In India, Job Creation the Biggest Issue in Voters’ Minds

In India, Job Creation the Biggest Issue in Voters’ Minds

Authors:  Asit K. ​Biswas ​and ​Cecilia ​​Tortajada ​

India will go ​to the polls ​between April ​11 and May 19 ​for the ​election of ​representatives ​to the ​country’s ​lower house Lok ​Sabha. ​

As India’​s working-age ​population has ​increased, ​unemployment reached a  45-year high ​in 2017, at 6.1%​. Job creation  has therefore ​become one of ​the most ​important ​issues in this ​election. ​

In 2014, Prime ​Minister ​Narendra Modi ​came to power ​by promising to ​create jobs for ​millions of ​Indians. But ​his program ​– ​Make in India  – has ​not created ​jobs at the ​rate India ​needs. ​Nearly 30% of the respondents  of an online ​poll by The ​Times Group in ​mid-February ​believed job ​creation was ​one of the ​biggest ​failures of ​Modi’s ​government. ​

UNMET POTENTIAL

From the ​makeup of its ​population, ​India should be ​reaping ​demographic ​dividends, a ​condition where ​a country can ​catapult its ​economic growth ​by having more ​people in the ​working-age ​group than ​dependent ​population (​children and ​senior citizens)​.

By next year ​India is ​expected to ​overtake China ​as the ​world’s ​most populous ​country. In the ​span of three ​decades, India ​is estimated to ​have added 400 ​million extra ​people to its ​population, ​taking it to 1.​73 billion by ​2050. Most of ​these people ​will be of ​working age (15 ​to 59). ​

If these ​people can find ​productive ​employment, ​with decent ​incomes, this ​can propel ​India’s ​economic ​development. ​

But OECD data ​indicate that ​more than 30% ​of India’​s 15- to 29-​year-olds ​are neither in ​schools nor in ​jobs .

India is thus ​facing an ​employment ​crisis, the ​magnitude and ​complexity of ​which has never ​been witnessed. ​

DISSAPPEARING JOBS

Jobs are ​disappearing ​each year. The ​Centre for ​Monitoring ​Indian Economy, ​a think tank, ​estimates ​11 million ​jobs were lost ​in 2018 . All India ​Manufacturers’​ Organisation ​noted ​that 3.5 ​million ​manufacturing ​jobs were lost ​between 2016 ​and 2018 .

According to ​the latest ​World Bank and ​ILO data, women ​have been ​especially ​affected. ​Between 1990 ​and 2018, ​women’s ​participation ​in the ​workforce fell ​from 27.7% to ​24.4%. In ​contrast, ​participation ​rates in 2018 ​for women were ​43.5% in China,​ 38.5% in ​Malaysia and 40%​ in the ​Phillippines .

Modi’s ​2016 move to ​withdraw two of ​its highest ​denomination ​banknotes from ​the market, ​amounting to 86%​ of all ​currency in ​circulation, ​contributed to ​jobs disappearing .

The banning of ​Rs500 and ​Rs1000 from ​circulation, ​called ​demonetisation, ​was touted to ​curb corruption ​and black money.​ But instead, ​it resulted in ​economic chaos ​all over the ​country. ​

There were ​work stoppages ​or reductions ​in all sectors. ​Prices of ​agriculture ​products fell ​and industrial ​activities were ​curtailed, ​creating ​widespread ​economic ​uncertainties. ​Even ten months ​after ​demonetisation, ​labour ​participation ​rates were 3% ​lower than what ​was before. ​

Rural areas ​suffered the ​biggest brunt ​of job losses ​in 2018, with ​84% of all jobs ​lost there. ​Most of those ​who lost jobs ​were uneducated ​and unskilled ​wage and ​agricultural ​labourers and ​small traders. ​

A report of India’​s National ​Sample Survey ​Office (NSSO)​  – which ​the government ​tried to ​suppress –​ shows that for ​the first time ​since 1993-94, ​India’s ​male workforce, ​or men who have ​jobs, has ​shrunk to 286 ​million in 2017-​18 compared to ​304 million ​during the last ​survey in 2011-​12.

Not surprisingly,​ competition ​for the few ​jobs available ​is fierce. Some ​200,000 people ​sent applications ​when the city ​of Mumbai ​advertised ​vacancies for 1,​137 police ​constables in ​2018, requiring ​grade 12 ​education. A ​constable ​receives a ​salary of Rs. ​25,000 ($352) ​per month and a ​live-in quarter.​ Among the ​applicants, ​423 had ​degrees in ​engineering, ​167 had MBAs, ​and 543 hold ​postgraduate ​degrees .

Similarly, ​when the Indian ​Railways ​advertised 90,​000 low-skilled ​jobs for high ​school ​graduates, some ​28 million ​people applied. ​The starting ​salary offered ​was around ​Rs. 18,​000–19,​000 ($252–​$263) .

STRUCTURAL PROBLEMS

India has many ​structural ​problems to ​solve before ​good-paying and ​long-lasting ​jobs can be ​created. ​

There is a ​mismatch of ​jobs available ​and the skills ​of job-seekers. ​The formal ​sector does not ​contribute much ​to employment ​opportunities. ​Instead, 90% of ​India’s ​labour demand ​comes from ​informal ​sectors like ​day labouring ​for agriculture,​ construction, ​tourism, and ​other low-paid ​services and ​trades. ​

India’s ​789 universities ​and 37,204 ​colleges churn ​out mostly ​unemployable ​graduates. For ​example, 6,214 ​engineering and ​technical ​institutions ​graduate 1.5 ​million ​engineers every ​year. Many of ​them do not ​have the skills ​required by ​employers. ​

Even after ​graduation, ​they lack basic ​work and ​communication ​skills. Not ​surprisingly, ​unemployment ​among graduates ​is 16%, nearly ​three times the ​national ​average. ​

Furthermore, ​38% of students ​in India do not ​even complete ​their primary ​education. They ​struggle to ​read and write. ​They find it ​difficult to ​acquire any ​skill, which ​constrains ​their ​employment and ​economic ​potentials. ​

Meanwhile, ​many entry-​level jobs are ​being automated ​with robots and ​artificial ​intelligence. ​This is also ​the case for ​repetitive ​manufacturing ​jobs. Such ​trends are ​likely to ​accelerate in ​the future, ​reducing the ​country’s ​capacity to ​generate ​employment. ​

WHAT NEXT?

To solve this, ​India must ​increase ​effective ​investment in ​education, ​improve ​capacity ​building at all ​levels and ​sectors. The ​country must ​also improve ​health and ​public services.​ The government ​should enhance ​connectivity ​across the ​country by ​investing in ​infrastructure. ​

It is a rather ​tall order for ​the country to ​fulfil over the ​medium term. ​But, unless all ​these enabling ​conditions are ​met, jobs ​creation is ​likely to ​remain anaemic. ​

A determined ​effort has to ​be made to ​create new jobs ​and maintaining ​existing ones: ​otherwise, ​India’s ​demographic ​dividend will ​remain a mirage.​

There is now a ​distinct ​possibility ​that instead of ​harvesting ​demographic ​dividends, ​India may ​witness social ​unrest and ​greater gender ​inequality by ​frustrated, ​restless and ​worried young ​job-seekers. ​

Asit K. Biswas  , Visiting ​Professor, ​University of ​Glasgow.  Cecilia Tortajada  , Senior ​Research Fellow,​ Institute of ​Water Policy, ​Lee Kuan Yew ​School of ​Public Policy, ​National ​University of ​Singapore. ​

This article ​was published ​by THE CONVERSATION , April 11, 2019.