A 10-point jobs agenda for Modi 2.0

The historic win secured by the National Democratic Alliance inspires hope that we will see some bold and exciting proposals from the government. The upcoming budget will signal priorities. One burning issue is lack of adequate, good quality employment opportunities. We propose a 10-point agenda, with both short-term and long-term measures, to tackle this issue.

Strengthen NREGA

There is urgent need to boost demand and expand public infrastructure in rural areas. MGNREGA has proved popular and remains the most effective way to achieve these aims in the short run. However, the programme has suffered due to lack of funds for several years now. There needs to be at least a doubling of its budget to make it an effective demand-driven employment guarantee, and to make programme wages at least equal to the proposed national floor minimum wage.

Urban jobs programme

Small towns are in need of employment as well as improvements in infrastructure. This can be done via an employment guarantee that provides services and builds roads, bridges, parks and canals. The programme we propose calls for providing 100 days of guaranteed work at Rs 500 a day for a variety of works. It also provides for 150 contiguous days of training-and-apprenticeship at a stipend of Rs 13,000 per month for educated youth. We estimate that this can create up to five crore work opportunities across India.

Universal basic services

Given India’s level of per capita GDP, public spending on key social services is average or below average. Out-of-pocket spending is much higher in India than in other comparable countries. There is ample evidence that government can deliver services effectively and for a fraction of the cost of the private sector. Further, we estimate that filling existing vacancies in the system, expansion of capacity, as well as regularising various forms of contract and ‘volunteer’ workers (such as ASHA and Anganwadi workers) can create millions of good jobs.

Strategic industrial-trade policy

The experience with industrial-trade policy during the planning years was mixed at best. However, the IT industry shows that government can play an enabling role in promoting industrial growth. A new, coordinated industrial-trade policy should go beyond tax breaks, ease of doing business or attracting foreign investment. Further, it should be fine-tuned according to product, and targeted to the different needs of small, medium, and large enterprises. But most importantly, there is a need for a clear system of reward and punishment that ensures performance standards.

Leverage culture for job creation

India is home to an incredible range of culturally significant goods in food, textiles, garments, footwear, metal wear, etc. There are over 500 recognised craft clusters in our Geographical Indications registry. Each cluster can employ anywhere from a few thousand to a few lakh skilled workers. Brand recognition, skill and credit ecosystem, value chains and export potential already exist. A new programme can systematically support job creation in these culture goods industries.

Tap and expand skilling ecosystem

A large part of our workforce is skilled but formally uneducated. On the other hand, an increasing fraction is formally educated but lacking in employable skills. Unorganised sector workers need formal credentials as well as access to a systematic way to update their skills. Graduates and post-graduates need access to on-the-job training, which remains one of the best and most cost-effective ways of imparting occupational skills and enhancing employability. If employers are reluctant to spend on training future employees due to competitive pressures, government support subsidising on-the-job training programmes can prompt businesses to offer such opportunities.

Improve social protection, job security

There is ample evidence that effective laws for improving job security and environment can increase productivity in addition to boosting morale. On the other hand, getting rid of labour laws does not guarantee job creation. Unorganised sector workers as well as informal workers in the organised sector need more job security, not less. They also need effective implementation of grievance redressal mechanisms and health and safety norms, and policies against sexual harassment. India is now ready for a bold new social contract that brings these together to signal that we value the people who make the country run.

Attack labour discrimination

The nature and desirability of one’s job, its remuneration, whether one works at all or not, are still determined to a large extent by one’s social identity. Employment policy must end this. Programmes such as MGNREGA have proved effective in creating opportunities for women and ensuring equal pay. Increasing employment opportunities specifically for educated women, ending degrading forms of caste-based occupational segregation, and ending the exclusion of Muslims from the formal labour market must be priorities.

Encourage mass entrepreneurship

A crucial aspect of a new mass entrepreneurship policy should be a minimum workable scale. Microfinance has resulted in the proliferation of micro-businesses, which often get reduced merely to disguised unemployment, generating a meagre livelihood. There is a role to be played by the government in ensuring that businesses can take advantage of economies of scale, ensure compliance with environmental laws, pay taxes, and ensure a safe workplace for their workers.

Make fiscal policy jobs-focused, not deficit-driven

Many of the above measures will require public resources. We must not shirk from spending money where it can really be effective. A favourable credit rating from international ratings agencies cannot be more important than good employment policies and other valuable public expenditure. Macroeconomic conditions are favourable for fiscal expansion. India’s debt-to-GDP ratio is at 68%, which is near the 30-year low of 66%. There is no evidence to suggest that current debt levels are likely to retard growth.

(The writers teach economics at Azim Premji University, Bengaluru)