The absence of job creation: Unemployment are the crucial one…

India has 463 mllion workers under the aegis of employment in formal and informal sectors(6%-94%).In the informal sector most of them are either self-employed or under-employed. A stock of 50 million persons of employable age are awaiting jobs. On top of this unlike developed world ,where female employment ranges to 70%-80%, female employment ratio in India is abysmal 27%. So, we can imagine what will happen if they also start seeking employment, which of course is out of question due to patriarchal society we have. Next, comes accrual of additional 12 million persons coming of age seeking jobs every year.

Unemployment

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Present bad situation of low job growth is basically due to heavy capital expenditure on machineries leading to very low employability. To obviate the problem of low job creation when additional 12-14 million persons are added to job pool every year solutions have to be found in sevices, MSME and infrastructure sectors, where employment elasticity is higher and investment intensity is lower…Basic fact of India’s economy people forget that its large part is informal and unorganized. Majority of its workers are under employed and unemployment figure always hovers in the range of 5%. Due to lack of all pervasive social security in the pattern of western Europe or even USA or Brazil and Mexico, people in the margin go for any work or job to survive. Hence , low unemployment percentage on record.

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Value added per employee in informal sector in India is on the average only 15% of the same in formal sector. Labour productivities in informal sector basically either of self employment or business with 1-2 employees are very low or abysmal. It's hand to mouth existence with no health or social security.

91% of India's economy is in informal sector. Every month more than 1million persons are added to working age population. Slow formalization of economy with job and social security is the only way out to get out of jobless growth scenario in spite of continual GDP growth rate in 7% range. Formalization of economy will increase both labour productivity and growth elasticity of employment.Instructions given by the government to count self employment of the marginally placed individuals or employees with no job or social security in informal sectors, as jobs created, I find very dicey, against all the prevailing definitions of employment world over.

Coming to job creation, EPFO and ESIC figures are both formalization of employment and creation of jobs mostly in 18-25 years age group. This also consists of double accounting of figures. Job creation in formal sector, being capital and technology intensive , is very marginal. And in spite of 7% average GDP growth rate since liberalisation of 1991, we basically had jobless growth under all the regimes ruling till now. So called demographic dividend will become a curse in the absence of job creation.

As for job creation since 2014 during present NDA II regime exhaustive reliable figures are still awaited before any definite comments could be made.Sine qua non of employment policy to meet requirements of additional 12 million jobs every year is going all out for labor intensive growth. Private investment is still to pick up and in the absence of job creation consumption growth is down. Only public investment in agriculture and infrastructure projects by the government could uplift the economy, enabling creation of jobs and enhanced consumption as a consequence.

Unlike USA, where monthly job creation figures are based on rigorous methodology and never contested for accuracy, in India due to its large informal economy , employment figures bandied about lacks efficacious robustness. Long term employment solution is formalization of economy and universal social security for workers. As for employment figures peer group of economists should analyse it for robustness.

In stead of going for statistical juggleries only way out for job creation is to go for development of sectors with high employment elasticity of growth- construction, education, health care, hospitality, MSMEs ( textile, jewellery, handicrafts, leather wares etc).To this added cover of social and health securities is also imperative....‪Those surviving at the bottom of pyramid somehow need job with social security....

91.6% of Indian labour force is in informal sectors,consisting of 14% contract,30.2% casual and 48.4% self employed labourers. Wages of contract and casual labourers of informal economy is normally 40-45% to that of permanent labourers of organised sector. On top of that they have no benefits of pension or health insurance. As for self employed labourers less said the better.They are without any social security and their daily survival is an onerous chore.

Answer to all these problems are formalisation of economy slowly, Complete social security and qualitative free public health care and education systems for them.Universal basic income ,minimum wage or wage subsidy,minimum support for unemployed and old age pension for needy are some of the ideas which could be looked into by the Central and state governments in tandem seriously...

NSSO should go for robust data collection with at least quarterly frequency unlike present biannual rounds with delayed publications of analysis. With demonetization and coming of GST some parts of economy will be formalised but it's a long way to go before we are on par with developed world in the formalization of our economy. In USA there is a very robust system of monthly collection of data of job creation in non-agriculture sector, very useful for policy planners. In India lack of verifiable data is due to the fact that only 93% of economy is formal, even in organised sector majority of employees are contract labourers with no social security...



About the Author

Mousumi Roy
Mousumi Roy is an author, whose writings are published in Times of Oman, Khaleej Times, etc. She is based in Muscat, Oman and she is also a visiting professor of International Relations.