If there is a single issue that has dominated the election discourse over the past two months, it has been India’s jobs crisis. But what exactly is this so-called hiring challenge? While one hears anecdotal stories of educated youth not finding jobs, jobs mean different things to different people.
If this implies any engagement in gainful productive activity, then employment growth since 2017-18 has been the highest in recent years, with the total number of workers in the economy rising from 458 million in 2017-18 to 563 million in 2022-23, as reported by the Periodic Labor Force Surveys (PLFS).
Last week, the National Statistics Office (NSO) published estimates from quarterly surveys for urban areas for the period January-March 2024; these confirm previously reported trends. Urban males aged 15+ have seen their labor force participation rate increase from 67.7% in January-March 2022 to 69.8% in January-March 2024. The increase is greater for urban females, the labor force participation rate of which increased from 18.3% to 23.4% during the same period
But then, why is employment a problem? Mainly because in an economy like ours, with significant economic difficulties, finding jobs is almost a necessity. Most people in the working age group need some means to make ends meet, with only a few able to survive on accumulated wealth. For the vast majority of Indians, unemployment is an unaffordable luxury.
Which also means that unemployment statistics are not the only way to understand the challenge. While useful, these data represent only one aspect of the problem. A nuanced look would suggest that the uptick in employment data may be masking growing concern in the economy.
Most of the employment gains have been in agriculture and among women workers; this suggests distress-induced job search over the past five years. Also consider that increases in economic growth are usually accompanied by a decline in the share of agricultural workers, but this trend only held steady until 2017-2018 and saw no reversal after that, raising questions about off-farm job creation .
Anxiety about jobs extends to those who want superior employment, a very large group. Among those who are employed, the past decade has seen a deterioration in the quality of work and also a decline in income from such work. While casual wage workers in rural areas continue to suffer from falling real wages for farm and non-farm work, the decline has been sharper for regular workers.
PLFS data suggest a decline in regular rural wages by 1.3% per year over the past five years, with regular urban wages falling by 2.7% per year. In fact, regular worker wages have been falling since 2011-12, with real wages in rural areas falling by 0.6% per year since 2011-12 while urban wages have fallen by 1.2% per year since from 2011-12.
The quality of employment has been a bigger challenge. The only thing that distinguishes a regular worker from a casual wage worker is regularity of employment. But this scenario is bleak. Almost two-thirds of India’s regular workers do not have a written contract, while only a quarter have a contract longer than 3 years. Both these indicators have deteriorated since 2011-12.
The decline in real earnings from regular employment has led to a situation where the earnings of the bottom quintile of regular workers are no different from the bottom quintile of casual workers. In 2022, both received average monthly earnings of approx 3000 per month or 100 per day.
Earlier this year, while releasing the International Labor Organization (ILO) and Institute for Human Development’s India Employment Report 2024, the chief economic adviser (CEA) was criticized for saying that the government cannot create jobs for all.
CEA may be right in a general sense, given the government’s restrictions on public sector job creation, but the administration’s responsibility is not only to create government jobs, but also to create the conditions that enable the private sector to employ people in good standing. work.
It is also the duty of the government to provide an appropriate regulatory framework for decent work, including social security provisions for those who are either employed as regular workers or are self-employed. Instead of political promises to create millions of jobs, a better way to face the employment challenge is to initiate structural reforms that can encourage labor-intensive sectors as well as small and medium-sized enterprises. India needs to improve the quality of employment to provide people with social security as well as better income.
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