India's job crisis: Clue to employment is growth in the real sense, not just high GDP numbers
While headline numbers are definitely eye-catching, the unemployment ratios within the educated and skilled classes are alarming
The issue of employment will not be resolved easily as the concept is amorphous
The revelation of the linkage with educated and skilled personnel is important
The job situation among those who have been skilled through vocational training is not very different
The issue of employment will not be resolved easily as the concept is amorphous given that it is hard to define who is employed or unemployed. The NSSO data that has been used in Business Standard has not been accepted as being the final document and hence is not official. But nonetheless, the revelation of the linkage with educated and skilled personnel is important as it is serious given that the unemployment numbers are scary.
The Business Standard article quoting NSSO data shows that during the period 2011-12 and 2017-18 unemployment among the educated increased sharply across males and females in both rural and urban areas. The ratio of unemployment more than doubled to 10.5 percent and 9.2 percent for males in rural and urban areas respectively and was at 17.3 percent and 19.8 percent for females respectively in rural and urban areas.
This bit of news is disturbing because we do usually talk of the concept of demographic dividend which can become a liability in case employment is not created. However, given that the NSSO defines an educated person as one with secondary education up to 10th standard, there is some comfort given that children may not be entering the workforce at that age. To this extent the unemployment numbers may be on the higher side.
The broader issue which comes for discussion pertains to the quality of education which is more important because when the youth has to enter the non-menial professions, it would be necessary to be equipped with the right qualification. It has been noticed in India that education is not homogenous and there is no singular curriculum that is followed across the country.
There are state differentials, and even within the region, there are differences in the approach to education which can be English based on regional language based. The latter stand fewer chances in the competitive world and end up at the lower levels as competition too is very high. The NSSO should probably firm up the concept of educated youth to get a better sense of the status of employment.
The report also points out that the situation among those who have been skilled through vocational training is not very different. Two features have been highlighted. The first is that the ratio of those who received training came down to 2 percent from 2.2 percent which could be because of a higher base of educated youth. Second, the unemployment rate here too is worrisome as it has doubled to 12.4 percent in FY18 as against 5.9 percent in FY12.
Here it can be argued that the fall in the ratio of those who received such training can also be attributed to the fact that today with the advent of technology and access to viewing the good life, students may not be willing to go in for jobs such as carpenters, plumbers, electricians, etc. once they deem themselves to be educated. It becomes the last resort as the majority of youth aim for an office job where manual skills are not required. This is a major challenge especially with the lower income group where the aspiration is to do better in life with unemployment being preferred to doing such jobs.
Addressing these issues is important because while headline numbers are definitely eye-catching, the unemployment ratios within the educated and skilled classes are alarming. It brings to the fore the fact that having rudimentary education and acquisition of menial skills may not be adequate to find jobs which ideally should be increasing with the spread of urbanisation and growth.
Normally growth in the housing sector should lead to higher demand for masons, electricians, plumbers etc. and the retail boom should require more hands on the loom. Here the explanation is that with the advent of technology there has been a strong case of labour displacement with fewer hands being required and productivity increasing. In a way, the stringent labour laws act as a deterrent for small firms which do not want to hire too many people.
Hence while the issue of unemployment will continue to dominate agendas of government the answer is to revamp the education system and make the skills job oriented. This is a very big task because overhauling the entire education system is not possible but as long as there are initial differences in quality of education, the inequality will carry on through the life cycle right up to the time one acquires skills. Education in an Indian language from a government school (which is the only available facility in most of rural India) cannot get a child education in a better-rated college which in turn makes it even more difficult to get professional education. These anomalies have to be corrected or else the problem will only deepen.
On the other side, the youth also has to be more adaptable and settle for jobs with rudimentary skills and not wait for office or delivery boys’ opportunities. The fact is in most advanced industries companies are working on models of limited human interface with greater reliance on technology. Making inroads will be difficult. It will be more a case of the new industries like e-commerce including retail which do require human beings for the last mile and would be willing to take on more labour. This is where the conundrum lies as it has been observed that all such industries start in a big way but do lead to consolidation at some point of time with this kind of labour becoming less relevant.
The clue to unemployment is growth in the real sense and not just having high GDP numbers. There needs to be more sectors growing which employs more people who in turn consumer more thus keeping the spiral moving. It is a hard task given that for the last three years, the economy had been confronted with a series of disruptions that have come in the way of growth.
(The writer is a chief economist, CARE Ratings)
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