State of Working India Report 2019: Country's unemployment crisis is real; boosting investments in health, education can work wonders
The biggest challenge regarding employment in the country is the gap between demand and supply.
There is a huge infrastructural inequality in the education and healthcare sector
Interestingly, the solutions suggested in the report to provide employment are focused on public investments
It is good blend of Amartya Sen’s capability approach and theory of cross subsidy for manufacturing development
Most assessments have consistently stated the increasing unemployment rate in the country.
The Azim Premji University’s Centre for Sustainable Employment has just released its report, State of Working India Report 2019. The report has combined figures of household-level unemployment rate and policy challenges to ensure employment to millions of jobless people. The report is based on CMIE data.
The report has used the Consumer Pyramids Survey (CPS) of CMIE which includes income, expenses, savings, borrowings, investments and ownership of assets of households. The period for assessment is from 2016 to 2018, a crucial period for Indian economy because of demonetisation and GST, the two major macro level economic initiatives ever since liberalisation in 1991.
The report has highlighted an increasing trend of unemployment from 2011. Both, the periodic labour force survey (PLFS) and CPS indicate a steady growth rate of unemployment at 6 percent which is higher than the decade between 2000 to 2011.
The report reveals that about five million people have lost jobs between 2016 and 2018. The rate of participation of the labour force participation in 2018 was 42.9 percent and 52.8 percent in 2016-17. The most disturbing figure is the low labour force participation of women that stood at 11 percent compared to a participation by males at 71.8 percent in 2018. Female work participation rate was 26.9 percent in 2016-17 compared to males at 76.8 percent.
Graph 1 indicates share of unemployment among different educated groups
(Source: The State of Working India Report 2019)
The relationship between education and job skills do not match. There have been reports of persons with doctorate degrees working as office assistants or peons. So skill and capacity hardly match when it comes to jobs.
Insufficient employment generation
The biggest challenge regarding employment in the country is the gap between demand and supply. One of the reasons for the privatisation of the Indian economy was the demand for employment. It was expected that a free market economy will remove the license raj system and ensure huge employment opportunities. However, nearly three decades after India’s experiments with liberalisation and privatisation, we have still not been able to absorb the unemployed including the educated youth. There has been no formal project in the country to ensure employment to its people.
The government can implement target-oriented hunger eradication programmes like the National Food Security Act and to some extent, the minimum income scheme such as MGNREGA. However, implementing a massive employment generation programme is still not possible within the government programme.
The State of Working India Report 2019 proposes a universal basic service (UBS) scheme for employment generation. It is a very simple approach which puts onus on the government rather than on the private sector. The report emphasizes on health and education.
Interestingly, the report’s argument is based on the recent public debate of spending three percent of GDP for healthcare from current 1 percent. There is also a similar demand for spending six percent of GDP for education from the current four percent. It seems that this report wants to give a solution-centric assessment which makes it different from CMIE and NSSO data.
The solution which State of India report 2019 suggests is to have a general acceptance (between education and healthcare) since these are two essential services which are important for survival of the people. The fact remains that these two sectors are increasingly neglected in the state and central government budget allocations.
Graph 2 explains the trend of government investment on public health (capital and revenue) from 1991-92 to 2015-16.
Declining capital investment compared to revenue indicates the increasing infrastructural gap in this sector. The private sector cannot provide basic public health on a massive scale. Spending in this sector would benefit the rural sector. Private sector cannot ensure employment generation through healthcare since it prefers only tertiary care and to some extent medical education.
There is a huge infrastructural inequality in the education and healthcare sector. So the idea of spending on these two sectors is welcome. However, it should follow a crowding in (private sector investment) rather than a crowding out approach. Access to similar provisions are equally important.
Interestingly, the solutions suggested in the report are focused on public investments. It is true that the current economic environment does not support such arguments. The chapters on the importance of manufacturing sector and fiscal policies in employment generation lay emphasis on state investments. This is a fact in a country like India.
The report has acknowledged the importance of public investment and also indicates the importance of responsible private investments. It is good blend of Amartya Sen’s capability approach and theory of cross subsidy for manufacturing development. That is the contribution of this report to the policy debate.
((The writer is Assistant Professor, Jamsetji Tata School of Disaster Studies, Tata Institute of Social Sciences)
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