Will Rozgar Mela solve India’s unemployment crisis?

Will Rozgar Mela solve India’s unemployment crisis?

Context- On Monday, Prime Minister Narendra Modi distributed 51,000 appointment letters via video conferencing to newly inducted recruits as part of the Rozgar Mela (Employment Fair). Since October last year, the government has been organising these fairs to fill up the 10 lakh (or 1 million) existing vacancies in all types of government jobs before the general election of 2024.

(Credits- Business Today)

Unemployment in India: A quick recap of the past five years

• Just before the 2019 general election, it was reported that the official survey for unemployment (Periodic Labour Force Survey) for 2017-18 showed that unemployment had hit a 45-year high.
• Soon, academics found that between 2012 and 2018, the — total employment fell for the first time in India’s history — by as much as 9 million (or 90 lakhs) in 6 years. Worse, it was found that not only had youth unemployment shot up starkly but also that it rose with education attainment.
• In early 2020, India, like the rest of the world was hit by the Covid pandemic and predictably this worsened unemployment further.An unfortunate aspect of the way the unemployment crisis has been unfolding is the worsening impact it has had on the role women in India’s economy.

Rozgar Mela: Will they solve the unemployment crisis?

The short answer is no.

• Because the total jobs in question are akin to a drop in the ocean. Even if all 10 lakh vacancies are filled, they are nothing in comparison to the total estimated jobs that India needs to create.
• According to Radhicka Kapoor, senior visiting fellow at the Indian Council for Research on International Economic Relations (ICRIER), India needs to create anywhere between 20 million (2 crore) to 200 million (20 crore) new jobs.

1. Because these are pre-existing vacancies, not new job creation.
2. Because the size of public employment ( read all types of government jobs) in India was already quite low. According to a 2019 calculation by academics C. P. Chandrasekhar and Jayati Ghosh, public employees per 1000 population in India (16) was starkly lower than comparable economies such as China (57), United States (87), Brazil (111), and far lower than some of the nordic countries such as Norway (159) and Sweden (138).

Is unemployment an old problem or a new crisis?

• Some argue that people are making too much of unemployment and that India always had widespread unemployment.
• Others argue that the unemployment was never this high and that the current crisis has taken shape over the past decade or so.

Where does the truth lie?

• Problems of employment in India are complex both in form and content…Broadly speaking, three problems
• First is the problem of partial unemployment in the economy, i. e., idleness enforced by circumstances on a large part of the available working population for some part of the year, month, or day; this is best described as open underemployment.
• Secondly, there is the problem of very low productivity, i. e., productivity being so low in the case of some of those who are nominally engaged in work (and believe themselves to be fully or partially employed) that, if judged by the criterion of their net contribution to the social output, they would seem to be in effect unemployed; this is often referred to as the disguised unemployment in the economy.
• And thirdly, there is the full, continuous, and open unemployment of a part of the available working force; this kind of unemployment, insofar as it exists, bears much the same characteristics as unemployment in developed, industrial economies.”
• Now, if one looks at only the third (last) category mentioned above — open unemployment — then it is true that India has never had such a bad state of unemployment in the past.
• In developing countries such as ours, where there are no safety nets, people cannot afford to be unemployed and, as such, they often are under-employed or employed in low productivity work
• This is why the recent rise in self-employment is so worrying. Now we not only have high open unemployment rates but also rising self-employment, worsening youth unemployment ( often 2-3 times the overall unemployment rate) and rising unemployment with education levels. All of these also have a worsening gender aspect.
• What has worsened the unemployment situation in India over the past decade or two is the fact that India has increasingly had a bulge in the youth population. This is exactly the cohort that faces the highest unemployment levels and it accounts for almost 80% of all unemployment in India.

What explains the lack of fast job creation in the recent past?

• India is repeatedly recognised globally and our politicians justifiably take credit for the attractive GDP growth rates. But GDP growth rates are not enough to tell the whole story. That’s because it is entirely possible for a country’s GDP to rise either with very little new job creation or even with actual job losses.

(Credits- CMIE)

What is the solution to India’s unemployment woes?

• The first thing to note is that new jobs are required at such a large scale that it is not possible for any government to provide direct employment. Moreover, it is not the job of the government to give jobs; its job is to create the enabling environment so that the economy itself creates more jobs.
• Then one has to focus on the sectoral composition of GDP growth. It is now fairly clear that India needs to boost its manufacturing.
• Firstly, a change in India’s industrial policy framework, which has typically laid greater emphasis on capital-intensive industries
• Secondly, a radical rethink of India’s labour regulatory regime, where the narrow agenda of labour flexibility has dominated the discourse. “For India to convert its comparative advantage in labour-intensive industries to a competitive advantage, it needs to recognise that labour is not a mere factor of production whose factor cost (read remuneration/ salary) has to be pushed down but human capital in which there is a need to be invested”
• Thirdly, a comprehensive cluster development policy which allows small and medium sized firms to enjoy collective efficiency

Conclusion- The challenge of productive job creation is more pressing today than ever before, and its redressal calls for a radical reorientation of India’s growth strategy to make the growth process more employment-intensive and inclusive.

Syllabus- GS-3; Employment

Source- Indian Express