Too many workers, or too few: India’s colossal employment challenge

The grubby lanes of Musallahpur, in Patna, heave with the foot traffic, banners and vending carts familiar to commercial hubs across India. Here, though, the cacophony is directed toward a single goal: helping young people land a government job.

Musallahpur is filled with brick-barn classrooms where 20-somethings crowd themselves and their heavy backpacks to train for standardized employment exams. With nearly 1,800 applicants for every one of the state’s top-tier jobs, they know it is the ultimate long shot. But in a country where semi-employed drudgery defines life for hundreds of millions, it is their only hope.

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A thousand miles to the south, in the city of Coimbatore, a busy automotive parts entrepreneur, M. Ramesh, faces the flip side of India’s profound employment challenge. If the government has far more potential workers than it needs, Ramesh has far too few.

To make complicated aluminum castings that perform precisely at 200 mph, he needs workers who are willing to stay put, learn and earn. But he says he cannot find enough who are capable and reliable, from the country’s more impoverished north or anywhere else. So he was a week away from partially automating his plant — turning to machines in the hope of employing fewer humans.

As India overtakes China to become the world’s most populous nation, solving its economic mismatch is perhaps its most crucial task. Success could mean a more middle-income future that fulfills the country’s world-shaking promise. Failure could leave swaths of India mired in pervasive poverty for decades to come.

The fate of the planet’s biggest generation of workers hangs in the balance.

India’s young and expanding population, with more students leaving school every year to start careers, is the envy of countries that face an aging citizenry and a shrinking workforce. Its economic growth of about 6 per cent a year is also a global bright spot.

But that growth is not producing enough jobs. And the jobs that businesses do have to offer are often out of alignment with the skills and aspirations of India’s potential employees.

This has implications for the entire world. India must get more out of its workforce if its economy, now the fifth-largest and knitted more deeply into the global exchange of goods and services each year, is to stoke growth elsewhere, as China does.

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Inside India, the long-term consequences of failing to match its young with adequate employment could be grave. The unmet desires of these workers, more educated and more indebted than ever, have become a volatile force. Across the state of Bihar, of which Patna is the capital, young men set fire to trains last summer, furious at a plan that could eliminate jobs in the armed forces.

A quieter risk is an immense waste of human potential. India’s anticipated “demographic dividend,” as its population continues its steady but manageable growth, could instead bring a huge cohort forced to settle for unfulfilling and unproductive work, when they do not drop out of employment completely.

At the same time, managers struggle with enormous personnel problems. Finding people willing to uproot themselves for the factory jobs most crucial to long-term economic growth can be difficult. Training them can be expensive, and keeping them can be nearly impossible.

If India were to follow a traditional path to development, it would need a more robust manufacturing sector, economists say. But as bosses try to bypass their labor issues by opting for automation, India is tipping toward “premature deindustrialization,” with manufacturing jobs vanishing before they have worked their usual poverty-alleviating magic.

“We either have to go in for full automation, where we have to reduce our manpower drastically, or look at doing business with fewer people,” said Jayakumar Ramdass, the joint managing director of Mahendra Pumps, another booming industrial concern in Coimbatore.

Striving masses

In Bihar, India’s youngest, poorest and fastest-growing state, with more than 120 million people, a feudal social structure and low rate of urbanization pose old chicken-or-egg riddles that ask what keeps a poor place poor.

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Here entrepreneurship looks like another name for self-employment, and self-employment a euphemism for unemployment. More than half of India’s workforce is technically self-employed. That work is often piecemeal: Picture a railway station where 10 rickshaw drivers wait for passengers but there are only enough fares for two or three.

So, in India, many young people aim not for the stars, but for stability. In Bihar, that means a government job, no matter how lowly. Even an under-registrar position in the Prohibition office, for instance, is a coveted prize.

But the competition is fierce. Roughly half a million young people took the annual preliminary test for the Bihar Public Services Commission in February, for a total of 281 jobs. For every batch of 2,000 hopefuls, 1,999 will walk away with nothing.

The odds are nearly as bad on the national level. From 2014 to 2022, Indians filed more than 220 million job applications with the central government. Of those, just 720,000 — less than a third of 1 per cent — were successful, a government minister told Parliament.

Still, every year, Patna, the capital of Bihar, draws in thousands of students from the densely populated countryside, each spending years scribbling notes on calculus, geology and everything else they might face on state examinations.

Praveen Kumar, 27, is both a student and an employee at a Patna coaching center. Though his parents never left their family farm, he earned a bachelor’s in math and moved between richer parts of the country, looking for work.

What he saw depressed him. Friends with engineering degrees found jobs on assembly lines, screwing together mobile-phone chargers for $146 a month. That is considerably more than they would have made in their home village, but not enough to be worth leaving behind family for very long.

After Kumar gave up and returned to Bihar, he said, “I was getting frustrated sitting at home.” He sometimes contemplated suicide. In one such low moment, he was ignited by the dream of admission to the civil service.

Since then, he has moved to Patna and tried to pass the exams four times. While studying, he earns $110 a month doing video production work on lessons for students like himself. With that he manages to feed himself, his wife and their 4-month-old baby.

In India, where outright unemployment hardly exists, many similarly scrape by. “People cannot afford to be unemployed,” said Amit Basole, a professor of economics at Azim Premji University in Bengaluru. “So, they are, of course, working all the time, but they are working in very low-wage and low-productivity occupations.”

The one exception are educated young people — those at a stage in life when they can, briefly, hold out for something better. For people under 30 with at least 12 years of schooling, the unemployment level reaches 15 per cent to 20 per cent, Basole said. Among young women, it can go as high as 50 per cent.

When nothing pans out, even the most educated young people must settle for whatever work they can find, be it wage labor in the city or helping around the farm back home.

In Kumar’s home village, Nai Naiyawan, the signs of unemployment appear in subtle ways. On quiet rural lanes, a striking number of the handsome carved wooden doorways are padlocked. Whole families have left behind their homes in search of temporary work.

It is not so tough a place as it was when Kumar’s father was younger; now there is adequate electricity, cheap phone and internet service, and subsidized grains. “Here there is no employment,” the younger Kumar says. “Otherwise, all things are good.”

Those still in the village are tending livestock and openly idling away their weekdays. Except for the men in their early 20s. They are finishing university degrees and dreaming about government standardized tests.

Help wanted

The valley around Coimbatore, in Tamil Nadu, is a model of what India wants for itself in the decades ahead. The state’s fertility rate is much lower than Bihar’s. Coimbatore’s business community is diverse, with about 100,000 small- to medium-sized companies, specializing in casting, machining and irrigation equipment.

What these businesses don’t have is a steady supply of reliable labor. Ramesh, the managing director at Alphacraft, the auto parts manufacturer, is optimistic about almost every aspect of his business. Orders are going up and shipping costs are being streamlined, and he sees growth prospects on three continents. His only problem: a workforce he cannot count on “because they are all coming from distant parts of the country.”

Of the 200 workers who come from outside Tamil Nadu, a majority are from Bihar and speak only Hindi.

Ramesh needs them because the youth of Tamil Nadu are looking elsewhere. So many have earned higher degrees, often a bachelor’s in technology, that they don’t want to settle for the factory floor. They would rather earn less driving a scooter for a delivery app (“a job in tech”) and daydream about finding a professional job someday.

But it takes a lot to train the working-class men from Bihar. They arrive with low levels of literacy and an unfamiliarity with the kind of schedules and standards that rule a modern, semi-automated factory floor, factory owners say.

Ramesh is the only manufacturer of Aston Martin parts in Asia. The training he invests in the migrant workers becomes an expensive proposition, when 80 per cent of them “float,” he says — they often leave for major festivals, at unpredictable intervals, never to return. That keeps his HR department scrambling.

Ramesh is proud to provide a good living to the men who stay loyal to his company, far more than what a government job in Bihar would pay. Still, he and other owners and managers in Coimbatore are investing heavily in automation. For now, they need their migrant workers, but once they can afford more investment, they hope to need fewer of them.

Without more industry in places like Bihar, and a greater supply of capable, willing factory workers in places like Coimbatore, the great opportunity represented by India’s demographic moment in the sun remains under a shadow.