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Tuesday, Dec 10, 2019

India’s unemployment crisis is worrying, writes Karan Thapar

The labour force participation rate — the number of people looking for jobs — is simultaneously shrinking. In 2016, it was 47-48%. Today, it’s 43%. So while the number of people unable to find jobs has grown, the number seeking them has fallen. That is not good news

columns Updated: Nov 16, 2019 19:55 IST
While the number of people unable to find jobs has grown, the number seeking them has fallen
While the number of people unable to find jobs has grown, the number seeking them has fallen(REUTERS)
         

Let me start with an admission. I’m not an economist and what I know of the economy has been culled from the papers or by listening to economists on television. So it’s second-hand knowledge. But the picture that’s emerged of the unemployment situation is deeply worrying. Yet I don’t hear politicians speaking about it, not even those of the Opposition.

Mahesh Vyas, the CEO of the Centre for Monitoring the Indian Economy, says unemployment has risen to 8.5% in October. When it touched 6.1% in 2017-18 it was said to be the highest in 45 years, though the government had reservations about that claim. Since then, it’s soared.

More worryingly, the labour force participation rate — the number of people looking for jobs — is simultaneously shrinking. In 2016, it was 47-48%. Today, it’s 43%. So while the number of people unable to find jobs has grown, the number seeking them has fallen. That is not good news.

If this overall picture is disturbing, it becomes more worrisome when you look at specific survey results. The first are a set on general unemployment between 2011-12 and 2017-18. An early one, by Laveesh Bhandari and Amresh Dubey, commissioned by the PM’s Economic Advisory Council, shows employment grew from 433 million to 457 million. More recently, two others come to the opposite conclusion. Santosh Mehrotra and Jajati Parida, in a paper published by Azim Premji University, claim employment fell from 474 million to 465. A piece by Himanshu in Mint claims the fall was greater, from 472.5 million to 457.

The Mehrotra and Parida survey offers a plausible explanation for why jobs have shrunk. It shows between 2011-12 and 2017-18 agricultural jobs fell by a massive 27 million, a decline of 11.5%. The rest of the economy did not generate enough new jobs to make up.

This is corroborated by the CMIE’s findings. It reports rural joblessness is at 8.3%, just 0.6% behind its urban counterpart. Normally the difference should be closer to 2%. The fact it’s considerably narrower suggests a sharp deterioration in village jobs. As Mahesh Vyas puts it: “A rate of 8% in rural India is stressful, because there are not many fall back options as in towns and cities. It would become a question of survival if the situation worsens further.”

Perhaps more worrying are specific findings on youth unemployment. The survey by Mehrotra and Parida shows the total number of unemployed youth (15-29 years) went up marginally from 8.9 million to 9 million between 2004-05 and 2011-12 but jumped to 25.1 million by 2017-18. MGNREGA appears to corroborate this. The total number of young workers (18-30) seeking employment under MGNREGA is rising. It was one crore in 2013-14. It declined to 58.69 lakh in 2017-18. It’s risen to 70.71 a year later in 2018-19. That trend seems to be continuing. As of October 21, it’s reached 57.57 lakh.

One reflection of this is the number of young people (15-29) who are neither part of the labour force nor in education or training. It’s risen to over a 100 million in 2017-18. It was 83 million in 2011-12. The conclusion Mehrotra and Parida reach concerns all of us. “The slow growth (or scarcity) of non-farm jobs and the rising open unemployment together have resulted in a massive increase of disheartened youth… these are young people who are disheartened by the state of affairs and are neither looking for jobs nor are they interested in studying or training themselves.” It seems India’s youth — its future — is opting out.

Honestly, I didn’t realise how serious the unemployment situation is nor how grim things are for the young. Perhaps it’s not surprising the government doesn’t talk about it — why would it? — but isn’t it perplexing it is not being held to account? It’s a worrying situation, yet the government is getting away with it. The question is: how long can this continue?

Karan Thapar is the author of Devil’s Advocate: The Untold Story

The views expressed are personal