Arjun Kumar, Ritika Gupta, Anshula Mehta, Sunidhi Agarwal, Sakshi Sharda, Mahima Kapoor

The issue of unemployment remains a prominent topic for political and social discussion, exacerbated by the COVID-19 lockdown. With this in mind, Centre for Work and Welfare (CWW) at the IMPRI Impact and Policy Research Institute and Centre for Development, Communication and Studies (CDECS), Jaipur organized a panel discussion under The State of Development Discourses – #CohesiveDevelopment on “How to Resolve Unemployment Problem in India”.

How to Resolve Unemployment Problem in India

Dr Arjun Kumar, Director at IMPRI gave a brief presentation to provide an overview of the unemployment crisis in India. The sources of employment statistics in India include Census, National Sample Surveys (NSS), Periodic Labour Force Surveys (PLFS), Labour Bureau, Chandigarh, Government Registries such as Employment Exchange and Migration Data, Private Databases such as Centre for Monitoring Indian Economy (CMIE) and IMPRI, Government Databases such as Employees’ Provident Fund Organisation (EPFO) and MNREGS, Corporate Databases such as Naukri.com and LinkedIn, and Independent HR.

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Looking at the trends in unemployment, certain features stand out:

  1.  Since 2010, the unemployment rate has been declining across all age groups.
  2. Starting from 2017, the rate hovered around 4%, rising to 6-7% within two years and jumping to 25% due to the lockdown measures. The rate then moved in tandem with the COVID-19 waves. The rise in the unemployment rate during the second wave was not as devastating as the first one.
  3. Among daily wage workers and salaries workers, the former have been the most hard- hit.
  4. Women’s labour force participation has been declining, especially the youth in the marginalised classes.
  5. India has not been able to reap the benefits of demographic dividend as only 5.5 million additional jobs have been created against 8 million youth joining the labour force during 2017-18.

Lack of policy and statistical architecture including industrial policy and employment policy, youth and female unemployment, and livelihoods in lockdown are pertinent issues facing policy makers and the country.

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Prof Sunil Ray, Former Director, A. N. Sinha Institute of Social Studies, Patna; Advisor, CDECS and IMPRI, the chair and moderator set the tone for the discussion by highlighting a set of major concerns. Theoretical debates on employment by economists include analysing the market economy and providing solutions within the frameworks of Keynesian and Milton Friedman economics. In addition to the unemployment, low wage rates of the migrant workers were exposed during the lockdown. A common assumption within the policymakers was that by targeting growth, other aspects like unemployment would be taken care of by the market. This was proved false by the ‘jobless growth’ the economy experienced.  While disguised unemployment was tackled to a certain extent by MNREGA, educated unemployment remains a cause of concern. Among emerging economies, India had one of the highest unemployment rates and lowest growth rates during the COVID-19 pandemic.

So, Prof Ray asked what kind of structural transformation or policy shift in the structure of governance, production, investment and entrepreneurship or injecting a different culture of conjunction is needed to solve the problem of unemployment. Instead of focusing on catching up with the western countries, one should look at growth that is beneficial for the majority.

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Global Integration

Prof Dev Nathan, Eminent Professor; Research Director, Gendev Centre for Research and Innovation, Gurugram, focused on manufacturing exports, which has high employment elasticity of output. Thus, in order to increase employment, the country must increase its share of manufacturing output. This can be achieved by integrating itself into Global Value Chains (GVC).

So far, India has been participating in assembling products through the GVCs. Prof Nathan noted that these chains have maintained, despite the international border restrictions. China had taken advantage of these GVCs to emerge as a manufacturing hub in the world and as a result, reduced poverty and increased employment. However, with the rising wages, manufacturers have moved out of China but have not looked at India as an attractive alternative, limiting labour-intensive exports. An inverted tariff structure, with higher tariffs for components and lower tariffs for finished products, contributes to this problem.

This problem can be ameliorated if low quality production, logistical bottlenecks, low share of synthetics in garment exports, inefficient labour systems dependent on contractual labour, physical and administrative infrastructure, and low research and development (R&D) and innovation are eliminated.

Political Planning

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Prof R B Bhagat, Professor and Head, Department of Migration & Urban Studies International Institute of Population Sciences (IIPS), explained that every second household in Bihar has a migrant worker, however along with Uttar Pradesh it contributes only one tenth to the GP. According to him, it is important to note the states that act as destinations of accelerated GDP growth and taking into account the urban-rural divide.

Keeping in mind that agriculture employs 45% of the labour force, boosting jobs through boosting production becomes important. Rural diversification combines agro processing, food processing, rural industrialization and services. The strategy of integrating the benefits of rural and urban through policy instead of rural versus urban is pertinent.

In light of this, planning has to be revived. Additionally, this planning at the national level has to be converged across the various departments of the government and at the local level. Unemployment is not just an economic issue, but a political one as well.

Rights-based Approach

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Dr Lenin Raghuvanshi, Founder and CEO, People’s Vigilance Committee on Human Rights (PVCHR), an initiative of Jan Mitra Nyas, Varanasi, highlighted the importance of equal opportunity to work. He talked about his work in Musahar ghettos in improving their knowledge, attitudes and practice (KAC) and production.  The concept of village republics has to be brought to the centre stage in order to provide dignity and opportunities to the farmers in the villages, that they get in the big cities. Training of the youth and passing on the share of profits as part of democratic capitalism gave economic freedom to them to pursue these opportunities.

Capacity Building

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Dr Chandra Sekhar Shrimali, Educator and Career Counsellor; Member, Board of Management, Maharaja Ganga Singh University, Bikaner, highlighted that a major concern is that the youth of the nation, while choosing field of education and subsequently work, do not map out their goals. In addition to this, the practical aspects of modules at high school or undergraduate levels are left out, creating a gap between leaning and its application. According to him, relevant diplomas should me made compulsory to augment the skill sets.

Recognizing Invisible Work

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Ms Sonia George, Secretary, Self-Employed Women’s Association (SEWA), Kerala, called for rethinking the definition of unemployment. The binary concepts of employment and unemployment do not seem to work when we consider that most people employed in the informal sector are not considered to be ‘job-seekers’. For example, services, frontline and home-based workers.

National Rural Livelihood Mission, National Urban Livelihood Mission and other government programs are based on the concept of building self-help groups for credit and skill. Ms George questioned the ability and sustainability of these methods to generate jobs and enterprises.

Unpaid labour of women has largely subsidized the economy. In addition to this, the care economy also remains undocumented. Establishment of these jobs and strengthening social security are some solutions. Incorporation of these in the formalization process and consideration as a source for employment generation is the way forward.

Career Planning

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Dr Upendra Singh, Director, Centre for Development Communication and Studies (CDECS), Jaipur, directed the focus of the situation to the micro-level. The working-age population should get the appropriate jobs matching their skill set and remuneration. This stems from the fact that there is a mismatch between a person’s knowledge and skills and the job they are aiming for.

There is a push and pull effect of demand and supply of labour in the market. The market, political system, and administration can be called the fulcrum which is determining the stability of the same. The focus should then be in identifying the sectors or states that are generating demand for labour and the type of opportunities they provide.

To mitigate the problem, Dr Singh suggested counselling systems, starting from high school, across the country. Stirring dedication and devotion, especially among the people who have been struggling to find opportunities, is imperative. Further, skill impartment should be through hands-on training. To this, Prof Ray emphasised the concept of collective entrepreneurship, which are missing in India, to strengthen the indigenous production process and reduce dependency on imports.

How to Resolve Unemployment Problem in India

The Way Forward

  • Creation of models through economic democracy for equal rights of the labour
  • Development and institutional and capacity building starting at the local level
  • Convergence of goals and practical skills and knowledge
  • Recognizing the role of undocumented work and integrating it with economic growth for inclusivity and acceleration of jobs

Acknowledgement: Ramya Kathyal & Ria Mohal is a Research Intern at IMPRI.

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Picture Courtesy: BloombergQuint