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Employment and unemployment scenario in India: Where are we heading?


By Arjun Kumar
The job market scenario in India for the last few? years has been quite shaky, to say the least. The Pandemic has further complicated that shaky scenario more intensely. Today, the country remains in a critical position, where on the one hand it is trying to mitigate the risks added by the pandemic in its economy and on the other trying to bounce back. On that line of thought, #IMPRI Center for Work and Welfare (CWW), IMPRI Impact and Policy Research Institute, New Delhi, Indian Social Institute (ISI), New Delhi, and Counterview, organized a #webpolicytalk on Employment and Unemployment Scenario: Where Are We and Where Are We Going?

COVID 19 and the toll of job loss

The session was opened by the Moderator Prof K R Shyam Sundar, Professor, HRM Area, XLRI – Xavier School of Management, Jamshedpur. He reiterated the concerns that the pandemic has brought, in the employment-unemployment scenario of the country. The PLFS 2019-2020, reported a substantial rise of 3.5 % in workforce participation rates for all workers in both rural and urban India, and a sharp rise in the female participation rate. This has been lauded as a remarkable growth that was witnessed in a short-term period of 2 years.
It also witnessed a tremendous degree of stunted workforce participation, given the prolonged lockdown imposed. With the resumption of economic activities, the statistics, however, now show a pretty satisfying picture and testify to a recovering economy. While, the data from the trade unions from a more micro perspective, shows that the situation is not that rosy as it might be made to see. Many have also questioned the very reliability of the PLFS (Periodic Labour Force Survey) statistics.

Data and Growth

The Panelist Dr. Radhicka Kapoor, Senior Visiting Fellow, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, added yet another dimension to the topic at hand, that is “how we got here”. She divided her presentation into two sects- one analyzing the trends and the second part focusing only on data.
For analyzing the trends, Dr. Kapoor concentrated on the data from the NSS household survey and the PLFs annual rounds. Dr. Kapoor started her analysis from 2004-2005 data because at that time India witnessed a stupendous rate of growth, which saw some sluggishness from 2015-2016. Many attribute the reason as not creating enough jobs. But that is a misguided perception.
The challenge of creating better, quality jobs has always been very much present in India, irrespective of the growth rate or the time frame.
The unemployment rate should not be the single determining metric to assess the unemployment condition, labour force participation rate is yet another fundamental factor for the same. Since 2004-2005 an interesting trend has been the increase of salaried labor force and a decline in the unorganized sector, which showcased the formalization of the economy.
One of the predominant factors driving these trends has been the nature of structural transformation that India has witnessed since 2005. The decade saw a sharp decline in agricultural contribution in the economy, with the rise of the service sector and the construction sector. These sector-wise change has however also cropped up some problems of rehabilitation within the transforming economy.

Education and the Job Sector

Dr. Gayathri Vasudevan, Executive Chairperson, LabourNet, Bengaluru, highlighted the changing pattern of educational qualification and its impact on the overall job sector market. From a policy perspective, we need to look at the financing of the booming sectors of the economy, to ensure a steady job flow.
Dr. Vasudevan also underlined the increasing gender parity in the booming construction sector of the economy. In some cases, it is also found that women are totally unaccounted for the work done by them and the wages or following remunerations are being appropriated by men, even without any contribution. Thus, this decreasing women’s labor force might also be for not counting them or their work in the labor market. The same trend is noted in the agricultural sector as well.
She also discussed extensively the MNREGA, where again the participation of women has bizarrely declined and the men again appropriating the jobs meant conventionally for the women. She also provided a new perspective of bringing in service sector jobs within the MNREGA, thereby increasing the overall quality of jobs provided under this scheme.
Dr. Vasudevan while discussing the proportional relationship that exists between the education and job sector, highlighted the group of young people holding college degrees, but lacking any sort of skills required for jobs. These groups unable to find jobs in tune complementing their educational backgrounds adds further to the overall unemployment rate. Thus, Dr, Vasudevan emphasized the need to see that we don’t push towards higher education without any proper plans towards guaranteeing employment, across the educational spectrum.
The Panelist, Dr. Ishan Anand, Assistant Professor, Jindal Global Law School, focused on the analysis of the PLF data, to analyze the employability trend in the job market. He highlighted three major issues that emerged from the latest PLFs. The first is the decreasing unemployment rate even during the pandemic, increase in the real wage which was again surprising given the storm that the pandemic threw at the economy, and third is the rise of the female labor participation rate.
In the year 2019- 2020, the GDP has been falling, and as other surveys have shown that from the period of 2017-2020, the real wage has been falling. But despite that the year 2019-2020 saw an unprecedented increase in the participation of the labor force, remaining at an all-time high. For most of these categories, what is interesting is the involvement of people above 60 years of age in the labor force. Similarly, the share in the self-employed category has significantly risen.
All these points out that the growth we are witnessing is actually distress-driven growth. Dr. Anand on that note also highlighted the menace of educated unemployment which has been steadily increasing, which saw a jump of 18.1%. If the statistics of the educated unemployment is dug deeper and its gender and caste composition is analyzed, it is found that the deprived section of the economy, who is facing a disproportionate burden of unemployment. Similarly, if the statistics of the public sector jobs are looked at, it will be found that the number of permanent jobs has come down drastically in the last 10 years.
The discussant Dr. Rahul Suresh Sapkal, Assistant Professor, Centre for Policy Studies, Indian Institute of Technology (IIT) Bombay, Mumbai, began by remarking that the populace has somewhat been normalized with the new unemployment rate of 6.1%.
Theoretically, the relationship between inflation and unemployment is supposed to be inversely proportional, but the reality of the Indian economy is showing altogether a contradictory trend. Inflation is rising keeping pace with unemployment.
Apart from unemployment, Dr. Sapkal also brought to the attention the discussion of the ill implementation of labor laws in India. The rampant structural changes in the country have added a further menace of job loss, coupled with unemployment.
During the pandemic, a lot of surveys were done to assess the damage to the labor force. But Dr. Sapkal expressed his reservations on the reliability of the data collected. Statistics published by the Government such as the PLFs have also failed to capture the inflow and outflow in the labor market. He also harped on the necessity to understand employment intensity as a unit of analysis rather than occupation as a unit of analysis to grasp the picture fully. He also mentioned the lack of social and economic mobility in the Indian labor market.

Pertinent Questions and Concluding Remarks

In response to moderator Prof. K R Shyam Sundar, the question on the need for affirmative action in the Indian labor market, Dr. Anand mentioned that he thinks a disservice would be committed if we move away from the constitutionally established affirmative action. Dr. Vasudevan in that context mentioned the lack of assessment of the quality of the jobs created in the country. In the concluding section, Dr. Arjun Kumar posed the issues of the biasness of the PLF and the NSS data and how far it actually captures the reality of the Indian labor market, which was very categorically explained by Dr. Anand and Dr. Vasudevan. “Its High time that we have an urban employment guarantee,” said Dr. Ishan Anand. “One of the key component to look at is where is the money going?” asked Dr Gayathri Vasudeva.
“We should look at quarterly level analysis to capture the transition and state of labour market in India”, said Dr Rahul Suresh Sapkal.

Acknowledgement: Anondeeta Chakraborty, Research Intern at IMPRI

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