Context

Labour Bureau annual survey (2015-16) data and Centre for Monitoring Indian Economy (CMIE) data (post-2016) says job creation has slowed down in recent years in India

Status of Job crisis

• The leaked NSSO 2017-18 data have shown that while the open unemployment rate (which does not measure disguised unemployment and informal poor-quality jobs that abound in the economy) by the usual status has jumped to 6.1% in 2017-18 that never went over 2.6% between 1977-78 and 2011-12
• NSSO 2017-18 data show the share of regular wage jobs rising, especially in urban areas and the share of self-employed and casual wage work falling
• According to CMIE data the number of youth (15-29 years) employed in agriculture fell between 2004-5 and 2011-12. However, after 2012, as non-agricultural job growth slowed, the number of youths in agriculture increased significantly.
• Manufacturing jobs fell in absolute terms, from 58.9 million in 2011-12 to 48.3 million in 2015-16
• The World Bank, in its publication South Asia Economic Focus, Spring 2018: Jobless Growth, says that over the long-term, India has been creating 7,50,000 new jobs for every one per cent rise in gross domestic product (GDP); at an average of 7% growth, India should be creating at least 5.25 million jobs

Reason for Job crisis in India

• Lack of skills: Prevailing educational system failed to produce trained and efficient labour force required for jobs that are available and redundancy of some skills.
• Use of Capital-Intensive Techniques: Private sector prefers to invest in highly capital-intensive plants and equipment on the basis of technology developed in labour-scarce western countries. It is argued that labour-intensive techniques have low productivity and low surplus-generating capacity.
• Inequitable Distribution of Land: In the developing countries like India is inequitable distribution of land so that many agricultural households have no adequate access to land which is an important asset for agricultural production and employment.
• Rigid Protective Labour Legislation: Labour legislation is so much rigid that it is even difficult to close down the unit and quit the industry. Thus, this excessively protective labour legislation induces private entrepreneurs to prefer the maximum use of capital in place of labour.
• Neglect of the Role of Agriculture in Employment Generation: Agriculture though containing surplus labour can generate employment opportunities if proper strategy for its development is adopted
• Large-scale substitution of labour with automation: With technology the demand is for very high skills, or very average skills, with middle-skilled jobs being phased out. “Blue collar” service jobs are booming in logistics, warehousing, home services, mobility, retailing, etc.
• Lack of Infrastructure: Inadequate availability of infrastructure is a great obstacle for the generation of opportunities for productive employment.

Solution to job crisis

• Improve labour market information system: This would help to spot emerging demand for skills quickly and the necessary training and certifications for the same are created quickly.

Jobs and skills planning need not be centralized but has to be done at state and district levels, where there is granular information on education, skills and job options.

• Labour market reforms: Labour reforms essentially mean taking steps in increasing production, productivity, and employment opportunities in the economy in such a manner that the interests of the workers are not compromised.
• Invest in medium-scale units: The enterprises-to-jobs multiple is highest for medium-scale units. This can’t happen without deep changes to labour laws and access to credit.
• Smart urbanization: The link between good urbanization and jobs growth is positive, and unless India’s urbanization is concentrated in narrower areas and serviced by good infrastructure, job creation will be sub-optimal.
• Employment in government: It is an observed fact that as economies move from basic poverty levels to middle- and higher-income levels, the size of government grows—and so will employment. So, there is large scope for more employment expansion in government—but of the right kind.
• Change in industrial technique: It is essential that labour intensive technology should be encouraged in place of capital-intensive technology.
• Population control: The growth of population should be checked in order to solve unemployment, problem. Family planning programme should be implemented widely and effectively.