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Not working for too many

The rate of job creation in India has not kept pace with the increase in the labour pool.

india Updated: Nov 11, 2010 23:36 IST
Hindustan Times

A new survey by the labour bureau nearly quadruples India's estimate of its unemployed. The self-confessed 'thin survey' covering 46,000 households across 300 districts puts the number of jobless — those out of work for six months — at 40 million, roughly the population of Argentina. The broader studies of the National Sample Survey (NSS), on which the official orthodoxy rests, come up with a relatively modest 11 million, even then that's more than all the Greeks put together. The NSS data themselves throw up widely divergent estimates of the unemployment rate depending on how the questions are framed. At its widest definition, India accepts the unemployment rate in 2004-05 was 8.28%, pretty close to the 9.4% the labour bureau study fixes for 2009-10. The flagship social welfare programme of the United Progressive Alliance, the National Rural Employment Guarantee Scheme, covered 43 million households last year, lending credence to the higher estimates of joblessness in India.

The other takeaway from the labour bureau survey is Indians may be leaving farms faster than we had thought. Less than half of the workforce earns its livelihood from agriculture. The unemployment dole is showing results if an extra 40 million people have found other work in villages, like laying roads, or in towns. Yet the deeper malaise is also on display: India's jobless growth. Although the rate of job creation is doubling every five years, it has still not caught up with the pace of increase of India's labour pool. So large movements of people from the farm will remain an assisted process for the foreseeable future.

This imposes costs at two levels. One, the money it takes to provide the food-for-work programmes like the 40-odd thousand crore rupees the Centre hands out a year for the unemployment dole. Two, the cost of setting up a social security net from scratch. The labour bureau survey finds four in five Indian workers have no access to pension or healthcare benefits. Universal social security is a distant dream for India although baby steps have been taken by the UPA government. The size of India's workforce is bigger than the population of the US, providing it with a fraction of the benefits enjoyed by workers in advanced economies is a staggering exercise. That must not, however, deter us. A swelling labour pool is the principal reason for our rapid growth in the 21st century. This resource needs to be nurtured.

First Published: Nov 11, 2010 23:32 IST