India’s unemployment rate hit a four-month high of 7.9% in December 2021, with urban unemployment hitting 9.3%, reflecting how hard Indians have been hit by a dismal economy and the pandemic. The situation is getting worse – in Uttar Pradesh, where polls are limited, the labor force has fallen from 149.5 million to 170.7 million over the past five years, while the percentage of people employed (as a percentage of the working-age population) actually fell from 38.5% to 32.8% over the same period, according to CMIE data.
Such political disappointment has real-world implications, especially for young people, for whom the unemployment rate has risen sharply in recent years, from around 15.66% in 2016-17 to 28.26% in 2020. -21 (it was 32.03% cent in August 2021). Even getting a degree is not a guarantee of employment – 9 million out of 55 million graduate degree holders were unemployed in 2019. We seem to be wasting our country’s demographic potential – our young people are staying unemployed longer, desperately waiting for a chance to land government jobs. And if they don’t, then the only option is to get an informal job as a labourer.
Our policymakers may have mastered the art of populism, but have they got their hands on job creation? The challenge is getting harder and harder – India needs to create 90 million non-farm jobs between 2023 and 2030, to ensure the absorption of our population surplus. Instead, we’ve tinkered with short-term solutions, hoping new trends will fix this problem. Only a decade ago, policymakers expected India to be the back office of the world, with paid employees. Now we hope that the gig economy, driven by new-age start-ups, can make it happen. A reality check – in July 2021, there were over 53,000 recognized start-ups in India, which had created around 5.7 lakh jobs (not counting the jobs they could have destroyed by optimizing chains valuable). Meanwhile, the old tap of public sector jobs has dried up – there were 11.3 lakh employees in central public sector enterprises as of March 31, 2017; in 2019, this had dropped to 10.3 lakh.
India’s poor responded as they always have – continuing to plow the fields and work as labor on the construction sites. For some it is a continuing series of disappointments with the Indian state – many have simply stopped looking for work; the labor force participation rate has fallen from 47.26% in August 2016 to 40-42% — 60% of our workforce is simply not looking for work. However, in recent years the bill has increasingly fallen to the state – demand for state-insured jobs under the National Employment Guarantee Scheme has increased to 85.6 million people participants between April and October 2021, significantly more than between 2017 and 2019. And so India is scrambling, hoping this time that manufacturing jobs will leave China.
But perhaps a different state could emerge, one that fosters the creation of public goods and invests in human capital. And by simplifying regulations and boosting production, jobs would be created. A first step would be to rejuvenate the state by significantly expanding basic public services. In 2019, before the pandemic, there were around 2,000,000 vacancies for health workers, 1 million teaching vacancies and 1.17 million vacancies for anganwadi workers, making a total of over 2.5 million vacancies. In addition, there is a clear need to increase health care capacity from 2,90,000 to 4,20,000 health workers. It is not enough to simply announce a new AIIMS every campaign season. We also have a moral duty to regularize contract and seasonal workers in these sectors. This would create more than 5.2 million jobs.
At the same time, we must help improve the skills of the existing workforce, especially in urban areas of India. A national urban employment guarantee program, focusing on the creation of public assets, would help improve skills, provide certification and provide income support. Such a scheme could cover 20 million urban casual workers for 100 days, at a wage rate of Rs 300 per day, with an overall cost of Rs 1 lakh crore per year. The condition of Indian cities continues to be poor – with significant rehabilitation and expansion of public works needed. Such a diet could help.
Another way out could be to promote “green jobs”, including those traditionally the responsibility of public services (water conservation, waste management). It is estimated that a city with a city council could create around 650 “green jobs” in these categories, while a city council could lead to the creation of 1,875 jobs and a fully fledged municipal corporation could lead to the creation of 9,085 jobs. About 150 to 2,500 of these jobs in the latter area would be generated in the renewable energy sector, while an additional 300 to 2,000 jobs would be in waste management, 80 to 1,700 in urban agriculture and 300 to 2,000 jobs in waste management.
Continuing to be reactive will have significant societal consequences. In 2021, Shivpuri in Madhya Pradesh witnessed scenes of pandemonium as around 8,000 citizens lined up for a chance to become one of 20 peons recruited for the district court. In Gwalior, 15 openings for various menial roles (from driver to caretaker) saw over 11,000 unemployed youths flock to collect forms. Often the same person (MBA or PhD graduate) would apply for the role of peon, while preparing for a judge’s exam.
Indian cities can be magnets for job creation, if the right policies are implemented. We need a national conversation on urban unemployment, with roundtables for government officials, MPs and MPs to hear the needs of young people, as well as more detailed thoughts on the development and implementation of this strategy. We must rise to the challenge of creating jobs and improving the skills of young people for the labor market to ensure that India’s demographic dividend does not turn into a demographic catastrophe. Mere rhetoric will no longer suffice.
(The author is a BJP Lok Sabha MP)