With a million people entering the job market every month, India's economy desperately needs to find a way to make space for them.
The morning of September 17, 2015, India woke up to a curious headline: PhD holders among 2.3 million applicants for peon jobs in UP. The response to 368 vacancies for peons in the most populous state of the country had been a record of sorts. The minimum qualification for the post was no more than school education and bicycle riding skills. The salary, a measly $240 [Rs 16,000] per month. Yet among the 2.3 million applicants there were more than 150,000 graduates and 24,969 post-graduates. There were also more than 250 doctorates or PhD holders. The clamour for the posts surprised even the government that had initially planned to select candidates through interviews but then opted for a written examination to screen the large number of hopefuls.
The story mirrored the tragic state of employment in the country, often touted as the fastest growing economy in the world. But it does not really come as a surprise. According to the labour bureau, the unemployment rate in the country shot up to a five-year high of 5 per cent in 2015-16. The rate was higher at 8.7 per cent for women and 4.3 per cent for men. It was 4.9 per cent in 2013-14, 4.7 per cent (2012-13), 3.8 per cent (2011-12) and 9.3 per cent (2009-10).
India is home to 356 million people in the age group of 10-24 years that would be eligible for work within the next decade. Already the government says an estimated 1 million people join the workforce every month. Having such a young population is an obvious strength. There would be no dearth of able hands should there be enough work. However, creating proportionate viable opportunities is a Herculean task by any standards.
“Young people are the innovators, creators, builders and leaders of the future. But they can transform the future only if they have skills, health, decision-making, and real choices in life,” says Babatunde Osotimehim, Executive Director of United Nations Population Fund (UNFPA). "Never before have there been so many young people. Never again is there likely to be such potential for economic and social progress. How we meet the needs and aspirations of young people will define our common future."
The current slowdown in economic activity in the country coincides with the increasing influx of people in the job market and poses a stiff challenge for the government. A majority of India's population continue to be employed in the agriculture sector, which has stagnated and is often at the mercy of fickle monsoons. Attempts at creating more opportunities in manufacturing and services industries in the cities have only been partially successful.
According to the fifth annual employment-unemployment survey, about 77 per cent of the households had no regular wage or salaried person. The survey was conducted across all states and union territories during April 2015 to December 2015 with a total sample of 1,56,563 households - 88,783 households in rural and 67,780 in urban sector.
The challenges in generating employment are multifarious. Traditional labour intensive sectors like textiles, leather, gems and jewellery and metals and mining are increasingly mechanising their processes for greater efficiency. Far from creating new jobs, it raises the prospect of loss of employment. Coupled with it the slowdown in these sectors along with IT/BPO segment has aggravated prospects.
The labour ministry′s 27th Quarterly Employment Survey said there were 43,000 job losses in the first quarter of FY 2015-2016. The second quarter was better, with 134,000 new jobs, but it was a far cry from the peaks of 2010 when 1.1 million jobs were created. In the following five years, 1.5 million jobs were lost. There has been no signs of recovery in fiscal 2015-16.
"If you look at 2025, this (job creation) problem is going to grow larger,” says Y.C. Deveshwar, chairman, ITC, a century old large Indian conglomerate that employs over 25000 people in the country. “Creating sustainable employment which is environment friendly are the two big challenges that our country has to address, right now, and at an accelerated pace tomorrow."
India has failed to live up to this challenge in the past. Between 1991, the year the country's economy was liberalised, and 2013, the size of the country's working age population increased by 300 million. The economy, however, could absorb less than half or only 140 million of them into the labour market according to Asia-Pacific Human Development Report. It estimated that by 2050 at least 280 million more people will enter the job market and suggested the country should focus on specific industries in manufacturing to create jobs and try to move people away from agriculture. These numbers fly in the face of high GDP growth that is often dished out as the panacea of all problems.
"The economy is generating less jobs per unit of GDP," says D.K. Joshi, chief economist at ratings and research firm Crisil. “In manufacturing, if 11 people were needed to execute a piece of work that generated US$ 14700 [Rs 1 million] worth of industrial GDP a decade ago, today only six are needed. The economy has become less labour-absorbent."
The silver lining in the story is in newer sectors like the boom in start-ups in the country that have opened up fresh avenues for employment. IT industry lobby Nasscom said in its report in 2015, that India was the third largest base for new companies with more than 4,000 registered digital start-ups employing an estimated 85,000 people. By the turn of this decade, the number of start-ups is expected to swell to over 11,500 creating employment for 0.25 million people in the process.
Surely something to cheer for, but a country of 1.26 billion needs way more