India’s employment challenge :

Instead of doubting the NSS data, policymakers would do well to heed it.

They have plenty of problems at hand.

The recent estimates of employment and unemployment from the 66th round (2009-10) of the National Sample Survey (NSS) belie any hopes that the growth of the Indian economy between 2004-05 and 2009-10 has been inclusive. Employment has expanded by only a million jobs during this period. Not only is this lowest ever growth recorded in any such period, the fact that it occurred during the period of highest growth in the economy makes it exclusionary. It is of little concern that this growth of employment is not even a fraction of the government’s claim of creating more than 50 million jobs during the same period.

The results were shocking to many senior policymakers, but more than that they were embarrassing. This reflected amply in their anger against NSS and claims of problems about the data quality. Not only were the claims unverified and untrue, they did great disservice to the statistical system of the country.

But what did the data show that offended policymakers so much? It showed that employment increased by merely one million with male employment expanding by 22 million, but female employment declining by a drastic 21 million jobs. It also reconfirmed what was already known: that a large part of the employment created was in the informal sector with casual workers accounting for more than 80% of all the new jobs generated. Regular employment also showed deceleration. A large number of the jobs created were in the low productivity construction sector while the remaining were in the non-farm sector that contributes more than three-fourths of the growth accounting for less than one-fourth of total employment increase. In a nutshell then, there is overwhelming evidence that not only did growth fail to create a sufficient quantity of jobs, but the quality of employment also deteriorated.

The data, however, showed that one possible reason for the slow growth of employment could be the significant increase in attendance in educational institutions by the younger population, particularly female. It also showed a respectable increase in the wage rate of casual workers with real wage of male workers increasing by 3.6% and rising by 5% per annum for female workers. It also showed increase in participation in public works, particularly the Mahatma Gandhi National Rural Employment Guarantee Scheme with participation improving by almost eight times during this period. Further, unemployment rates fell for all categories of population. Unfortunately, having sullied the data, policymakers failed to take note of the positive features that emerged from the same data.

Later commentators have obviously picked up positive features to claim that there is no cause for worry. Probably some of this is true. It is now acknowledged that the previous period—1999-2000 to 2004-05—was a period of severe distress. This could have led females to move out of household in numbers to the job market, leading to a large increase in female employment. Since the subsequent period was one of high growth, the situation did improve and, therefore, some women went back from being workers to non-workers. Also, the shift of younger population to educational institutions explains a small part of the low growth of workforce.

Unfortunately, none of these explanations is new or unexpected. But if these were known, why did the government claim that the economy will generate more than 50 million jobs per year?

However one views the data, there are reasons to worry. This is not only due to the fact that high growth has failed to create jobs, but also that planners and policymakers are clueless about long- term employment patterns. The fall in unemployment rate from 2.6% to 2.1% is of little significance in a country where more than one-third of the population is poor and three-fourths is economically vulnerable. Remaining unemployed is not a luxury that the poor of this country can afford. They will take whatever jobs that come their way, even if they are not remunerative, but are casual and informal. The problem is not that of those who are unemployed, but that of the large majority of the working poor.

As far as female employment is concerned, it is true that they enter the labour market when there is severe distress. But if that is the case, this signals vulnerability and should not be looked as employment creation. But why should they move back from being workers to non-workers when the situation improves? It takes courage for the women of this country to move into the labour market, breaking patriarchal and social barriers. It is a shame if women are forced to move away from the labour market because there is marginal improvement in incomes. It is symptomatic of the vulnerability of female workers where they are needed only to fill the gap in case of distress. If not, the other possible reason can only be that even those jobs that were available to them have been taken away. Either way, a sufficient cause for worry.

But the trend that should worry them the most is the trend of younger population staying away from the labour market to acquire better degrees. Because while they gave breathing space to the government this time, they will be a restless and aggressive lot when they enter the job market in the coming five years armed with skills and degrees.

Courtesy: livemint.com, August 2, 2011