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Rising unemployment is the biggest challenge before India, not GDP growth

Twitter, a social media interface, has lately been burning with attacks on unemployment under the regime of the NDA government led by Prime Minister Narendra Modi. People have taken their grievances to Twitter making “ #Modi_Rojgar_Do” as one of the top Twitter trends over the past few days. The hashtag has been used in over 2 million tweets by fellow countrymen essentially asking the Prime Minister to provide more employment. Seeing already 2 million tweets with this underlying theme, we are expecting that unemployment is likely to remain prominent over the coming days this week. Well, finally.

In fact, this is not all. Unemployment is slowly gaining attention on the social media in the both ways- positive and negative. Positive being the hashtag stated above which directly asks the government to provide some relief in job sector while negative being the other two Twitter trends that are worth noting. The hashtags which are trending under this umbrella are “#आरक्षण_ज़हर_हैं”, translated to “Reservations are poison”) and “#ब्राह्मणवाद_जहर_है , which essentially means “Brahmanism is poison”. Well, on the face of it, both of these trends are highlighting the deep sown problem of casteism or caste hierarchy. The tweets seem to target the caste-based reservations in the job sector. However, if you analyse carefully, they also attack the same underlying issue which is “India’s massive unemployment problem”.

Well, massive is a big word to use. Isn’t it? But how can I help not using it when the statistics hint that way. To begin the analysis, we would first have to understand the “massive” scale of the problem at hand in our country which is ripping away the very essence of our beautiful nation. At the end of the financial year 2019-20, at the exact point when India’s coronavirus crisis started creating a wreak havoc, India already had a disproportion of employed and unemployed people. According to the data by Mahesh Vyas of Centre for Monitoring Indian Economy, during that time, around 35 million people were openly unemployed while around 403.5 million people were employed in the country. To this existing pool of vast numbers, our country adds as many as 10 million, or 1 crore, new people looking for a means to earn their livelihood.

This is just the pre-covid data. Needless to say, the pandemic has been pretty heavy on all of us with flashing news of incessant layoffs, salary cuts, migrations, and what not breaking through our television and mobile screens. It is even horrific to imagine the extent of economic, physical, and emotional losses that people all around the globe would’ve incurred simply because a minuscule virus turned out to be an obstreperous creature.

Over the last 366 days in the year 2020, a year never expected by the human race, several millions have lost their livelihoods and sources of income.
Putting the above line into data, India had only about 400 million employed as of January 2021 in comparison to 403.5 million in 2019-20. The numbers don’t look as ugly as expected perhaps because by the time this data is presented many people have regained employment with the economy starting to take up the pathway to recover. The fact that the actual unemployed was far more than this difference cannot be isolated. Moreover, another problem in this “400 million” number lies also the stagnancy in the employment levels of the Indian subcontinent.

As per the data which is being compiled since 2016 by Vyas/CMIE, the number of people having jobs has been steadily falling and coming down in India with 407.3 million employed in 2016-17 as against only 405.9 million employed in 2017-18, and then finally to a despondent 400.9 million at the end of 2018-19. Take these numbers in comparison to the ever-rising Indian population and you will realize how catastrophic is this deadly virus of unemployment.

Therefore, according to the data mentioned above, it won’t be wrong to say that even with India’s economy growing, even if that was with a decelerating curve, the unemployment statistics were getting worse before the Corona virus crisis as well making the total number of openly unemployed people reach a milestone of 35 million. And if we take into account the layoffs over the past 12 months, this number must stand anywhere between 40 to 45 million today. Taking this devastating thought further, think that each unemployed person is a part of a larger family that is dependant on him for bringing the food to the table — implying that millions of families and even more millions of individuals will be suffering from the lack of economic opportunities and will be dying of hunger just as you read this article.

To take this conversation to the ugliest part of our employment sector, the 45 million estimates only captures the “openly” unemployed people. In other words, it only talks about those who are looking for work in the markets but are unable to find any.

The actual grass root problem of unemployment In India gets even bigger and uglier.

Well, here is how. Let’s try to adjust this data in consideration with the rising population of the country.

India’s standard population growth states that every year nearly 20 million people more people enter the working-age population (15 to 59 years). However, many of these do not necessarily seek a job. Young women may not feel empowered to work if the law and order is unsupportive or if cultural does not allow them to. Similarly, there might be kids who do not wish to work but study. Many from the crown might also give up the dream of being employed after repeated failed attempts. As more and more people quit this line of jobs, India’s labour force participation rate (LFPR) sees a steep fall, a scenario which India is witnessing from the last few years.

 

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India’s Labour Force Participation Rate stands only at a saddening 40 per cent. In other words, if 100 people are eligible to apply for a job in India only 40 do so actually. Taking the same to a larger scale it means that just 40% of the 20 million people joining the working-age group annually apply for a job or seek employment. Patriarchal society makes this participation ratio even lower among the feminine gender.

In contrast to the acute 40 per cent in India, most of the developed countries have a labour force participation rate of 60 per cent, approximately. If we alter India’s data by this 60 per cent rate of developed nation, the country would have to accommodate a marginal increase of almost 15 million job seekers each year to the matrix of openly unemployed people under the current circumstances.

But why is the unemployment rising even when the GDP is rising?

Even though GDP is an indicator of growth, it is not very exhaustive and wholesome in all means. Just like every other indicator, the Gross Domestic Product (GDP) also has certain limitations and restrictions. Indeed, in the general notion fast economic growth handles the unemployment crises, the case in India has been a little different. We cannot assume fast economic growth to pivot the graph of rising unemployment and automatically resolve India’s unemployment crisis because even when India’s GDP was increasing at an increasing rate, the growth brought with it a very small number of well-paying jobs. Thus, having no drastic or substantial effect on the unemployment numbers.

Vijay Joshi, Emeritus Fellow of Merton College, Oxford, highlights the same in his book “India’s long road”, by claiming that in the time span of a decade (from 1999-2000 to 2009-10), the total Indian workforce surged by 63 million out of which as many as 44 million joined the unorganised sector, and nearly 22 million people became informal workers in the organised sector. This made the number of formal workers in the organised sector drop by a stooping 3 million.

So, what is the route ahead?

We can feel a little happy with the GDP growth projections in the coming financial year. The trajectory stating India’s sharp rebound is linked with an enormous “base effect”.

This still, however, does not change the lop-sided or asymmetrical manner in which India has been and will be registering a growth- Under the current system, even if the GDP goes up and reacher the sky-high levels, more and more companies will tend to increase their production by switching from labour intensive procution techniquies to cpital intensive production techniques. In other words, they might look at replacing labour with advanced technology or machinery. India at its present stage cannot afford it. We cannot employ machines when full-fledged fit and fine human beings are not able to find jobs. Thus, this will only deepen India’s unemployment problem.

Another problem which may aggravate the unemployment stats at least in the short to medium term is the mantra of “minimum government” as exposed in the Union Budget for 2021-22. It means that government will try to interfere less and less in the economy, essentially cutting down the government’s role in creating new jobs directly in the economy. Some may argue that this is essential to make the markets function better, I would say the timing is questionable with a weak and struggling Indian economy lying breathless in the hands of the prime minister just like a new born baby in the hands of its mother. Weak and fragile, looking for a motherly support and care. I hope, the mother of the Indian nation, its government, does not abandon the child at a stage when it needs her the most.

 

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