Jobless growth: Niti Aayog offers just a partial solution based on old data

New Delhi - Is India powering ahead without creating enough jobs for the 10-15 lakh youth entering the workforce every month? The government think tank Niti Ayog doesn’t think so. In fact, Niti has rubbished claims of India powering ahead jobless, saying unemployment rate has been constant between 5 percent and 8 percent under the strictest definition of the term. In its three-year draft action agenda, Niti has instead shifted gears, talking of under-employment and saying low productivity and low wages for those already in jobs is the real problem. Not jobless growth.

Reuters

Reuters

Of course, Niti is only partly right. We do need to enhance productivity and raise workers’ wages but dismissing inadequate job creation is just brushing the uncomfortable under the carpet. It is interesting to also see how Niti has sidestepped another crucial aspect in the quest for jobs: lack of timely and adequate data. Niti has used old data to make assertions against the jobless growth charge. It quotes figures for unemployment from the six year old NSSO Survey of 2011-12 and for the services sector, it goes back further – by a decade – using the 2006-07 NSSO survey of service firms to point out that those who are already employed are under-paid as they are engaged in low productivity jobs. If Niti’s suggestions for what ails Indian workforce are to be taken seriously, the government must focus on adequate and timely data generation to be able to capture trends in unemployment.

Anyhow, the government is obviously reluctant to admit its failure on the jobs’ front but data compiled by its own Labour Bureau on a quarterly basis show why this is a serious issue. In the nine months till December 2016, only 2.31 lakh new jobs were created across eight labour intensive sectors. This averages to 0.26 lakh new jobs a month (against at least 10 lakh needed), not even a 1,000 jobs a day, or just about 840 new jobs on an average each day of the nine months under review.

Remember, the Labour Bureau which tracks employment generation across select sectors quarterly has smartly altered the sample size and the sample itself, now terming the data released for calendar 2016 as “new series”. This implies one cannot compare job generation data which was released for earlier years. The latest data show that 1.32 lakh new jobs were added in the October-December period of 2016, far more than the 32,000 added in the immediate previous quarter and 77,000 in the April-June quarter of 2016.

As per the Bureau’s previous surveys, no new jobs were created but there was actually a decline of 20,000 jobs in the December quarter of 2015. The September quarter of the same year had added 1.34 lakh new jobs across the same eight sectors and was still the slowest quarter in the previous six years (barring 2012 where quarter wise data was not available). So total number of new jobs created across the eight sectors between January-December 2015 stood at just 1.35 lakh, making this the slowest pace of new jobs being created since 2009.

So unemployment is obviously a serious issue. But having said that, Niti’s focus on enhancing workers’ productivity and latching on to business from export markets for raising workers’ wages is a welcome move.

Its most significant suggestion is enhancing Indian manufacturing to globally competitive levels so that India gets a larger share of the global export basket, ahead of competitors like China. Comparing India’s progress with that of China in jobs growth, the Niti report says, "Many super competitive firms in China today employ not just tens of thousands of workers but hundreds of thousands of them. In contrast, there are hardly any firms in India employing hundreds of thousands of workers."

Niti’s action plan says companies that create 10,000 jobs within three years of setting up should be given a corporate tax holiday for five years. More importantly, the three-year action plan says we need to improve on product quality in, say, merchandise to be able to wrench a larger share of the global merchandise export basket, pushing China back. India needs a comprehensive strategy for fostering large, labour intensive export firms to take advantage of the export market and improve the quality of jobs.

Other suggestions include setting up coastal employment zones like China and faster labour reforms.

This article in Scroll says the contribution of unorganised sector jobs in 2017 will rise to 93 percent. And 60 percent of those with jobs do not find employment for the entire year, indicating chronic underemployment. An overwhelming majority of the Indian workforce is in the unorganised sector, with little job guarantee, frequent job rotation, low productivity and obviously low wages.

Some labour intensive sectors have been dealt with in detail by Niti, with specific suggestions on how to raise productivity, create more jobs and enable workers to earn more. India’s poor track record in the apparel exports area has come in for criticism, with Niti suggesting that India should seize the opportunity provided by rising wages in competing apparel exporting countries to get a larger share of the global export pie.

Another important suggestion by Niti is extending fixed-term employment to all sectors. Currently, fixed-term employment had been announced by the government in apparel manufacturing only, as part of the Rs 6,000-crore textile package announced last year.


Published Date: May 01, 2017 01:34 pm | Updated Date: May 01, 2017 01:34 pm