Drop in unemployment not necessarily good news

Published: Saturday 31 March 2007

the 61st round of the National Sample Survey (nss) seems to suggest that the unemployment rate in the country has come down. But this statistic has to be read in context. The entire gamut of data generated by the survey also indicates that the unemployment rate based on daily status has increased which means that the number of people who are not getting regular, assured employment is going up. This phenomenon is of a piece with other findings. For instance, a year on no state has been able to provide 100 days of employment to people who desire it, which the National Rural Employment Guarantee Act has made a justiciable right.

The other phenomenon that the nss data throws up in high relief is that the decline in the unemployment rate has been powered to a large extent by a sharp increase in self-employment, especially in villages. What this means, clearly, is that employment generation is poor, especially in the agricultural sector, forcing people at the margins (especially women) to undertake low-skill, distress-driven and often tenuous avenues of employment.

This raises another question related to productivity. Though the nss findings do not address the question of disguised unemployment, it would surely not be too far off the mark to try to establish the character and degree of correlation between self-employment and disguised unemployment. Given the fact that about 90 per cent of the workforce is in the unorganised sector--a lot of it consisting of casual labour--the increase in irregular and marginally productive self-employment must be a cause for utmost concern.

In this scenario, it is heartening to note that some of the stewards of our economy have finally come around to the conclusion that self-congratulation over the unprecedentedly high rates of growth the economy is experiencing is misplaced in a situation where a large number of people remain out of the loop of the benefits of economic growth. Simplistic, and sometimes fanatical, faith in the inevitability of trickle-down, knock-on improvements in the lives of those on the lower rung of the social-economic order must continually be questioned, lest policy-makers be further lulled into a false sense of complacency about development. Employment statistics are a good point of entry into the issue of social justice and equity, which the market does not address.

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