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To beat jobless growth, generate jobs with greater public investment

According to the labour bureau, 12-odd million people seek work every year while only 1.35 lakh jobs were generated in the Indian economy in 2015. Joblessness has in fact been steadily rising from 3.8% in 2011 to 5% in 2015 despite steady GDP growth

analysis Updated: Feb 08, 2017 16:27 IST
Joblessness has in fact been steadily rising from 3.8% in 2011 to 5% in 2015 despite steady GDP growth.
Joblessness has in fact been steadily rising from 3.8% in 2011 to 5% in 2015 despite steady GDP growth.(Reuters File Photo)

In an unusual and rare admission, the NDA government stated during question hour in the Rajya Sabha that the rate of unemployment has steadily risen in the country, especially among the other backward classes. The data is from Labour Bureau’s annual survey of employment and unemployment that was conducted between April-December 2015. This showed an overall rate of 5% on a usual principal status basis — that refers to people looking for work for a longer part of the year — while it was 5.2% for OBCs in 2015 according to the union minister of state for planning Rao Inderjit Singh.

Joblessness has in fact been steadily rising from 3.8% in 2011 to 4.7% in 2012 and 4.9% in 2013. There was no survey in 2014. Disturbingly, this has been happening despite robust GDP growth of 5.1% in 2012-13, 6.9% in 2013-14 and 7.9% in 2015-16 – what critics have referred to as a process of jobless growth. The government of the day, regardless of whether it Congress or BJP-led, never officially admitted this reality although it has been acknowledged that employment growth has seriously lagged behind growth in the labour force, especially in the 2000s when compared to the 1990s.

When 12-odd million people seek work every year while only 1.35 lakh jobs were generated in the Indian economy in 2015 according to the Labour Bureau, unemployment is bound to result. A 5% rate appears somewhat low given this mismatch between supply and demand in India’s labour market. It is largely because the poor cannot afford to remain unemployed as they take up whatever self-employment and casual wage employment opportunities that are available to get by. It is only the educated segments that wait for better opportunities to emerge and remain unemployed for a longer time.

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While the situation is grim for everyone – typically unemployment for women is higher than for men — the minister only underscored the fact that the situation is much worse for OBCs and the Scheduled Castes for whom the unemployment rate was 3.1% in 2011 and rose to 5 % in 2015. These sections suffer disproportionately as an agrarian crisis is raging and jobs are fast drying up. However, the far bigger problem is underemployment than unemployment per se – a fact that is also brought out by the Labour Bureau which showed over a third of working people were employed for less than a year in 2015.

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Despite the pervasive nature of joblessness, however, this problem rarely features in official debates on economic matters in India. A big reason is the relatively low rates indicated by official data of the National Sample Survey Organisation or Labour Bureau that are contrary to the widespread impression that there is a vast and growing reserve army of unemployed. A 5% rate is unlikely to bring Parliament to a standstill. But the admission of a rising rate of unemployment ought to be a beginning in focusing attention on generating jobs with greater public investment, especially for the weaker sections.

N Chandra Mohan is an economics and business commentator.

The views expressed are personal.