CMIE data shows 11 mn jobs lost in 2018: Labour reforms need of the hour, but no political party is serious about it

Almost 11 million people lost their jobs in the country in 2018. According to a report by the Centre for Monitoring Indian Economy (CMIE),  job losses, and the number of unemployed people in the country have been steadily rising.

Job losses and unemployment are two different but inter-related phenomena. Job loss simply means displacement from livelihood and income, either by the employer or due to other reasons which includes voluntarily declining to work or closing down of the firm's activities. Job loss does not mean any major loss of organised sector jobs. It is loss of livelihood options of informal/unorganised sector workers and other vulnerable marginal groups.

 CMIE data shows 11 mn jobs lost in 2018: Labour reforms need of the hour, but no political party is serious about it

Representational image. Reuters.

The informalisation of the labour market started a long time back. According to the National Commission for Enterprises in the Unorganised Sector (NCEUS), "the unorganised sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers.” (NCEUS, 2007).

The Commission considers all agricultural activities undertaken on agricultural holdings, either individually or in partnership, as being in the unorganised sector. According to this definition, it excludes only the plantation sector and other types of organised agriculture (e.g., corporate or co-operative farming) and covers a very large part of agriculture.

About 90 percent of the labour force is still engaged in the informal sector. It includes agriculture and other rural non-farm activities. Informalisation of the labour market has been an agenda of successive governments since liberalisation in 1991-92. Every government has indulged in unwanted reforms in labour laws and in the scrapping of social security for workers. Both, the Congress and the BJP, are guilty of it. So what the CMIE presents is historical data and is not just limited to the year 2018.

The loss of employment results in vulnerability in income and adds to the number of informal workers who are entitled to get bare minimum wages. The rate of unemployment was higher in December 2018 compared to the other 11 months in the year. (See Table 1)

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Table 1 also shows that urban unemployment rate is higher than rural unemployment. Interestingly, the rate of employment loss is high in the rural areas than in the urban areas. Around 91 lakhs rural informal workers lost their jobs compared to 18 lakhs of urban informal workers in 2018. There is about 84 percent of job loss in the rural areas which gets added to the numbers of rural-urban labour migration.

Women as a segment lost around 88 lakh jobs compared to 22 lakhs for men. Also, rural women are more vulnerable than their urban counterparts. Rural women lost 65 lakh jobs compared to 23 lakh by urban women. The other side of this vulnerable story is that there is an increasing marginalisation of women which leads to even lesser scope for employment.

The number of men migrating for jobs are higher compared to the number of women. This results in poor household incomes and widens the inequality in the rural sector. This is a highly neglected area in the development governance of India. This reality needs to assessed in the context that there is only the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme available for those who have lost their jobs in the rural sector. It is again a partial income support scheme and not a full-fledged employment guarantee programme.

The CMIE report also refers to about 37 lakh salaried employees who lost their jobs. This is largely pertaining to the private sector. Cashless transactions and poor capital investments are the causes; however, there is not much official acceptance of these results.

In India, employment generation is dependent on capital investments. For a worker that would mean the creation of employment, and unfortunately in the Indian economy, employment elasticity, i.e. ability to produce employment by every one percent increase in investments has been declining since 1972. (See Table 2)

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The CMIE report also mentions that there is a gradual decline in new projects in the last couple of years. (See Table 1). There is a sudden decline in new project announcements and implementation after 2010. It shows a declining trend in the last five years. What is worrisome is that it is not cause for alarm yet for any ministers and policymakers.

The lack of new projects and poor employment elasticity coupled with the crisis posed by the attempt to build a cashless economy are the reasons behind employment loss.

Indian policymakers and institutions like NITI Aayog should accept the fact that employment elasticity in the country is less than that of the African countries and other middle income countries. And, neither proper method nor any correction mechanisms has been suggested by the authorities appointed by the government. No economic advisor in the country pays any attention to this. The finance ministry too, completely ignores these facts. Such manufactured ignorance is the root cause of massive social and economic inequality in the country.

India needs labour-intensive sector reforms and not technology-oriented ones. Preferential privatisation is not needed as it benefits a few and impoverishes the poor. However, the 2019 election is not going to be influenced by any of these realities as these are not the priority of any  political party.

(The writer is Assistant Professor, Jamsetji Tata School of Disaster Studies, Tata Institute of Social Sciences)

Updated Date: Jan 07, 2019 16:07:46 IST