Job offers increased in September 2018

In the month of September, the labour participation rate increased to 43.2 per cent. This was its highest during the current fiscal so far. News reports from the labour markets of large scale recruitment seem to connect with this increase in the labour participation rate.

 

Labour participation rates in India are low at less than 45 per cent because there are few jobs. Most people who are employed are, in fact, self-employed. They do not have jobs like we imagine jobs to be. They employ themselves to do something and eke out a living because nobody else employs them. Many others accept very low salary jobs because a better one is not on offer. But, many others simply do not go out looking for jobs by seeing the poor outcome of those who braved it in search for a decent job. This involuntary reticence to seek a job is one of the main reasons for our low labour participation rate.

 

But suddenly when a large decent offer comes up, many of the reticent ones do line up to apply. This is what seems to have happened in September and possibly on other similar occasions in the past.

 

The Indian Railways was seeking to hire 120,000 recruits. This is a government job that offers great security of employment and also provides facilities such as living quarters which are highly coveted. According to newspaper reports, 23.7 million applied for these Railways jobs.

The government organised 100 special trains to ferry the applicants to 60 exam centres, according to an extensive report in The Indian Express on October 7.

 

Such a huge mobilisation is bound to reflect in the labour participation rate.

 

The 23.7 million applicants are 83 per cent of the estimated 29 million unemployed persons in the country. But there were another 9-10 million unemployed who were willing to work but were not actively looking for a job. These are not considered as part of labour force. But, with the Railways recruitment drive many of even these will have joined the labour force by applicants or aspirants for the job. There will also have been many more who were not willing to work unless a government job comes on offer who must have applied. All of this contributed to the sudden increase in the labour force.

 

Of course, many of the applicants were already self-employed but applied because they preferred a government job. Or, they were employed in the private sector but preferred a government job for greater security.

 

Women willing to join the labour force often prefer a government job or no job. They are often averse to working in the private sector. The impact of the Railways recruitment drive shows up as a big jump in the female labour participation rate — from 10.3 per cent in August to 11.9 per cent in September.

 

The increase in female labour participation rate in September and the willingness of even employed persons to seek government jobs shows the influence of a large government recruitment on the labour participation rate.

 

It is likely that a significant part of the monthly or quarterly variation in the labour participation rate time-series is explained by the announcement of large government recruitment drives. We did see a temporary halt in the falling labour participation rate after the November 2016 demonetisation when the Railways announced a recruitment drive in February 2017. This hypothesis merits a more detailed examination. But there is prima facie evidence of the positive impact of government recruitment drive on participation rates.

 

The increase in the labour participation rate in September also reflects some heavy recruitment in the private sector.

 

September was the month when online retailers were hiring in a big way for the coming festive season. Flipkart is running the Big Billion Days and Amazon is running its Great Indian Festival this festive season. The two together are reported to be hiring 80,000 additional temporary hands for the season that lasts till the end of 2018. Total temporary jobs that these and others like Swiggy, FoodPanda, Big Bazar, Paytm and MobiKwik are hiring is estimated to be of the order of 300,000 compared to 250,000 last year. Some estimates of temporary hiring that include partner sellers place the intake at 500,000.

 

Many of these temporary hands are college students or fresh graduates. They are likely to include a large number dropouts or those who are not clear whether they would continue education or join the labour force.

 

A job opportunity where educational qualification is not a great entry barrier, even if the job is of a short-term nature has possibly also contributed to the increase in the labour force in September 2018.

 The author is managing director and CEO, Centre for Monitoring Indian Economy P Ltd