State of employment in India: What a new report says about youths and women, concerns and caution

 

The improvement has coincided with periods of economic distress, both before and during the Covid-19 pandemic, says the India Employment Report 2024 released by the Institute for Human Development and International Labour Organisation on Tuesday.

There have been “paradoxical improvements” in labour market indicators such as the labour force participation rate, workforce participation rate, and unemployment rate in India in recent years after long-term deterioration from 2000-2019. The improvement has coincided with periods of economic distress, both before and during the Covid-19 pandemic, says the India Employment Report 2024 released by the Institute for Human Development and International Labour Organisation on Tuesday (March 26).

The big picture

The report has flagged concerns about poor employment conditions: the slow transition to non-farm employment has reversed; women largely account for the increase in self-employment and unpaid family work; youth employment is of poorer quality than employment for adults; wages and earnings are stagnant or declining.

The ‘employment condition index’ has improved between 2004-05 and 2021-22. But some states — Bihar, Odisha, Jharkhand, and UP — have remained at the bottom throughout this period, while some others — Delhi, Himachal Pradesh, Telangana, Uttarakhand, and Gujarat — have stayed at the top.

The index is based on seven labour market outcome indicators: (i) percentage of workers employed in regular formal work; (ii) percentage of casual labourers; (iii) percentage of self-employed workers below the poverty line; (iv) work participation rate; (v) average monthly earnings of casual labourers; (vi) unemployment rate of secondary and above-educated youth; (vii) youth not in employment and education or training.

Employment quality

Informal employment has risen — around half the jobs in the formal sector are of an informal nature. Self-employment and unpaid family work has also increased, especially for women. Almost 82% of the workforce is engaged in the informal sector, and nearly 90% is informally employed, the report said.

Self-employment remains the primary source of employment — 55.8% in 2022. Casual and regular employment accounted for 22.7% and 21.5% respectively.

The share of self-employment remained almost stable around 52% between 2000 and 2019, while regular employment increased by almost 10 percentage points, to 23.8% from 14.2%. This reversed by 2022, with self-employment increasing to 55.8%, while the share of regular employment declined to 21.5%. Casual employment consistently declined to 22.7% in 2022 from 33.3% in 2000.

Regular employment is generally seen as providing better-quality jobs due to the regularity of employment and associated social security benefits, while casual work is linked with relatively poor-quality jobs due to its irregular nature and lower daily earnings.

Participation of women

The female labour force participation rate (LFPR) in India remains among the world’s lowest. Female LFPR declined by 14.4 percentage points (compared to 8.1 percentage points for males) between 2000 and 2019. The trend reversed thereafter, with female LFPR rising by 8.3 percentage points (compared to 1.7 percentage points for male LFPR) between 2019 and 2022.

There is a considerable gender gap — women’s LFPR (32.8%) in 2022 was 2.3 times lower than men’s (77.2%). India’s low LFPR is largely attributed to the low female LFPR, which was much lower than the world average of 47.3% in 2022, but higher than the South Asian average of 24.8%, as per ILO data.

Structural transformation

There has been a reversal of the slow transition towards non-farm employment after 2018-19. The share of agriculture in total employment fell to around 42% in 2019 from 60% in 2000.

This shift was largely absorbed by construction and services, the share of which in total employment increased to 32% in 2019 from 23% in 2000. The share of manufacturing in employment has remained almost stagnant at 12-14%.

Since 2018-19, this slow transition has stagnated or reversed with the rise in the share of agricultural employment.

Youth employment

There has been a rise in youth employment, but the quality of work remains a concern, especially for qualified young workers.

Youth employment and underemployment increased between 2000 and 2019 but declined during the pandemic years. However, unemployment among youths, especially those with secondary-level or higher education, has intensified over time.

In 2022, the share of unemployed youths in the total unemployed population was 82.9%. The share of educated youths among all unemployed people also increased to 65.7% in 2022 from 54.2% in 2000.

The unemployment rate among youths was six times greater for those who had completed secondary education or higher (18.4%) and nine times higher for graduates (29.1%) than for persons who could not read or write (3.4%) in 2022. This was higher among educated young women (21.4%) than men (17.5%), especially among female graduates (34.5%), compared to men (26.4%).

The unemployment rate among educated youths grew to 30.8% in 2019 from 23.9% in 2000, but fell to 18.4% in 2022.

The way forward

• There are five key policy areas for further action: promoting job creation; improving employment quality; addressing labour market inequalities; strengthening skills and active labour market policies; and bridging the knowledge deficits on labour market patterns and youth employment.
• The rise of artificial intelligence (AI) could have an impact on employment, the report said, noting that the outsourcing industry in India could be disrupted because some back-office tasks would be taken over by AI.
• Investment and regulations are required in the emerging care and digital economies, which could be an important source of productive employment. The lack of job security, irregular wages, and uncertain employment status for workers pose significant challenges for gig or platform work.
• Economic policies are required to boost productive non-farm employment, especially in the manufacturing sector, with India likely to add 7-8 million youths annually to the labour force during the next decade.
• More support needs to be provided to micro, small and medium-sized enterprises, especially by providing tools such as digitalisation and AI and a cluster-based approach to manufacturing.

Written by Aanchal Magazine

Source: Indian Express, 28/03/24

Lifelong lessons

 

Five American states — Pennsylvania, Maryland, North Carolina, Alaska and Utah — have now dropped the requirement of a four-year college degree for most government jobs

The college degree is losing its shine right in the heart of the country that claims some of the best colleges in the world. Five American states — Pennsylvania, Maryland, North Carolina, Alaska and Utah — have now dropped the requirement of a four-year college degree for most government jobs. The immediate trigger is no doubt the tight labour market. But as college tuition continues to rise and their enrolments continue to decline, opinion polls repeatedly reveal falling public faith and support for traditional higher education.

What Peter Drucker called the knowledge economy seems not to be working quite as well as when the term was doing popular rounds in the second half of the 20th century. Even so, the erosion of faith in traditional colleges in the United States of America remains a localised phenomenon. It does not necessarily indicate a loss of faith in higher education per se, just in its traditional method and venue of delivery. The knowledge worker most likely to continue being relevant is still someone immersed in knowledge, just capable of coursing through its rapidly changing waters through an entire lifetime rather than bearing an early, immutable stamp. Lifelong learning, that great liberal humanist expression, is now a corporate catchphrase owned by organisers of distance, continuing, and (the particularly lucrative) executive education. And with pandemic-accelerated logistical support behind, and the ongoing and impending wave of Artificial Intelligence right ahead, the giant called educational technology has expanded its reach to engulf much of that life of long learning. Certainly enough for the newsmagazine, Inside Higher Ed, to describe a recent crucial gathering of tech and finance business leaders at MIT as the “oncoming AI Ed-Tech tsunami”.

The onset of the tsunami is being particularly felt in post-industrial island states where the key resource is people. At 275 square miles and home to 5.4 million people, Singapore knows well what its key strength is — human capital. “The only thing Singapore has,” Gan Chee Lip, associate provost for undergraduate education at Nanyang Technological University, recently told the Times Higher Education, “without natural resources, is people.” It is natural that Singapore has taken lifelong learning more seriously than most other countries because without a future-ready workforce it will quickly lose its edge in the global economy. The SkillsFuture programme was introduced by the Singapore government in 2014, with the motto, “Develop Our People”. With the goal of providing Singaporeans with “opportunities to develop their fullest potential throughout life,” it gives every citizen aged 25 or older S$500 of credit that they can spend on further education or training. The programme has gained traction in the corporate world as it does not necessarily require employees to commit to a full-length academic programme but space out the learning as and when necessary. Universities have followed, with the National University of Singapore making the striking announcement in 2018 that all its alums will stay enrolled in the university for 20 years from admission, making its 300,000+ alums automatically eligible for its 700-odd continuing education courses, to which they can apply their government subsidies.

Innovative US institutions have been experimenting with the ‘fragmented’ college model for some time now. The Design School at Stanford initiated a six-year undergraduate degree a few years ago, which could be taken in instalments of two years each in different decades of one’s life. It is not quite clear what the success of that initiative has been, but what is clear is that the traditional model of college education is under significant pressure in the US, not just from unsympathetic politicians and an increasingly disinterested public but also from the rapid decline in numbers of college-age students, which is projected to reach a major crisis in 2025. Which, incidentally, means that these colleges will be more eager than ever to welcome fee-paying international students, particularly from Asia, from where applications continue to rise.

That the bachelor’s degree is being stretched and pushed in different directions is clear from its new incarnation in India’s National Education Policy, 2020. As we know by now, it offers four versions of undergraduate certification, attainable at the end of each of the first, second, third, and fourth years. This is a significant departure from the examination-driven, three-year structure that was the colonial inheritance of Indian universities from the University of London model. While the relevance of undergraduate research is acknowledged in the expanded, four-year degree, a productive fragmentation of this education seems to be the goal behind the early exit policies, with credits bankable and transferrable through the Academic Bank of Credit. The NEP seems torn between — sometimes productively and sometimes not so productively — the liberal, the professional, and the vocational — and the pluralisation of the undergraduate degree reflects this, to a similarly mixed effect.

But it is impossible to talk about the fragmentation, diminution or, for that matter, the obsolescence or lifelong expansion of the college degree without considering what this means for social mobility, particularly for those who need it the most. This was, indeed, the caveat behind Drucker’s knowledge society — the loss of manufacturing jobs to venues overseas, he had argued, would render the American unskilled worker jobless — as it did across the Rust Belt across the Midwest. The NEP committee, now working on the National Curriculum Framework, recently asked me to provide a brief definition of ‘knowledge’ that could be used to frame the policy discussion, and while trying to think of something that would be as expansive as it would be pluralistic — a sore need of the hour — I realised anew the porousness and amorphousness of the term, whether at the secondary or the post-secondary stage. And it is a problem of practice, not just philosophy. Knowledge and skill are just elements of the educational experience, and the college degree offers the making of a cohort, a community, and socio-professional networks that may just return to the exclusive possession of the born-elite if eroded beyond recognition. The biggest risk of the early-exit undergraduate degree is the early exit of the poorest college student.

Saikat Majumdar is Professor of English and Creative Writing at Ashoka University

Source: The Telegraph, 24/05/23

Second Round of Quarterly Employment Survey

 The Union Ministry of Labour and Employment recently released the second round of Quarterly Employment Survey. According to the survey, nine sectors hired two lakh people. This accounted to 85% of the total employment of the country. The survey was for the period July to September 2021.

Key Findings of the Survey

• The total employment in the nine sectors are 3.10 crores. This is two lakhs higher than the employment in the first round. The first round of the survey was held between April and June, 2021.
• 90% of the establishments had less than hundred workers. 30% of the BPO and IT sector had at least hundred workers.
• The number of female workers in the country were 32.1% of the total workers. It was 29.3% in the first round.
• 20% of the workers were contractual in the construction sector. Also, 6.4% were casual.
• Around 5.6% of the establishments in the country reported vacancies. This was around 4.3 lakhs. However, the reasons of vacancies were not specified. The vacancies were created due to resignation. And 11.7% of the vacancies were created due to retirement of employees.

What are the nine major sectors that contributed to the employment?

Construction, Manufacturing, Education, Transport, Trade, Restaurants, Accommodation, financial services and IT/BPOs.

Other Three Surveys

The ministry is also conducting three other surveys. They are survey on migrant labours, domestic workers survey and area based employment survey.

What is Quarterly Employment Survey?

It assesses the employment situation in organisations with ten or more workers. This is mainly from the above mentioned nine sectors. The survey provides following information:

• Gender – wise data
• Number of vacancies
• Nature of Employment

Significance

Employment is the most crucial indicator of economic growth of a country. Also, it is a measure of policy implementation. QES ensures that high quality data is available for the policy makers.

Difference between QES and Labour Force Survey

The QES is a part of All India Quarterly Establishment based Employment Survey. It focuses on demand side. On the other hand, the labour force survey focuses in supply side of the labour market.

Tackling India’s unemployment wave

 

Trishali Chauhan, Christophe Jaffrelot write: Across sectors, age groups and gender, there has been an increase in joblessness, which cannot be blamed solely on the pandemic

Over the last few months, the Government of India and the mainstream media have highlighted the return of economic growth. However, very little attention has been paid to the job market. India’s unemployment rate has been soaring. It went up to 7.91 per cent in December 2021 from 6.3 per cent in 2018-2019 and 4.7 per cent in 2017-18, when the trend started to change — a sign that this phenomenon is not just due to Covid. In urban areas, this has gone up to 9.30 per cent in December 2021 from 8.09 per cent in January 2021. In rural areas, it has gone up to 7.28 per cent against 5.81 per cent.

Clearly, unemployment is more in the urban areas as compared to the rural areas. Between 2019-20 and December 2021, the manufacturing sector has lost 9.8 million jobs; by contrast, agricultural jobs jumped by 7.4 million. One probably needs to get back to the Raj years to see such a movement towards ruThe quality of jobs is also at stake. The percentage of salaried people has dropped from 21.2 per cent in 2019-2020 to 19 per cent in 2021, which means that 9.5 million people have left the salariat and become jobless or part of the informal sector. But the informal sector itself has shrunk, so much so that — to return to aggregate figures — the employed population, over the same period, has decreased from 408.9 million people to 406 million, at a time about 10 million young Indians were entering the job market. The age pyramid does not help, despite the belief in the so-called demographic dividend.

India’s Labour Force Participation (LPR) does not compare favourably with other emerging countries — a category that is vanishing quickly. According to the World Bank, it stood at 46 per cent in 2020 (it has not improved since then), while that of Brazil stood at 59 per cent, Chile’s at 57 per cent, China’s at 67 per cent, Ethiopia’s at 76, Ghana’s at 66, per cent, Indonesia’s at 66 per cent and Malaysia’s at 64 per cent.

Certainly, there are variations among Indian states. As per CMIE data, the unemployment rate in December 2021 was the highest in Haryana (34.1 per cent), followed by Rajasthan (27.1 per cent), Jharkhand (17.3 per cent) and Bihar (16 per cent).

There are also variations age-wise. Based on the data from CEDA-CMIE (between January 2019 and July 2021), the year 2020-21 saw 42.4 per cent fewer 15-19-year-olds employed in comparison to 2019-20. The age group of 20-29-year-olds saw the average monthly employment numbers go down by 15.6 per cent.ralisation: Workers are back in their villages even though urban jobs provide better wages.

In fact, according to the NSSO, in 2019, when India had the highest unemployment rate in the last 45 years, this rate was particularly high among India’s youth: 34 per cent for those between 20 and 24 years. For urban dwellers in this age group, this rate was 37.5 per cent. This figure is coherent with the CMIE figures: For the age group of 20-29 years old, the rate was around 28 per cent, meaning that nearly 30.8 million young people in this age group were jobless, compared to 17.8 million in 2017. An astonishing fact is that the more educated the people, the more unemployed they were — 63.4 per cent of graduates falling in the age bracket of 20-24 years were unemployed. This number has increased with time.

Variations according to gender are also important. Unemployment among women is higher than men, both in urban as well as rural areas. For women, the average unemployment was 14.28 per cent and for men, it was 7.88 per cent. Further, of the women willing to seek work in urban areas, 92.1 per cent don’t get any work. This count for rural women stands at 54.8 per cent.

To start with, the proportion of women who get employed and get paid is low and continues to decline over the years. This is happening even though more and more women are attending school and college in the country.

The absorption of women in the workforce, as compared to men, is much less for two main reasons. One, most women were involved in agricultural jobs in rural areas; the mechanisation of these jobs has had a huge impact on female labour force participation in the country. Two, India’s manufacturing sector is not labour-intensive. This has made it difficult to compensate women who got displaced from agricultural jobs.

There has been a lot of discussion about how women’s role as primary caregivers and ownership of domestic chores is a reason for the low participation of women in the workforce. The cultural norms and deep roots of patriarchy apparently limit women’s labour participation in India. In fact, young women tend to abstain from looking for a job when their own brothers cannot find one.

The employment scene will improve only if private investment picks up. At the moment, the situation is grim on that front. The investment rate is declining — almost in a linear manner — since 2011. It has dropped from 34.3 per cent then to 27 per cent in 2020. One of the reasons why companies do not invest is weak demand – which is partly due to joblessness — that dissuades enterprises from hiring more. This vicious circle is also fostered by growing inequalities, resulting in the shrinking of the middle class.

Unfortunately, investors will also be at an unfair disadvantage of more delicate access to credit in the coming weeks and months: Not only are Indian banks still badly affected by NPAs, but interest rates are bound to increase because of inflation — the rate has almost touched 5 per cent. In December, the State Bank of India raised its base rate for the first time in two years.

Unemployment in India has undeniably reached a critical stage and perhaps, raises serious questions on the quality of the economic recovery, which the third wave of the pandemic may affect anyway, making joblessness an even more acute problem.

Written by Trishali Chauhan , Christophe Jaffrelot

Source: Indian Express, 12/02/22

There’s a mismatch between India’s graduate aspirations and job availability

 

Shobhit Mahajan writes: There is a huge pool of unemployed university graduates with unfulfilled aspirations. This group of dissatisfied, disgruntled youth can lead to disastrous consequences for our society.

Anju and Anita had come to me for advice on future career prospects. They were both students in my MSc course. During the conversation, I found out that Anju was the daughter of a vegetable seller while Anita’s father worked as a clerk in a private office. Both of them had been giving tuitions to school children right after their Class XII to fund their education. They would come back from their college at 5 and from 6 to 8 in the evening they would give tuitions to a group of children at another child’s house since their place did not have enough room.

The fact that they belonged to very modest families was not surprising. The results of a survey I did last year of our students in MSc Physics at Delhi University had already made me aware of the socio-economic background of our students — more than half of them were from villages or small mofussil towns; more than 50 per cent came from families where they were the first generation of college-goers; more than a quarter of them belonged to farming families and about 70 per cent of them reported their family income as less than 5 lakh a year.

The enhanced enrollment of students from these socio-economic backgrounds is primarily a result of the extension of reservations to OBCs and EWS. In addition, the massive increase in the number of higher education institutions has led to an enlargement of the number of available seats — there are more than 45,000 universities and colleges in the country. The Gross Enrollment Ratio for higher education, which is the percentage of the population between the ages of 18-23 who are enrolled, is now 27 per cent.

What is remarkable is that despite all these initial disadvantages, these students managed to finish their undergraduate degrees and some of them were now even looking at their prospects post their Master’s degree. They, and obviously their parents, have high aspirations for their future. And, this is where there is a huge mismatch between their aspirations and what they are likely to attain.

A majority of the students are aiming to get some kind of a government job post their degree. Unfortunately, the spectacular increase in enrollment in recent years has not been matched by a concomitant increase in jobs. Employment opportunities in the government have not increased proportionately and may, in fact, have decreased with increased contractualisation. Even in the private sector, though the jobs have increased with economic growth, most of the jobs are contractual. Worse, the highest increase in jobs is at the lowest end, especially in the services sector — delivery boys for e-commerce or fast food for instance. A student who has finished his college against all odds is not very keen to take up a job in a call centre or worse as a delivery agent for e-commerce or fast food.

Thus what we see is a huge pool of unemployed university graduates with unfulfilled aspirations. This group of dissatisfied, disgruntled youth can lead to disastrous consequences for our society, some of which we are already witnessing.

Attitudes towards work would not change overnight — the time scale for change in societal attitudes is possibly in decades. A reduction in the rate of increase of universities and colleges might not be politically feasible given the huge demand for higher education. But there are several things that the government can attempt to do. A concurrent increase in the number of high-quality vocational institutions is something that can be done.

There are upwards of 15,000 Industrial Training Institutes (ITIs) in the country currently. These institutions provide training in various trades like air conditioning mechanic, electrician, mechanic etc. The quality of these of course is very uneven. They are also, by and large, poorly maintained and lacking in resources, both physical and human. The curriculum remains outdated and has not been upgraded to include some of the newer skills like maintaining networking and telecom equipment.

And yet, there is a huge competition for admission into these institutions, and polytechnics. In some places, it is harder to get into these than to get admission to the local government college. The reasons are obvious. Manufacturing units prefer hiring them for blue-collar jobs since they at least have a modicum of training. In addition, the pass-outs from ITIs also have the option of being self-employed in the various service-related sectors.

Upgrading the existing ITIs, opening many more new ones with high-quality infrastructure and updated curriculum is something which should be done urgently. There is a scheme to upgrade some ITIs to model ITIs. However, what is required is not a selective approach but a more broad-based one that uplifts the standards of all of them besides adding many more new ones. Industry might be more than willing to pitch in with funding (via the CSR route) as well as equipment, training for the faculty and internships for students. After all, the industry czars never cease to remind us about the shortage of skilled labour in the country. And surely, if the government can spend thousands of crores on existing and hypothetical Institutes of Eminence, funds should not be an issue for this exercise which, coupled with our demographic dividend can be a boon for the economy and the society.

For Anju and Anita though the future remains uncertain. They would finish their MSc, possibly do a BEd, and keep trying to get a teaching job in a government school. If they are lucky — they would succeed though in all likelihood — they would have to settle for teaching in a private school for a pittance. And, of course, continue giving tuitions to support themselves and their families.

This column first appeared in the print edition on November 1, 2021 under the title ‘Future imperfect’. The writer is professor of physics and astrophysics, University of Delhi

Source: Indian Express, 1/11/2021

Jobless growth: the pandemic has revealed India’s crisis of unemployment

 COVID-19 infections are once again on the rise with daily infections crossing 60,000 per day last week. This is considerably higher compared to the reported infections during the same period last year when the numbers were less than 500 per day. What is obvious is that the pandemic is far from over despite the availability of vaccines. However, unlike last year, the response this time has been muted with no nationwide lockdown. One of the reasons for the differing responses is the lesson from the unintended consequences on the economy of the strict lockdown last year. While aggregate estimates on the growth rate of GDP showed a sharp contraction in economic activity (the economy shrunk by 24 per cent in the April-June quarter of 2020) the impact on lives and livelihoods is still unfolding even though the sharp contractionary phase seems behind us.

The extent of the loss of lives and livelihoods is becoming clear only now, with detailed data from the Periodic Labour Force Surveys (PLFS) — the latest round of which is for the April-June quarter of 2020. This is the first official report on the estimates for the quarter, which witnessed the worst impact with the lockdown in force until the middle of May. Visuals of thousands of migrants walking back to their villages are still fresh in the mind. While many have returned to urban areas in the absence of jobs in rural areas, many did not. The PLFS, which captures the employment-unemployment situation in urban areas, provides some clues to what happened.

The estimates from PLFS are broadly in line with estimates available from other privately conducted surveys, notably the unemployment surveys of the Centre for Monitoring Indian Economy (CMIE). According to the PLFS April-June 2020 round, the urban unemployment rate for the population above the age of 15 was 20.8 per cent, which is close to the monthly average for the same quarter from CMIE at 19.9 per cent. The CMIE data, however, does suggest a sharp decline in June compared to April and May. Similar to the CMIE data, the PLFS data also shows a sharp rise in the unemployment rate which more than doubled compared to the unemployment rate in the preceding quarter of January-March 2020 at 9.1 per cent and 8.8 per cent in the same quarter (April-June) of 2019. While one in five persons above the age of 15 was unemployed during April-June 2020, the unemployment rate among the 15-29-year-olds was 34.7 per cent — every third person in the 15-29 age group was unemployed during the same period.

These are staggering numbers, but not surprising. While the lockdown certainly contributed to the worsening of the employment situation, particularly in urban areas, the fact that the economy was already going through severe distress as far as jobs are concerned is no longer surprising. Between 2016-17 and 2019-20, growth decelerated to 4 per cent, less than half the 8.3 per cent rate in 2016-17. The fact that the economy has not been creating jobs predates the economic shocks of demonetisation and the hasty roll-out of GST. The PLFS data from earlier rounds have already shown the extent of the rise in unemployment compared to the employment-unemployment surveys of 2011-12. The unemployment rates in urban areas for all categories increased by almost three times between 2011-12 and 2017-18. On an internationally comparable basis, the unemployment rate among the 15-24-year-olds in 2017-18 was 28.5 per cent, which makes the youth unemployment rate in India amongst the highest in the world, excluding small countries and conflict-ridden countries. Since then, it has only worsened or remained at that level.

The worsening situation is partly a result of the long-term neglect of the employment issue in policy circles. It is also a result of policy decisions such as demonetisation and GST implementation, which affected the informal/unorganised sector adversely. It is these enterprises in the unorganised sector that are the drivers of employment creation. Since 2016-17, most of these sectors have suffered as a result of policy choices. The decline in the number of workers by 15 million between 2011-12 and 2017-18 is only a partial reflection of the jobs crisis. The decline in jobs was accompanied by a decline in the quality of employment, with an increase in precarious jobs and a decline in access to social security for a majority of workers. The deceleration in the growth rate of economic activities also meant that real wages of casual workers in rural areas by January 2021 have declined compared to two years ago. Regular salaried workers were already suffering from a decline in real wages at 1.7 per cent per annum between 2011-12 and 2017-18. More recent data after the pandemic is not available but sectoral surveys do suggest that the decline in real earnings of regular salaried workers has continued. The lockdown only aggravated an already fragile employment situation.

Since the PLFS is also a longitudinal panel data, it is possible to examine what happened to different categories of households during the April-June 2020 quarter compared to the pre-lockdown January-March 2020 quarter. While the lockdown affected all workers, the most vulnerable were casual wage workers. Among casual wage workers employed during the January-March quarter, 50 per cent joined the ranks of unemployed and another 10 per cent exited the labour force. Only one out of three casual workers in urban areas could hold on to their job with another 5 per cent moving into the self-employed category. The regular salaried workers fared better but even among them 10 per cent lost jobs and another 5 per cent moved out of the labour force. Among those who were fortunate to retain their jobs, most suffered declines in earnings.

More recent data from the PLFS is awaited, but estimates from the CMIE data suggest that the unemployment rate has fallen 7 per cent for the 15 and above age population in recent months. While this may suggest that the economy is returning to the pre-pandemic levels, the rate is still very high. This level of unemployment is not just a symptom of the “jobless” model of economic growth that has been followed in the last two decades, but is also a recipe for political and social instability. The pandemic and the subsequent crisis in the employment-unemployment situation has only highlighted the fragile situation of the labour market. The real crisis of unemployment and jobless growth is a bigger pandemic that is unlikely to be resolved with the current model of economic growth which prioritises capital over labour.

Written by HIMANSHU

his article first appeared in the print edition on March 29, 2021 under the title ‘A bigger pandemic’. The writer teaches economics at JNU

Creating jobs for young India

If India does not make effective use of the strengths of its youth now, it may never do

Amartya Sen had once quipped that India’s unemployment figures were low enough to put many developed countries to shame. Professor Sen was, of course, not commending the country’s record in employment creation, but instead, highlighting the difficulties involved in measuring employment and unemployment in a developing country.

Unemployment has been at the centre of public debates in India recently. The government’s Periodic Labour Force Survey carried out in 2017-18 revealed that unemployment in the country reached an all-time high rate of 6.1%. What explains this sudden jump in unemployment in India, which had remained at a rather low rate of around 2% for several decades?

Our estimates based on official employment surveys and the Census show that in 2018, there were 471.5 million persons employed and 30.9 million unemployed in India. At the heart of the unemployment problem in India were young, unemployed men aged 15 to 29 years who comprised 21.1 million or 68.3% of all the unemployed in the country. To understand how their numbers rose recently, we need to examine the behaviour of not just labour demand but also labour supply over time.

Rising numbers of job seekers

First, the size of labour supply in India is getting a boost from the rapid expansion of the working-age population in the country — the population of 15-59-year-olds increased at the rate of 14 million a year in the 2000s.

Second, the nature of labour supply is changing too, with increasing enrolment of young adults for education and their rising job aspirations. Of all 15-29-year-old females in India, 31% had been attending schools or colleges in 2018, up from 16.3% in 2005 (although, it needs to be mentioned here that there have been questions on the quality of education received and skills acquired by these young people).

Third, the size of the workforce engaged in agriculture (and allied activities) has been declining in India: from 258.8 million in 2005 to 197.3 million in 2018 (which still accounted for 41.9% of the total workforce in the country). This decline has been partly due to the ‘push’ from low-productivity agriculture, which has suffered due to stagnant public investment from the 1990s onwards. The decline has also been driven by the ‘pull’ of new opportunities that emerge in the towns and cities. A significant number of people who are ‘employed’ according to official statistics could actually have been in ‘disguised unemployment’ in agriculture (consider a person who does no job but occasionally assists his family in cultivation). Young persons in rural areas will be increasingly keen to exit disguised unemployment in agriculture.

As a result of the above-referred factors, there has been a significant increase in India in the supply of potential workers for the non-agricultural sectors. These are 15-59-year-olds who are not students nor engaged in agriculture. If provided the relevant skills, they could possibly work in industry, construction and services. Our estimates show that the potential non-agricultural workforce in India grew at the rate of 14.2 million a year between 2005 and 2012, which rose further to 17.5 million a year between 2012 and 2018.

How has the growth of labour demand matched up to the job challenge in India? Between 2005 and 2012, construction had been the major source of employment in India, absorbing men who exited agriculture in rural areas, especially in Uttar Pradesh, Rajasthan, Bihar and Madhya Pradesh. The growth of construction jobs was associated with a revival in agricultural incomes and rural wages during this period.

Labour demand lagging behind

However, the growth of agricultural incomes and the rural economy in India slowed down markedly after 2012. New employment opportunities in construction created in rural India amounted to 18.9 million between 2005 and 2012, which fell sharply to 1.6 million between 2012 and 2018. The size of the manufacturing workforce in India declined by one million between 2012 and 2018, with micro and small firms in the informal sector suffering severe setbacks. At the same time, some segments of the services sector, especially education and professional, business and allied services recorded acceleration in employment growth after 2012. The crisis in the rural economy appears to have been moderated to some extent by an increase in governmental spending in 2016-18.

Even from 2005 to 2012, job creation in industry, construction and services in India (at the rate of 6.3 million a year) was inadequate to absorb the increase in potential job seekers into these sectors (at the rate of 14.2 million a year). Between 2012 and 2018, while the supply of potential workers into the non-agricultural sectors accelerated (to 17.5 million a year), actual labour absorption into these sectors decelerated (to 4.5 million a year). Thus, the mismatch between potential supply of and demand for labour deepened after 2012. While only the women suffered due to the mismatch during 2005-2012, young men were also affected after 2012. In fact, 30-59-year-old men managed to secure 90.4% of all new non-agricultural employment opportunities that emerged in India between 2012 and 2018, leaving too few new jobs for women and younger men.

Faced with the inadequate number of new jobs generated in the economy, women withdrew altogether from the labour market. Of all 15-59-year-old women in India, only 23% were employed in 2018, down from 42.8% in 2005. Correspondingly, there had been a sharp rise in the proportion of women who reported their status as attending to domestic duties in their own households. At the same time, the response of young men to the slow job growth in the economy was to continue in the labour market as job seekers. Among 15-29-year-old men, there was an unprecedented increase in the number of the unemployed, from 6.7 million in 2012 to 21.1 million in 2018. This was indeed the main contributor to the sudden increase in overall unemployment in India.

India faces a tough challenge in creating decent jobs for its growing young population. To tackle this, action will be needed on multiple fronts including investments in human capital, revival of the productive sectors, and programmes to stimulate small entrepreneurship. If the country is unable to make effective use of the strengths of its young women and men now, it can perhaps never do so. Within the next two decades or so, India’s population will gradually start getting older, and it will be tragic for millions of poor Indians to grow old before getting even moderately rich.

Jayan Jose Thomas is Associate Professor, IIT Delhi. Views expressed are personal

Source: The Hindu, 1/10/2019

Is the unemployment crisis for real?

Employment opportunities, formal jobs andthe labour force are all shrinking

The jobs situation in India does not reflect a crisis, but it is a matter of serious concern. A crisis is understood as an emergency that demands immediate attention, without which we could see a calamity of sorts. There is no immediate calamity of any kind on hand. But there is a deeply insidious problem at work in the form of shrinking employment opportunities, shrinking formal jobs, and a shrinking labour force.

A populous and demographically young country like India has a lot to gain if the expanding working-age population can join the labour force and be provided with gainful employment. More hands at work can ensure greater prosperity and relatively evenly spread growth.

Problems of unemployment

But if India cannot provide employment to its growing working-age population, it does not just miss a chance to become a prosperous country, but also risks becoming an unmanageable or unruly country. Unemployed youth, beyond a threshold, can lose hope of a job and can easily stray into becoming unsocial elements.

A bigger problem is that those who do get jobs and prosper do not appreciate the plight of those who do not. It is mistakenly believed that those who do not get good jobs are not worthy of getting them. The blame is placed at the door of the unemployed as if it is entirely their problem. The macro-economic and social dimension of the problem is not appreciated in India.

Statistics give us clues of the brewing problem and its insidious nature. First, we are in the midst of a serious investments deficit. CMIE’s CapEx database demonstrates the persistent fall in new investment proposals since 2011-12. New investment proposals had peaked at Rs. 25 trillion in 2010-11. In 2017-18, these were down to Rs. 11 trillion, and in 2018-19, these are unlikely to cross Rs. 10 trillion.

The impact of this fall in investments is visible in shrinking jobs. In a point-to-point comparison, in 2018, the number of persons employed declined by 11 million. An estimated 408 million people were employed in December 2017. This fell to 397 million in December 2018. The average employment in 2017 was 406.5 million. This fell to an average of 402.1 million in 2018. This shows a smaller fall of 4.5 million. Either way, we see a very substantial fall in employment. One (11 million) is only much worse than a fairly bad fall of 4.5 million, or 10%.

Labour participation rate

This fall in jobs is not translating into a proportionate rise in unemployment. But it is showing up in a fall in the labour participation rate. A rise in unemployment is bad, but a fall in the labour participation rate is worse. The former reflects a shortage of jobs compared to the number of people looking for jobs. The latter reflects a fall in the number of people looking for jobs. When we juxtapose this against falling jobs, we see a glimpse of the hopelessness of people who should be looking for jobs.

The crisis is the response

Our real crisis is in the nature of the government’s response to the situation. When the establishment works hard to rubbish sound statistical practices and results of large sample household surveys and instead uses back-of-the-envelope calculations to measure employment, we are headed towards a bigger crisis than the jobs crisis.

Source: The Hindu, 15/02/2019

The shape of the jobs crisis

India has no industrial policy or employment strategy to ride the wave of its demographic dividend

Job creation has slowed since 2011-12, the year of the last published National Sample Survey Office (NSSO) labour force survey. I used Labour Bureau annual survey (2015-16) data and Centre for Monitoring Indian Economy Pvt. Ltd. (CMIE) data (post-2016), which has a sample size larger than the NSSO labour force surveys, to reach this conclusion. Both surveys cover rural and urban, and organised and unorganised sector employment; in other words, they capture both the Employees’ Provident Fund Organisation/National Pension Scheme (organised) as well as such employment as might be generated by Micro Units Development & Refinance Agency Ltd (MUDRA) loans or platform economy jobs. The latter two job sources are precisely what the government claims were not being captured by jobs data available. We have repeatedly stated that government claims on absence of ‘good’ data on jobs are simply untenable.

My analysis prior to the leak of NSSO 2017-18 data had shown that the jobs situation has turned grim since 2012.

A jump now

What the leaked NSSO 2017-18 data have shown is that while the open unemployment rate (which does not measure disguised unemployment and informal poor quality jobs that abound in the economy) by the usual status never went over 2.6% between 1977-78 and 2011-12, it has now jumped to 6.1% in 2017-18. This was expected. In the last 10-12 years, more young people have become educated. The tertiary education enrolment rate (for those in the 18-23 age group) rose from 11% in 2006 to 26% in 2016. The gross secondary (classes 9-10) enrolment rate for those in the 15-16 age groupshot up from 58% in 2010 to 90% in 2016. The expectation of such youth is for a urban, regular job in either industry or services, not in agriculture. If they have the financial wherewithal to obtain education up to such levels, they can also “afford” to remain unemployed. Poor people, who are also much more poorly educated, have a much lower capacity to withstand open unemployment, and hence have lower open unemployment rates.

What NSSO 2017-18 also shows is that as open unemployment rates increased, more and more people got disheartened and fell out of the labour force; in other words, they stopped looking for work. The result is that labour force participation rates (LFPR, i.e. those looking for work) for all ages, fell sharply from 43% in 2004-5 to 39.5% in 2011-12, to 36.9% in 2017-18 (a reflection mainly though not only of the falling female LFPR). This shows up in the growing numbers of youth who are NEETs: not in education, employment or training. They are a potential source of both our demographic dividend but also what is looking to be a mounting demographic disaster.

Meanwhile, government economists have repeatedly told us that there is no jobs crisis.

Between 2004-05 and 2011-12, as many as 7.5 million new non-agricultural jobs were being created every year. The unemployment rate was only 2.2%. The volume of open unemployment was almost constant (at around 10 million) until 2011-12, but it increased to 16.5 million by 2015-16. Increased open unemployment, post 2011-12, suggests that those in education prior to 2011-12 would start searching for non-agricultural jobs but did not find them. The latest NSSO data suggest that this situation had worsened further by 2017-18.

Across education categories

A sharp increase in the unemployment rate of the educated (based on our estimates of the Annual Survey, Labour Bureau) should have worried the government. My estimate is that the unemployment rate rose over 2011-12 to 2016 from 0.6% to 2.4% for those with middle education (class 8); 1.3% to 3.2% for those who had passed class 10; 2% to 4.4% for those who had passed class 12; 4.1% to 8.4% for graduates; and 5.3% to 8.5% for post-graduates. Even more worrying, for those with technical education, the unemployment rate rose for graduates from 6.9% to 11%, for post-graduates from 5.7% to 7.7%, and for the vocationally trained from 4.9% to 7.9%.

While NSSO 2017-18 data show the share of regular wage jobs rising, especially in urban areas (and the share of self-employed and casual wage work falling), this rise in nowhere close to the number of educated youth entering the labour force.

For an economy at India’s stage of development, an increase of workers in agriculture (of 20 million that took place over 1999-2004) is a structural retrogression, in a direction opposite to the desired one. Between 2004-5 and 2011-12, the number of workers in agriculture fell sharply, which is good, for the first time in India’s economic history. Similarly, the number of youth (15-29 years) employed in agriculture fell from 86.8 million to 60.9 million (or at the rate of 3 million per annum) between 2004-5 and 2011-12. However, after 2012, as non-agricultural job growth slowed, the number of youth in agriculture actually increased to 84.8 million till 2015-16 and even more since then (as the CMIE data would attest). These youth were better educated than the earlier cohort, but were forced to be in agriculture.

Drop in manufacturing jobs

Even worse, manufacturing jobs actually fell in absolute terms, from 58.9 million in 2011-12 to 48.3 million in 2015-16, a whopping 10.6 million over a four-year period. This is consistent with slowing growth in the Index of Industrial Production (IIP), which consists of manufacturing, mining, and electricity. The IIP had sharply risen from 100 in 2004-5 to 172 by 2013-14 (in the 2004-5 series), but only rose from a base of 100 in 2011-12 in the later series to 107 in 2013-14, and to 125.3 in 2017-18. This is also consistent with exports first falling after 2013, then barely recovering to levels still lower than 2013. It is also consistent with investment-to-GDP ratio falling sharply since 2013, and still remaining well below 2013 levels. This holds for both private and public investment.

What is tragic is the growing number of educated youth (15-29 years) who are “NEET”. This number (70 million in 2004-5) increased by 2 million per annum during 2004-5 and 2011-12, but grew by about 5 million per annum (2011-12 to 2015-16). If that later trend continued (as there is evidence it has) we estimate it would have increased to 115.6 million in 2017-18. That is a 32 million increase in “NEETs” in our society over 2011-12 to 2017-18 — potential lumpen fodder.

These youth (“NEET” and unemployed) together constitute the potential labour force, which can be utilised to realise the demographic dividend in India. Will a new government at least recognise there is a crisis?

I estimate that the number of new entrants into the labour force (currently at least 5 million per annum), and especially educated entrants into the labour force will go on increasing until 2030. It will thereafter still increase, though at a decelerating pace. By 2040 our demographic dividend — which comes but once in the lifetime of a nation — will be over. China managed to reduce poverty sharply by designing an employment strategy (underpinned by an education and skills policy) aligned to its industrial strategy. That is why it rode the wave of its demographic dividend. Unfortunately, India has neither an industrial policy nor an employment strategy, let alone the two being aligned.

Is our political class listening? Or are our educated unemployed and NEETs meant to be merely used as political fodder? That is the trillion rupee question for the fastest growing large economy in the world, about to become the fifth largest in the world.

Santosh Mehrotra is Professor of Economics and Chairperson, Centre for Informal Sector and Labour Studies, Jawaharlal Nehru University, New Delhi. Twitter:@smehrotra1

Source: The Hindu, 13/02/2019

Is UBI a solution to the unemployment crisis?

By 2030, 800 million could lose their jobs across the world. Universal Basic Income can help keep them afloat.

Automation is here on us, and, in the years to come, Artificial Intelligence (AI) will take it to an unprecedented level. It will bring about a profound change in the way we live and earn our livelihood. According to McKinsey, it can potentially leave 800 million of us jobless by 2030 across the world. The situation may be all the more alarming in developing countries; 69% of jobs in India risk losing their relevance in the same period.

That’s a scary possibility, given a highly unequal distribution of technological resources. Industry leaders whose innovations will likely influence the AI-related developments suggest Universal Basic Income (UBI) as a solution. For example, Elon Musk told CNBC: “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation.” Mark Zuckerberg said during his Harvard commencement speech: “Every generation expands its definition of equality. Now it’s our time to define a new social contract for our generation. We should explore ideas like universal basic income to give everyone a cushion to try new things.”

In India, the opposition Congress party has announced that it will provide a basic minimum income guarantee to the poor, and the ruling Bharatiya Janata Party has similar ideas to offer. Such schemes are bound to bring immense pressure on the exchequer in their present forms. But, has the Indian political class unintentionally ended up providing a dress rehearsal for a future in which we are likely to face a permanent class of jobless people, in need of state support for survival?

When the machine came with the industrial revolution, it democratised the work culture to a large extent, weakening the institutions of slavery and caste, and making it unavoidable for the rest to work for subsistence. But for the first time in history, humans are facing an existential dilemma, where a substantial number of us stare at the prospect of being jobless because AI doesn’t only make humans’ physical work irrelevant, it also challenges the human brain, and it will only get better at it with time.

There may be newer job avenues with the proliferation of AI, but it would also mean that to keep themselves employed, humans would have to continuously update their skills. “A generation ago, the half-life of a skill was about 26 years, and that was the model for a career. Today, it’s four and half years and dropping,” Indranil Roy, the head of the Deloitte’s Future of Work Centre of Excellence, told the BBC.

But we are not prepared — emotionally, mentally and in terms of infrastructure — to adapt to such changes so quickly, threatening a prospect of great unpredictability around employment. Among the sectors that are likely to remain relevant — with constant training, of course — are creative, cognitive and technological, but for a large section of workers, it won’t be easy keeping up with these.

The possibilities of AI are, however, endless. It can open up jobs that are beyond our imagination right now, and may as well offset the loss in jobs. But the worrisome fact is that it can equally lead to an unprecedented inequality where the haves, having AI (like developed countries and a few individuals like Zuckerberg), will keep growing at a rate which have-nots will never be able to achieve. It may herald an age in which, initially, there is an unprecedented growth but little rise in pay or employment. Eventually, AI-driven automation will cheapen products, resulting in a decline in the wage of leftover jobs, and stagnation in the economy and employment — and could lead to the market’s collapse. UBI, in this context, makes business sense to keep the economy running.

Dutch historian, Rutger Bregman, calls basic income as “the venture capital for the people”. It could compensate for the loss in jobs and skills, and also help in innovation. Multiple surveys suggest that the young in this age do not recall their working hours as their happiest memories; may be, the UBI-funded creativity pursuits might help better our happiness index. Many consider George Orwell and Harper Lee, among others, as successes who were provided with basic support.

For many, such possibilities may simply be a red herring. But even if we discount the possibility of a loss in employment, certain activities would undoubtedly become automated (about half of the present-day skills, McKinsey, 2018), making a lot of workers easily dispensable, again leading to lesser pay for the rest of the employed — or pay polarisation, resulting into immense income inequality.

People cried wolf that machines and computers would eat up their jobs. But for the first time in history , it’s not just that humans’ physical power is being challenged, but also their thinking power, which was unique to humans. Precedence shows that the fallout of shifting from an Industrial and IT age to Artificial Intelligence age would indeed mean loss of jobs — for example, AT&T, worth $267 billion in today’s valuation, employed more than 7.5 lakh peoplein 1967, Google, worth $370 billion, employs merely 55,000.It increasingly appears that the news of the wolf’s arrival may not be too far. UBI can become part of the solution, more so in developing countries such as India.

Source: Hindustan Times, 5/02/2019