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Why This Silence on Unemployment, Mr Modi?

Subodh Varma |
The jobless rate crossed 8% yet again, and youth unemployment is raging unchecked
Unemployment Rate was 28.5% in Capital in Oct-Nov; for Women 54.7%: Delhi Govt Survey

New Delhi: There is a deafening silence on the part of the government, and its voluble leaders, on unemployment. Not even ritual claims or promises are being made -- one would think that India has no jobs crisis! Yet the relentless rate of unemployment, especially among youth, continues to devastate families. In August this year, unemployment once again crossed the 8% mark hitting the highest level in the past year. It was 8.3% aggregate with urban unemployment touching 9.6%, according to the latest estimates put out by the CMIE (Centre for Monitoring Indian Economy). Before the pandemic began more than two years ago, joblessness has remained in the 7-8% range on average every month. That’s a very heavy cost that India’s people are paying for electing a government that had promised millions of jobs every year.

The total number of employed persons continues to languish in the below-40 crore range. It was estimated at 39.5 crore in August, lower than the previous month’s 39.7 crore, as shown in the chart below. Two years ago, in September 2020, when the country was still reeling from the pandemic the number of employed persons was a tad higher at 39.8 crore. It appears that the so-called recovery or bounce-back after the pandemic has dramatically failed as far as jobs are concerned.

chart1

This year’s situation is marked by additional fragility because of weather vagaries. First, there was an unprecedented heat wave and then sowing for Kharif – which would provide work to large numbers – was delayed and disrupted due to rain delays and floods. But, even if one discounts these ups and downs, the fact that aggregate employment is still stuck at the around 40 crore range is deeply worrisome.

Vanishing Jobs for Youth

The chart below, also based on CMIE data, presents a shocking picture of how the much-vaunted ‘demographic dividend’ has sunk without trace in the ocean of unemployed. For the age group of 15 to 24 years, the number of employed persons has decisively gone down from about 21% in March 2017 to just above 10% in March 2022. That’s a halving in five years.

chart2

Of course, one fairly big section of this age group is not in the labour force at all – they are students. So these numbers should not be compared to older age groups. But despite this caveat, the steady decline in the employment rate shows the dire job situation. Note that this decline began before the pandemic and so, it can’t be attributed to only the effects of lockdowns and restrictions. It is due to the lack of jobs in the economy.

In fact, CMIE data shows that while the share of those reporting themselves as students has increased in recent years, it still doesn’t account for the huge deficit in work for these young people. Between 2016-17 and 2021-22, the share of students in the working age population increased from 15% to 23%. Most of these would be in the 15-24 age group.

Falling Share of Youth in Labour Force

In the same period, the share of youth in the labour force has fallen steeply from 17% to 13%.  On the other side, the share of persons in the age group 40-59 years has increased from 42% to 57%. To put it another way, the labour force in India is ageing rather than becoming younger! Even the other younger age groups are exhibiting declines: the share of persons in the age group 30-39 years has reduced from 25% to 21% in the same period.

What all this means is that the deadly employment crisis is forcing younger people to go out of the labour force altogether. This is a grave situation and a marker for the severity of the jobs crisis. Most of the younger persons are more educated than the older persons. With this education, they are unwilling to do low-paying, insecure jobs that are currently on offer. They would prefer to wait in the hope of getting better jobs sometime later. In the meanwhile, they perhaps depend on their families' income. Some may even enrol themselves in educational or skill development courses, in the hope of being better prepared for jobs. That would explain the rise in the share of students.

Govt Paralysis

The Narendra Modi government had placed all its faith in big business to generate jobs by investing in new productive capacity or infrastructure. It was claimed that giving easy credit to businesses, and giving them tax concessions and loan write-offs would facilitate business growth. Public investment had to retreat in order that private investors move in – this was the logic. It didn’t matter that this fatal logic had been proved wrong time and again in various countries. And it has proved wrong yet again in India. Industrial growth was tardy before the pandemic, it petered out due to the ill-conceived lockdown, and since the removal of pandemic restrictions, it has not picked up as desired, the celebratory back-slapping among government supporters notwithstanding.

Besides this cage of ideology that the Modi government is trapped in, it has no other vision for creating jobs. It is wary of even increasing allocations for such relief , such as the rural job guarantee scheme. Urban unemployment has not even been touched yet despite the army of unemployed that keeps flowing to bigger cities in desperate search of jobs. 

Perhaps, it is to cover up this spectacular failure that the ruling party and its associates are increasingly taking recourse to pseudo-nationalist rhetoric, bigotry and militarism to assuage and divert the growing discontent among people, especially youth.

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