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The Big Picture – Labour Bureau Reports: Highs and Lows

  • May 29, 2017
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The Big Picture- RSTV
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Labour Bureau Reports: Highs and Lows

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TOPIC:

General Studies 2

  • Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections

General Studies 3

  • Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

A labour report released by the Labour Bureau shows that while the economy increased by 7%, jobs increased by only 1.1% in 2016. This means that the government is facing growing employment crisis across the country.

Labour Bureau’s statistics show that job growth plummeted in 2015 at 1.55 lakh and 2.31 lakh in 2016 in key sectors to its lowest levels in 8 years compared with 10 lakh new jobs created in 2009. Usually one neglected aspect of India’s unemployment crisis is of underemployment or concealed employment. This is of two types- not finding work for full year and work at very low wages. The Labour Bureau’s report on 2016 unemployment paints a dire picture on both fronts.

Unemployment is a problem that needs to be addressed at the earliest.

To put numbers in perspective-

  • Unemployment has grown by 1.38 million per year. Over that, four year period from 2013-2016, there were 20 million people who joined labour force but only 15 million got work.
  • In a preceding period from 2004-05 to 2011-12, job in the non-agricultural sector were growing at 7.5 million per annum. In recent years, non-agricultural sectors added jobs only at the rate of 2 million per annum. At the same time, the numbers joining the labour force has significantly increased. These are young people who are better educated than earlier people. So they are looking for non-agricultural work.

Because jobs in non-agricultural sector were increased upto 2011-12, about 5 million people were leaving agriculture per annum. Now, numbers leaving agriculture has been dropped to about 1 million as non-agricultural jobs are not increasing.

In the organised sector, there has been significant increase in the share of contract workers as opposed to regular worker. Geographical distribution of growth in jobs in India has concentrated- two southern states- tamil nadu and Karnataka, two western states- Gujarat and Maharashtra, eastern state of WB and northern state of Haryana. The rest of the country has seen a significant decline in the jobs.

Between 2004-05 to 2011-12, only 2 million youngsters were joining labour force. Now about 5 million youngsters are joining labour force every year. So it is critical that job growth resumes and that can happen only if there is real growth happening.

Importance of investments

The economy seems to be growing at 7% whereas job creation is stuck at 1.1%. Investment as a proportion to GDP is down to 26.9%. This is the lowest figure since 2004-05. Investment creates lot of jobs. Movement from agriculture to construction sector was creating jobs. This kind of investment has come down drastically and it can be resumed only after banks’ NPAs problem is sorted out. Once the banks start to lend again on the scale which they used to lend in past, then there is hope of revival in investment and resultant job creation.

Growth will create demand, demand will induce credit need and then investment will pick up. When manufacturing takes place, the job sector will improve. However there is a limitation through which government can provide jobs through government services. Ultimately, it is the entrepreneurship or private sector which can create new jobs through more investment.

The government has to think about creation of jobs and entrepreneurship, but the philosophy of jobless growth is still going to continue. High amount of automation and ignoring the SME sectors has created a problem. If this is not attended and creation of make in India is not done, and situation is not job intensive or labour intensive, then there cannot be growth in employment. The problem areas wrt to jobs are clear. IT is facing problem because of upgradation of technology. High end technologies are entering into areas where human resources were required. Here, the government cant do much. But the government can create jobs in MSMEs as manufacturing is job creation sector.

How to create more jobs?

Urbanisation is the in-thing in India. The National Institute of Advanced Study in Bengaluru has published a report which talks about the mismatch between demand for skills and demand for jobs. Lot of job creation is happening in agriculture in rural areas. People are employing agricultural labourers rather than indulging in self-cultivation is increasing.  Thus, jobs are being created in rural sector. But the skills are needed to make the people more productive which would create more income and increase purchasing power. This is not happening as all skill development jobs are being oriented towards urban jobs in the services and industrial sectors. Thus, there is a spatial mismatch between where the government is trying to train people and where they are required to be trained.

Ultimately India needs to urbanise systematically. If India is to become 50% urban in next 20 years, it means that 25 crore people moving from village to town. This needs a physical urban environment to live, thus a need of 20000 sq.km. of additional urban space. This is urbanisation which is when planned and implemented properly generates huge amount of jobs directly in construction and indirectly in supplying the materials. There is no dearth of opportunity and there is need to invest in basic infrastructure, health and education. This will empower people to take up opportunities as and when they come.

Conclusion

How are people affording to stay unemployed? 40 years ago, if one was unemployed, the person was equal to dead. The people could not afford to withdraw from the labour force saying they don’t want to do the work and remain unemployed. When one lives on margin of subsistence, the person cannot withhold the labour and works at whatever rate available.

But today, the economy has prospered, the food is available at cheap rates, there is some amount of social security. So, people are able to remain unemployed. This is adding to the resilience of the system. While this is happening, the main thing to do is step up the investment in economy, create infrastructure and build the growth and jobs needed.

The growth is visible because

  1. Three years ago, oil prices were around $140 a barrel. Now they are down to $50-60 a barrel. So input costs for all kinds of activities- agricultural and non-agricultural have significantly declined. The revenues have remained the same as there is no reduction in final prices. Thus there is a rise in profits which is showing in GDP
  2. Import costs have fallen as 80% of oil is imported. Exports have not been increasing. The difference between two has grown and that shows in GDP too.

Thus, GDP is increasing but it is an artificial increase. Hence there is a need for real growth in the economy through labour intensive employment generation.

Connecting the dots:

  • Economy needs ‘real growth’. Discuss in detail the ‘real growth’, how it can be achieved and challenges faced to achieve it.
  • ‘Job growth in India has to be domestically motivated.’ Analyse wrt to jobless growth in economy

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