Employment beyond the data

How does one understand employment in a country as diverse and complex as India?  You study data and policies on employment, right?  Wrong.  To understand employment one has to understand the economy first.  And employment is an outcome that can best be understood in the context of the economy and even demography.  And that is where this book,  Employment in India, does not score.

Since independence, the Indian economy has been growing at rates moderately high, to slow, to high, and back to moderate in recent times.  Inadequate employment opportunities have been generated throughout this period.  Economists of various types, demographers, social scientists are not the only ones who have lamented on the inadequacy of employment generation.  Perhaps politicians have been even more concerned.

The proposed solutions have been broadly related to three areas.  First, we need to ensure that the workforce is better educated and skilled and that will help them access jobs with higher productivity.  Second, free the shackles on economic growth and opportunities from high growth will percolate down to the masses. And third, we need to ramp up manufacturing and rapid employment growth will occur just as it occurred in China. 

India failed in all three.  Actually, it did not fail completely, but failed moderately on all three fronts, though some may say it succeeded moderately as well.  Whether you call the glass half-full or empty, it is not good enough. Improved health care and access to basic needs contributed to a massive increase in population post-independence and, therefore, those in the working-age groups have risen dramatically.  While opportunities were being created moderately, the supply has been increasing far more rapidly. The core problem lies here.

Employment in India 

Author: Ajit Kumar Ghose

Publisher: Oxford University Press

Pages: 192

Price: Rs 345

To understand the unemployment problem let us first start with education and skilling.  Basic education was a huge mess until recently and even today, it scores quite poorly on the mess index.  Students now go to school, though many teachers do not; classes may now be held, though learning is low.  As a consequence, a person from the lower socio-economic segments is ill-equipped to access new opportunities being thrown up.  If people can't access new opportunities, some of them can’t become entrepreneurs and create new opportunities for others.  Salaried jobs and entrepreneurship both suffer.  

But the problem is worse than that: How can a society retrain or skill a workforce that is not able to read properly?  It can’t.  And so that cohort is forced to work in jobs that otherwise should not have existed by now.  The lack of good-quality basic education lies at the core of India’s employment problem and the only option left for the policymaker to take care of the illiterate and unskilled is to artificially create specifically designed jobs or opportunities for them. Therefore, we have micro-construction oriented policies, the National Rural Employment Guarantee Act and all kinds of welfare schemes.

Next consider the growth problem.  It is never the case that economic growth creates employment uniformly, it’s a non-linear process.  For instance, the IT growth created few jobs compared to the income generated, but there was a percolation effect.  Demand for personal services, housing, manufacturing products created second-order opportunities for others.  Except, no political conglomeration was really in favour of opening up beyond the initial reforms. As the economy remained shackled, organised growth never took off.  Labour laws, inspector raj, highly unresponsive governments in the Centre and states that ramped up the prices of land, capital, energy and supplemented it by troubling entrepreneurs incessantly led to only moderate growth in the organised sector.  

Strangely, there was a missing middle problem in India: Firms just would not grow from small to medium scale. A few were able to “manage” the government better and became large, but that was less because of their efficiency in operations.  And so, employment growth in the organised sector was highly compromised.  Forget foreign investment, even Indian investment in risk capital is limited.  So while growth went down and up and down, it was of very poor quality, did not create enough jobs and has been always inadequate for the task at hand.

And finally, consider the notion that manufacturing is the answer to India’s employment problem. It is not.  We now know that Indian manufacturing will not be able to address the employment problem in the next few decades at least.  Why? For one, it can’t grow that rapidly.  But let us leave that aside for the moment.  Two, when the majority of the workforce is illiterate or barely literate, how can it be trained to take up manufacturing jobs in the new globally competitive economy?  Three, there is the environmental mess that was first created in the West and worsened by China and if India gets into the same bandwagon, God only knows where we all will end up. So, the third option is now no longer an option.

To sum up, this volume talks about labour and jobs, various problems and solutions, elasticities and rates, and so on.  It has data, definitions and explanations, and it would be of help to those who want to know about labour.  But it misses out on the economic issues that underlie employment.

The reviewer heads Indicus Foundation and works on environment and inclusion