Employment, finally an election issue
#GS3 #Economy #GS2 #GOVERNANCE
Jobs are rarely far from the minds of citizenry. Politicians woke up to this fact in the run-up to the Bihar Assembly elections. It is for the first time that unemployment has become a big issue in an election. This is not surprising.
- The economy had been slowing for nine quarters prior to the COVID-19 outbreak. Before the 2019 Lok Sabha election, the BJP managed to divert the attention of the youth with Ram Mandir and ‘nationalistic’ issues.
- The government consistently denied that unemployment was a problem. It did not release the National Sample Survey (NSS) on employment until a week after election results were announced.
- The pandemic and the poorly planned nationwide lockdown caused the economy to contract severely and livelihoods to disappear. Bihar saw millions of poor migrant labour returning home. U.P. and Bihar have a disproportionately high number of out-migrants.
How did we get here?
- For nearly 10 years after 2003, GDP growth averaged more than 7%per annum. Non-agricultural jobs in India were generated at a rate of 7.5 million per annum.
- But only 2 million of the youth were joining the labour force (as enrolment in schools/colleges was increasing).
- New non-agricultural jobs pulled over 5 million per annum out of agriculture and into construction and other work, where Bihari and U.P. labour got absorbed in large numbers.
- However, the economy began slowing thereafter. Demonetisation and the reluctance to competently handle the non-performing assets crisis sent the economy into a downward spiral. What followed was nine uninterrupted quarters of slowing growth.
- Worse, the structural transformation, previously underway, stalled. Post-2013, people are still leaving agriculture, but non-farm sector jobs are growing more slowly. As a result, joblessness has grown.
- The number of unemployed educated youth and a disheartened labour force (youth who completed education and training but were still neither in jobs nor searching for jobs actively) increased to unprecedented levels by 2018. The COVID-19-driven collapse of the economy and jobs followed this year.
Myths and reality
- Unfortunately, debates on youth unemployment did not attract much political/electoral attention until the 2020 Bihar election campaign. Yet several myths persist, which can easily misguide our employment policymaking.
- First, only about 7% of the total employment is created in the government, including the public sector undertakings (NSS, 2017-18);yet that is what some are promising. Of the total 465 million jobs in India, about 260 million are created in non-farm (in the industry and services) sectors, of which only 34 million are created in the government sector. Hence, private sector employment through appropriate government policy is crucial. However, simultaneously, measures are needed to fill the vacant government posts. There has been a massive decline of government sector job growth from 1.3 million per annum from 2005 to 2012 to only 0.4 million per annum from 2012 to 2018.
- Second, the Central government tried to create a myth that the self-employed can create enough jobs. The data have exposed this myth. It is clear that despite the government’s measures (example, MUDRA) to promote self-employment, the number of youth engaged asself-employed declined from 81 million to 63 million between 2005 and 2012 and further to 49 million between 2012 and 2018. This is despite 95% of MUDRA loans being in the smallest Shishu category. The Ministry of Labour’s MUDRA study in 2018 had already demonstrated this fact.
- Although the National Education Policy 2020 is likely to increase the supply of vocationally trained youth due to the expansion of vocational training curricula at the school level, it will have no impact on the labour demand conditions of the industries.
- Meanwhile, Bihar saw girls’ secondary enrolment rising because the government provided bicycles to girls who got promoted from Class 8 to Class 9.
- Girls and boys can get jobs, if jobs grow. Hence, supplementary measures including development of infrastructure and local industrialisation are necessary.
- As per the 2015-16 NSS survey, more than 99% of Indian enterprises are micro enterprises (based on both investment and employment criteria).
- Bihar has 22 industrial clusters, 138 handicraft clusters, and 45 handloom clusters of low-level manufacturing, consisting mostly of micro and small enterprises. With appropriate support, these enterprises can grow into small and then medium enterprises. It is the private sector that creates jobs; the government’s role is limited.
- However, Bihar, like most other States, can provide more jobs in the government. But the new government will have to be careful. The focus will have to be on two kinds of jobs.
- First, the health and education sectors and the police and the judiciary have too few government staff. These are sectors where the new government can expand government jobs.
- Second, in all governments, State and Central, the share of Groups C and D jobs is an overwhelming 89%, leaving 11% of jobs for Groups A and B. With such few managerial or professional staff, it is impossible to run any government.
- Post-pandemic, most States will need to increase spending on public health. Bihar still has the highest fertility rate of any Indian state (3.4 children per woman of reproductive age), according to 2015-16 data.
- This is because Bihar’s public health system is in a shambles. According to the World Health Organization, there should be one doctor per thousand population.
- However, in Bihar, one allopathic doctor serves 43,788 people. Bihar also has the lowest bed-population ratio.