous 'India Shining' campaign of the NDA government just before the general elections in May 2004.

The current United Progressive Alliance (UPA) government has picked up the 10 million jobs mantra. It is expected to enact a national rural employment guarantee act ensuring 100 days of employment to one person from each household across rural India. But as the debate over the employment guarantee increasingly focuses on the cost to the exchequer, the government is expected to start with 150 districts and officials hint that another task force may be set up on how to 'arrange' jobs under the guarantee scheme.

But how unemployed is India?
In a country as diverse, disparate and disorganised as India, it would be impossible to accurately measure the exact number of the unemployed. For instance, it is clear that people 'find' employment for some periods of the year and it is also clear not all people are employed for all days in the year. So, the measure of unemployment has to gauge who will be regarded as employed in terms of the days they worked during a year and the intensity in terms of the hours they worked. Then, there is the issue of 'quality' of employment: so even if people are employed, is the work they do adequate to meet their basic needs?

The census, for instance, only classifies people as employed or unemployed. But the National Sample Survey Organisation (NSSO) collects and analyses information based on different criteria to determine the rate of unemployment (see box: Who is an unemployed?) and is considered to be the best assessment. The state employment exchanges -- roughly 958 across the country -- are the third, but inadequate source of employment data as few people actually register here for jobs.

Down to Earth

The NSSO 1999-2000 data shows the number of unemployed has increased from 20.13 million in 1993-94 to 26.58 million in 1999-2000. Consequently, the unemployment rate -- the number of people unemployed as a percentage of the labour force -- increased from 5.99 per cent in 1993-94 to 7.32 per cent in 1999-2000. The highest unemployment rate was in Kerala -- with 20.97 per cent of the labour force without work -- and the lowest in Himachal Pradesh where 2.96 per cent people had no work.

Where are the jobs?
The problem is that modern industry creates a chimera of jobs. For all the fuss made of the economic might of industry, it provides a mere 8.35 per cent of the total employment. Worse still, the glamorous and much touted private sector provides only 2.58 per cent and the much-abused public sector 5.77 per cent of this formal employment. Mining, water and electricity and in community and social services are the largest employers in the public sector. Unfortunately, with the decline of public services and demands for downsizing, this sector is showing a negative growth overall. On the other hand, with capital intensity growing in the private sector, its rate of growth has been near zero as far as jobs are concerned.

This when the maximum increase in employment growth rate over the 1990s decade was in the sectors of construction (7 per cent), financial services and transport and communication (roughly 6 per cent each). But it is the unorganised sector, which provides the job benefits. For instance, the small and medium manufacturing enterprises contribute nearly 80 per cent of the manufacturing sector employment and its employment elasticity is almost 3 times more than the organised sector.

But all this so-called growth in the construction-trade-transport and services sector is negated because agriculture, the major employment generator, has stopped absorbing people. The annual growth rate in this sector declined from 1.51 per cent in the 1983-94 period to -0.34 per cent in 1994-2000.

Another indicator of worsening employment scenario inrural areas is the declining share of self-employment in total rural employment from 58.9 per cent in 1977-78 to 52.9 per cent in 1999-2000. This indicates the proportion of farmers who cultivated their land has decreased because of declining yields or fragmentation of holdings. Similarly, there is a sharp increase in the share of casual employment over time -- reflecting the displacement of marginal cultivators and their conversion into agricultural labour. As a result, casual labour increased from 29.7 per cent of rural employment in 1977-78 to 37.3 per cent in 1999-2000.


Runaway bus
Employment programmes fail to create enough rural jobs, people migrate
Rural Employment Programme under the 10th Five Year Plan Increase in employment opportunity (in million person years)
Sampoorna gramin rojgaar yojana 1.29
Swarnajayanti gram swarozgar yojana 0.80
Pradhan mantri gram sadak yojana 0.77
Total 2.86
Will job programmes work?
Government runs rural employment programmes to create jobs in times of distress. The two key programmes of the early 1990s -- Employment Assurance Scheme (EAS) and the Jawahar Gram Samridhi Yojana (JGSY) -- have been renamed and relaunched a dozen odd times with changes in political leadership. In 2001, the schemes were merged into a single employment programme, namely the Sampoorna Gramin Rozgar Yojana (SGRY) with an enhanced annual outlay of Rs 10,000 crore, to create 10 million person days of employment each year. The government's calculation was simple. It had been shown (on paper) that 0.5 million person days were generated through EAS and JGSY with its allocation of Rs 6,000 crore annually (see table: Runaway bus).

Therefore, a doubling of budget would ensure a doubling of employment, it assumed. The question is if the schemes can actually create the jobs and if these casual jobs work more as supplementary source of employment in time of crisis or as real employment. The question also is how these programmes can be used to create continuous employment.

The job scene therefore looks grim. The organised sector has a low base and is shedding jobs. According to government estimates, even if this sector grows by a phenomenal 30 per cent per annum till 2007, its contribution would just go up from 2.58 per cent to 3.5 per cent in the employment chart. At the same time, large enterprises threaten the survival of the unorganised sector. The public sector is being downsized. The public and social services are being disabled. The agricultural sector -- still comprising 57 per cent of India's total employment -- is in decline. What is then the way ahead? How will the government make good on its 10 million jobs a year promise?

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