By Dr Santosh Kumar Mohapatra*
A 24-year-old Economics graduate is creating ripples on the internet after she opened up a tea shop named Chaiwali outside Patna Women’s College. Notably, the girl decided to become an entrepreneur by opening a tea shop after she was unable to find a good job. Instead of feeling ashamed, the government is acting as if everything is hunky-dory.
According to reports, she had been preparing for competitive exams but was unsuccessful. But was only a tea selling option. Many unemployed youths are doing similar jobs, even manual work. But no publicity. It is publicized because PM was elected as a tea seller. If tea selling or pakoras, spellings will make us atmanirbhar, then children of legislators, ministers, and bureaucrats should start selling tea.
Even success in the tea selling business depends upon a number of buyers. Just opening a shop does not help you earn. You need buyers and less competition. If more open shops, then you will have fewer customers and lower-income. Even one can sell only if people buy more. People buy more if they have money or purchasing power. But for this more jobs need to be created, especially in organized sectors.
This news is deliberately publicized in the media to camouflage the failure of the government in creating jobs. True government cannot provide jobs to all. But policy should be to create jobs not squeeze jobs.
The Modi government, which promised 2 crore jobs every year back in 2014, has, in fact, heightened the unemployment crisis. While the number of eligible job seekers is increasing rapidly, the Narendra Modi government has failed to provide adequate employment. As per the Indian government’s periodic labour force survey (PLFS) data, the country’s unemployment rate was 6.1 per cent in 2017-18, a 45-year high. While that hogged headline, the rate dipped to 5.8 per cent in 2018-19 but had gone up to a much higher level during a pandemic. As per CMIE’s report, it is around 8.12 per cent by the week ended April 23, 2022.
Under the Narendra Modi-led government’s tenure, where unemployment has reached record high levels, there are no new jobs; government posts that are already sanctioned are also not being filled. India’s job creation problem in the organised sector has morphed into a greater threat having cascading impact on workers.
The economy and jobs suffered the impact of the pandemic over the past two years. While the Indian economy has managed to bounce back beyond the pre-Covid levels, the job market has not been equally blessed. While economy and labour have moved divergently in opposite directions, this divergence could put 49 lakhs at the risk of being unemployed in the current fiscal, says a report by the Centre for Monitoring Indian Economy. This divergence in real GDP and employment growth may continue during the current fiscal too, although at a smaller scale.
It was found that at least 30 lakh sanctioned posts under the central government (including those under various bodies and institutions run by the Centre) and an estimated 30 lakh posts under various state governments are lying vacant. Filling up these posts itself would contribute to reducing the raging joblessness that has haunted India in the past several years.
The sanctioned but vacant posts amount to 9.10 lakh posts in central government ministries and departments; about 37 thousand posts in central universities, IITs/IIITs/IIMs/NITs and other central government-run higher education institutions, central schools (KVs), Jawahar Navodaya Vidyalayas; 8.53 lakh posts in primary schools in the states that are mostly funded by the central government.
Similarly, 1.68 lakh posts in the health sector; 1.76 lakh posts in the Anganwadi system; 2 lakh posts in the public sector banks; 1.07 lakh posts in the Indian Army; about 92,000 posts in the Central Armed Police Force (CAPF), as well as 5.31 lakh posts in the state police departments and judicial courts across the country, including the Supreme Court, High Courts, and more than 5,000 posts are vacant in lower courts. All these numbers have been taken from the central government’s sources and replies to queries in the Parliament.
However, jobs do not mean jobs in the organised sector only. But jobs in the organised sector are important to provide employment to educated youth. Out of 50 crore workers in India, around 10 per cent in organised sectors and a massive 90 per cent are employed in unorganised/informal sectors. While there is some sense of job security, and facilities in organised sectors, the informal sectors are bereft of labour rights, job security, minimum wage guarantee, and social security. Labours are leading a wretched life and struggle to eke out a basic existence.
The informal sector, which was devastated by the draconian demonetisation and flawed GST was further decimated by the Corona pandemic rendering massive workers jobless. The workers have been exposed to more exploitation and discrimination than before. During the first wave of the pandemic, 12.2 crores lost their jobs of which, 9.2 crore jobs were lost in the informal sector. In the second wave, one crore people lost jobs. Though the formal sector is now back to its pre-pandemic level, the informal sector continues to bear the brunt today.
The situation is so alarming and discouraging that a growing number of people are no longer even looking for work. According to the Centre for Monitoring Indian Economy (CMIE) report, now, more than half of the 90 crore Indians of legal working age — roughly the population of the US and Russia combined — don’t want a job. Between 2017 and 2022, the overall labour participation rate dropped from 46 per cent to 40 per cent.
Among women, the data is even starker. About 2.1 crores disappeared from the workforce, leaving only 9 per cent of the eligible population employed or looking for positions. Women do not join the labour force in as many numbers because jobs are often not kind to them. Though they represent 49 per cent of India’s population, women contribute only 18 per cent of its economic output, about half the global average.
A shrinking labour force is a sign of a deteriorating labour market, indicating that people are so discouraged by the conditions that they prefer to sit out and not participate in the jobs market. When the labour force shrinks, automatically unemployment declines. And data suggests that this has been happening in India. The government dismissed reports of a decrease in the labour force participation rate (LFPR) in the country and questioned the inference that half of the working-age population has lost hope for work. However, the government wants to hide its failure.
The workforce of a country comprises labourers and workers. The difference between these two types of people is that a worker enjoys his or her job while a labourer does not. To the labourer, his or her life is almost equivalent to a wage slave.
The labour force is the number of people who are employed plus the unemployed who are looking for work. Labour force participation rate is defined as the section of the working population in the age group of 16-64 in the economy currently employed or seeking employment.
The labour force is the number of people who are employed plus the unemployed who are looking for work. The labour pool does not include the jobless who aren’t looking for work. So, when more people don’t seek work, whatever reason may be, the labour force also declines.
The labour force participation rate (LFPR) is a measure of the proportion of a country’s working-age population that engages actively in the labour market, either by working or looking for work. If due to a poor economic scenario, pessimistic outlook, or whatever reason may be, many are not seeking jobs, the labour force participation rate (LFPR) declines. It provides an indication of the size of the supply of labour available to engage in the production of goods and services, relative to the population at the working age.
The unemployment rate can be defined by either the national definition, the ILO harmonized definition, or the OECD harmonized definition. The OECD harmonized unemployment rate gives the number of unemployed persons as a percentage of the labour force (the total number of people employed plus unemployed). [OECD Main Economic Indicators, OECD, monthly].
As defined by the International Labour Organization, unemployed workers are those who are currently not working but are willing and able to work for pay, are currently available to work and have actively searched for work.
In other words, the unemployment rate is the percentage of the total labour force that is unemployed but actively seeking employment and willing to work. In other words, unemployment refers to the share of the labour force without work but available for and seeking employment. The unemployment rate is the per cent of the labour force that is jobless.
Employment rates are defined as a measure of the extent to which available labour resources (people available to work) are being used. They are calculated as the ratio of the employed to the working-age population.
Given India’s population growth, each year there are close to 2 crore people who enter the working-age population of 15 to 59 years. All do not add to the workforce unless all are either employed or actively seeking jobs. For example, if 50 lakhs got jobs, 60 lakhs seeking jobs, and 90 lakhs not interested in any jobs, then 50 lakhs+ 60 lakhs = 1.1 crores added to labour forces only. When the labour force declines unemployment rate automatically declines.
Real GDP is estimated to have fallen by 6.6 per cent in 2020-21 and it bounced by 8.95 per cent in 2021-22. In absolute terms, the GDP was Rs 147.7 lakh crore in 2021-22, compared to Rs 145.2 lakh crore in 2019-20, before the pandemic. Real GDP in 2021-22 was therefore about 1.7 per cent higher in constant prices than it was before the pandemic was full-blown, but the number of employed persons is still behind the pre-pandemic level.
According to CMIE, meanwhile, employment in 2021-22 at 40.18 crores was 1.7 per cent lower than its level of 40.89 crores in the last pre-pandemic year of 2019-20. As jobs declined, the number of unemployed increased from 3.29 crore in 2019-20 to 3.33 crore in 2021-22. But this rise is not in line with the fall in employment.
While employment fell by 71 lakh, the unemployed swelled by only 4 lakh. The remaining 67 lakh, who lost their jobs in the aftermath of the pandemic have left the labour force, most probably in dejection over the lack of availability of employment opportunities.
The labour force shrunk by 1.5 per cent, from 44.18 crores in 2019-20 to 43.52 crores in 2021-22, it notes. The employment rate may drop to 36.7 per cent from 37 per cent in 2021-22. The 40.78 crore employments expected in 2022-23 would still be around 11 lakhs less than it was in 2019-20, which was 40.89 crore.
According to CMIE estimates, in January 2019, the total number of persons employed in urban India was 12.84 crore. This has declined to 12.47 crore at the beginning of December 2021. In other words, even as the population has grown (and so has the working-age population), there is an absolute decline of about 37 lakh employed people in urban areas.
Citing the data from the World Bank, CMIE said that the World Bank had pegged the global employment rate at 55 per cent in the pandemic hit 2020 or 58 per cent in 2019 while that of India stood at a low of 43 per cent. However, CMIE pegged India’s employment rate at 38 per cent.
For India’s employment-to-population ratio to be at the global average, nearly 60 crore people need to be at work. Currently, only a little more than 40 crores are. So, India still needs to create additional 19 crores of employment to reach the global average. According to a 2020 report by McKinsey Global Institute, India needs to create, at least, 9 crore non-farm jobs by 2030.
In India, employment in the organised sector, quality employment is declining. Only we see vulnerable employment. Youth unemployment is rising rapidly. Youth unemployment is the situation of young people who are looking for a job, but cannot find a job, with the age range being defined by the United Nations as 15–24 years old. In India, it was 21.99 per cent in 2014. It rose to 22.33 per cent in 2015, 22.60 per cent in 2016, 22.72 per cent in 2017, 22.85 per cent in 2018 and 23.01 per cent in 2019. Youth unemployment rising, by leaps and bounds, suggests that India is unlikely to reap the dividend that its young population has to offer.
The author is an Odisha-based eminent columnist/economist and social thinker. He can be reached through e-mail at [email protected]
DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.