Considering that there is a strong possibility of recession striking the US and the European Union, India's economic problems may pale in importance. According to the latest data, India's industrial growth rose to 8.8 per cent and manufacturing to 10 per cent in June 2011. Foreign direct investment inflows have also picked up. Though there is high food and general inflation, it is not yet in double digits. India's public debt has also not reached the danger level.
The US, on the other hand, is combating its monumental debt problem with fiscal tightening measures so that the government does not go bankrupt. The problem of unemployment, though closely monitored, has been kept in the background. Many Americans are of the opinion that unemployment is the most serious problem facing the US, and not the budgetary cuts and the downsising of government spending. Unless there are more jobs, the consumer demand and revenue collection will deteriorate further.
According to the New York Times, the US has 9.1 per cent unemployment, but it would be 16.1 per cent with 25.1 million people considered jobless if those who have only part-time jobs and those who have given up looking for work are also included.
Similarly, in India, slow employment growth is a serious problem facing the government. That jobs have been growing very slowly has come out clearly in the latest ( 66th round) National Sample Survey based on the data collected during 2009-2010 in its eighth quinquinnial round covering the five-year period between 2004-05 and 2009-10.
From the survey it is clear that 8 per cent GDP growth of the last five years has not translated into a higher level of job creation. There was a dramatic deceleration in total employment growth from an annual rate of 2.7 per cent during the previous five years period (1999-2000 to 2004-05) to only 0.8 per cent in the latest round. This means that India has been experiencing jobless growth during the last five years.
The latest NSS data also reveal that there has been an increase in employment of less than a million people in the country between 2004-05 and 2009-2010 despite the high level of economic growth. Another shocking revelation is that fewer women are taking up paid jobs in both rural and urban areas. Their participation in the labour force has been the lowest since 1993-94 in all age groups and not only in those age groups (15 to 24 years) undergoing education. There has been a 20 per cent decline in employment for self-employed women in the last five years. Why have so many women withdrawn from economic activities? Maybe, the number of women engaged in home-based crafts and handlooms have declined because of lack of capital or lucrative marketing outlets or due to competition from cheap Chinese imports. Maybe, women were working for exporters who faced losses (like in garments) during the last five years when the financial crisis hit Indian exports and they lost their jobs.
While it is true that a substantial number of young boys and girls (around 20 million) are engaged in studies and there has been around 50 per cent rise over the five-year period for both males and females going through education, it does not fully explain why employment growth has been so slow. More people have entered the job market in the last five years than in the previous five years, and clearly the supply of labour has not shrunk due to young people studying.
Also, it is hard to explain the fall in unemployment for both males and females because only "casual" jobs have increased and that too mostly in urban areas. In rural areas, the increase in casual work and construction reflects that jobs have been created under MGNREGA. There is also some increase in employment in financial services and the real estate sector.
An increase in casual work indicates that rural migrants are joining the informal sector in the cities. The increase is marginal for rural women. For the rural migrants, only the lowest menial jobs like those of domestic help, maids, drivers, cooks and chowkidars are available. Most migrants arriving in cities from villages take up these types of jobs and live in awful conditions. Though these "casual" jobs have been increasing, they are without any safety net or benefits.
The data also point out that Indian agriculture is not growing fast enough to provide jobs to the 67 per cent of the rural population still dependent on it. Employment fell sharply for agricultural and non-agricultural workers taken together and there has been a slowdown in non-agricultural job creation. Agriculture is contributing only 14 per cent to the GDP and this means low productivity and surplus labour continue to plague the farm sector.
There has also been a decline in employment in manufacturing both in rural and urban areas which means that food processing and other allied activities which could have employed more people have not grown fast enough. If more jobs were available in villages, then there would not be so much pressure to migrate.
The problem today is that even if there are jobs, most young people are not "employable" as they lack proper education and have few marketable skills. The large numbers of school dropouts are barely literate and it is difficult for them to find jobs in cities except the lowest paying ones. Also, what will happen to 8 million children who are not attending school?
There has to be a plan to provide jobs for all in the future, keeping in mind that those who are currently studying are going to be in the employment market in the next five years. Even the US is contemplating a plan for providing jobs to the jobless by reconstructing old schools across the country, but it is not going to be easy. In India, more labour-intensive infrastructure projects could be encouraged but most highway and expressway projects are using prefab, machine-made units that require big machinery to assemble them. Most of the metro-projects are being built using capital-intensive techniques. Rural road building projects undertaken by state governments, on the other hand, can employ more people.
The Central Government can play the role of a facilitator in creating jobs in rural areas by setting up institutes for vocational training. It is more important to give them a purpose in life rather than let them idle away their time after they finish school. While inflation fighting has to continue till it comes down owing to falling international oil and commodity prices and a possible decline in the demand, creating jobs is most important for the health of the economy and the wellbeing of the people.
(Dr. Jayshree Sengupta is a Senior Fellow at Observer Research Foundation, New Delhi)
Courtesy: The Tribune
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