Unemployment at 7.9%! Many may wonder why so much is made of a ratio that has been hovering between 6% and 8% since 2017. In India, when 7% lose their jobs, it means more than 40 million are without work. In December 2021, the CMIE informed us that 53 million Indians were unemployed. Assuming that each individual supports at least four other dependents in the household, it means just about a quarter of a billion of our population lost its means of livelihood. This is in addition to the at least 300 million who were already reeling under poverty. When you look at these numbers, the size of the tragedy becomes clear.
The Periodic Labour Force Survey 2019-20 informs us that a third (35.9%) of workers are self-employed. Regular salaried workers constitute 25% of the total workforce. Of the self-employed, half (51%) are engaged in Agriculture and allied activities. About a third of them (34%) are in the services sector. These numbers should give our policymakers enough to think about. We are entering a new debate between job-creation and job-seeking, with a clear thrust towards creation, despite evidence to the contrary. The other debate we see is between jobs in Manufacturing versus jobs in Services. Here, we trust in Manufacturing, once again despite the evidence. The real question to ask is: Why are people, despite high levels of poverty, unwilling to look for jobs?
The first point to be understood is regarding the workforce, or the number of people in India who are working or are looking for work. Labour force participation is at its lowest ever, even more so when we look at the female workforce. Nearly half the men in the working age group aren’t looking for work. The proportion is even higher for women. The women’s work participation rate was a dismal 19%. Post-Covid, it has fallen even further.
Why have our women given up on finding a job? The answer lies in almost everything that defines our dismal record on all gender indices. Poor access to education, acute malnutrition and anaemia, domestic violence, harassment at the workplace, disregard for minimum wage laws, inadequate transport facilities, the list goes on. India’s position fell last year on the WEF’s Gender Gap Index, and its current ranking is at 140 out of 156 countries. No wonder then that female work participation is low and falling further.
The second point is that after three decades of economic reforms, there is a wariness about seeking jobs in the private sector. Young Indians continue to seek government jobs, even if they are at the bottom of the organisational hierarchy. Millions apply for posts of security guards, gardeners, cooks and, as the most recent infamous case from UP Police shows, as messengers. More than 10 million applied to the Railway Recruitment Board last year for 35,000 jobs at the lowest rung — train assistants, time-keepers and guards — that clearly do not need the post-graduate degrees that a large number of applicants had.
The private sector is capital-intensive, employs very few unskilled people, and prefers time-bound contracts to formal employment agreements. The Quarterly Employment Survey of the Labour Ministry gives us some interesting results that validate this. In the organised sector, it is Manufacturing that employs the largest number of people, followed by Education. The fastest-growing IT and related sectors employ far too few people even now, just about 2% of the total organised sector labour force. It is Education that’s the second-largest employer. What this shows is that the organised sector is filled with skilled and educated workers. The unskilled therefore have no reason to look for work in these large sectors that define the modern Indian economy.
Although many dropped out of the workforce during the pandemic, the reduction in workforce had started much before Covid. While female workforce participation rates have been going down since the turn of the century as household incomes grew, a big jolt to the workforce participation rate came with the demonetisation of 2016. Just before demonetisation, India’s workforce participation, already among the lowest in the world, stood at 47%. After November 2016, it fell by 2%, which means that more than 13 million Indians left the workforce. It is important to note that demonetisation did not immediately result in joblessness. What it did was that it convinced these 13 million that looking for jobs wasn’t going to get them anywhere, and they dropped out of the labour market altogether. Again, most of them were women.
The fourth point we must understand is regarding the socio-religious categories and their representation in the workforce. The PLFS gives valuable insights on this. For example, the huge over-representation of the SC, ST and Muslim communities in the casual labour force is a matter of concern. There is already much literature on the discrimination that these categories face in the job market. With new and renewed calls being made to boycott these marginalised groups on various pretexts, the sense of alienation can only result in larger numbers of these people simply exiting the labour force. We have already seen what happens to the workforce when women feel threatened and vulnerable.
The way forward
The first step we need to take to tackle this problem is to have good, reliable and continuous data coming out of the Labour Ministry. We must also ensure that all discrimination and harassment at the workplace is firmly dealt with. The skilling initiative needs to be scaled up. What started off 15 years ago as an ambitious project to skill 500 million people has now been reduced to skilling 10 million. We also need an environment that creates more jobs and jobs that are of good quality, where each worker adds value to the enterprise. Poor quality jobs that contribute nothing to productivity are mere transfers of money and do not provide any value-add. In the private sector, where there is great uncertainty and fear, we need some social protection so that employees are not left vulnerable to the whims and fancies of bosses.
The debate must shift from all socially divisive topics to one about gainful employment. Boycotting establishments, shutting down businesses, and discriminating against workers on the basis of their dress and appearance are all counter-productive, to say the least. The number of jobs must go up in Infrastructure, particularly in Health and Education. Here is where we have a huge shortfall in staff — millions of teacher positions vacant and a doctor-patient ratio that is among the lowest in the world. With investments in Education and in Skilling, this huge opportunity that exists can so easily be leveraged to bring back millions of people into the workforce.
(The writer is Professor of Economics at MCRHRDI of the Govt of Telangana and teaches Public Policy at ISB and TISS)