Recently, the National Sample Survey Office (NSSO) released the Periodic Labour Force Survey (PLFS), to be specific it is the first time the NSSO conducted the PLFS which is an annual survey mapping unemployment to provide a closer trace to unemployment. The much talked about report from PLFS has revealed that India is at the midst of massive job crisis hitting 45 year high unemployment rate of 6.1% in 2017-18. The unemployment rate (UR) is at its highest in both rural and urban areas.
The UR in urban areas is 7.8% and in rural areas it is 5.3% in 2017-18 as compared to 3.0% and 1.7% respectively in urban and rural areas in 2011-12. The joblessness rate among male and female is 6.2% and 5.7% respectively. The staggering increase has painted a gloomy picture of employment opportunities in the country. The rate of female participation is further higher than those of male in urban areas. Aside from unemployment low wages and precocity continue to be widespread.
Present scenario:
According to reports conducted by NSSO, about 83% of the total employed persons were employed in unorganized sector. This means the majority of Indian workers are without social security provisions such as pensions, insurance so on and so forth. The increasing rate of unemployment can also be associated with the plethora of labour laws that prohibits the firms to recruit and retrench employees as per requirements. In a survey carried out by the Centre for Monitoring Indian Economy it has come to the light that 1.1 crore jobs were lost in 2018 of which majority belonged to the unorganised sector. The manufacturing sector is probably the largest job creator in the country, however due to slump experienced by this sector job additions have been adversely impacted. As per the Labour Bureau Report less than 5% of Indian Workers are skilled. Poor skill development, corruption have remained the bone of contention for the last few years. The reported rate of unemployment is dominated by people with higher education. Hence to capitalise on its demographic dividend, India must create viable and high productivity jobs. It is estimated that Indian economy will need to generate 70 lakh jobs annually to absorb the additional workforce moving out from rural areas currently employed in agriculture. It is not shocking that of India’s total workforce, agriculture holds 49% while it contributes hardly around 15% of gross value added.
The female labour force participation rate is also pathetic i.e 23.7% compared to 61% of China and 56% of the US, the International Labour Organisation ranks India’s Female Labour Force Participation rate at 121 out of 131 countries in 2013. Given the complexity of various labour laws the union cabinet approved the bill that will codify 38 central labour laws into 4 codes and intends to increase the legislative protection of minimum wage to the entire workforce. Another important aspect of this reality is that educational expansion has affected the unemployment debate by creating greater competition for well paid jobs among a rising population of educated youth. It allows young graduates to wait for well paying jobs thereby creating an army of educated unemployed. Hence the recognition of rising unemployment as a function of expanding education will force the government to grapple with different issues than simply focusing on unemployment statistics. According to the India Skill Report, only 47% of higher education youths are employable.
Revival of the situation:
Firstly it is very important to identify the skill shortages, developmental needs. It can be done with the help of The Labour Market Information System shortly LMIS. Additionally to mitigate this issue Government has undertaken a multi-prolonged approach through launching of ‘Start Up India’ for creating an environment for entrepreneurship and innovation. Other schemes such as MUDRA, Pradhan Mantri-Rojgar Protsahan Yojana, Shram Subidha Portal should be emphasised equally.
Secondly to impart the proper and future ready skills government has launched the Pradhan Mantri Kaushal Vikash Yojana (PMKVY) and National Skill Development Mission which in turn will create better trained and well paid workforce. Thirdly simplified and modified labour laws applicable to the workforce will ensure an optimum combination of flexibility and security. Further to ensure better working conditions for domestic workers, The National Policy on Domestic Workers needs to be implemented at the earliest.
Fourthly, to enhance female labour participation rate the government has brought about important legislation like Maternity Benefit (Amendment) Act, 2017 which increases the maternity leave from 12 weeks to 26 weeks, the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act and Equal Remuneration Act, 1973 which provides for payment of equal remuneration without any discrimination. Fifth, to reduce the confusion about the employment data collection, a task force under the Vice Chairman of NITI Aayog was formed in 2017. It recommended yearly survey on employment data based on household survey method. To formalise the workforce there is a need to emphasis on the exhaustive use of administrative data of EPFO, ESIC and so on. Sixth, cluster development to support job creation in MSME sector is of great importance. To encourage this sector government launched the Pradhan Mantri Mudra Yojana for refinancing activities relating to the micro industrial unit.
To ensure better working condition for all the workers state needs to strengthen the labour dispute redressal system and occupational safety and health in the unorganised sector. It is also a matter of concern that the present Minimum Wages Act do not cover all the sectors so government needs to look after this matter also. Apart from this major initiative; planned focus on rural job creation is also very crucial. Rural agri-based economy must move to other allied activities. Solar energy project in rural areas can be a very major catalyst for creating jobs to create solar clusters since it will provide more electricity. It can be certainly said that once the power becomes abundantly available a whole lot of rural activities can be created such as livestock, livestock feed manufacturing, fisheries based on scientific and commercial lines, milk production (Anand milk production model is a great example in this regard), tourism (in this case somebody needs to recognise the potential in that particular area). There are more than 6 lakh villages in our country, of them many villages can become a good tourist hub. These kinds of activities will surely augment the income generation and employment opportunities in rural areas, apart from providing impetus to only agriculture it should be given to other activities in rural areas also. Private players also here get a good role to play; they can build capacity among unskilled workers to ensure sustainability of renewable energy projects in remote areas. These kinds of initiatives will promote youth employment in rural areas and eventually they will stop migrating. The problem we are facing in urban areas is that there is so much migration that it puts heavy strain on urban infrastructure. Rural areas in India can be a catalyst in solving the problem provided they are facilitated with proper incentives.
Conclusion:
As India develops the nature of jobs is also changing, looking at the changing nature India requires an all encompassing environment so as to ensure that more jobs are created. The new data on unemployment undoubtedly presents a grim reality, use of new methodology, technology and quarterly surveys are helping to acquire more precise data which are the right kind of input to the policy makers. Further it needs to be independent with legal backing. India has one of the youngest population in an aging world. Demographics can change the pace and pattern of the growth. While China is benefiting from the demographic dividend, India is yet waiting to embark on this journey. Avenues are open we just need to deliberate and execute.
(The author recently graduated from Cotton University in Economics. He is currently preparing for International Relations and various other entrance examinations)
