Jobs for the masses

Recent columns on this page have highlighted the sheer magnitude of the challenge that employment poses for policymakers in this country. The labour force (generally defined as the number of people between the ages of 15 and 64) is around 450 million today. As today's children grow into tomorrow's workers, this number is estimated to rise to 700 million over the next three decades. Even if India were replicating the typical developmental transition, involving the movement of large numbers of workers from farm to factory, it is difficult to visualise these numbers of jobs being available. The stark reality is, however, that India is not following historical precedents as far as employment is concerned. Despite a significant shrinkage in the share of agriculture in GDP, the proportion of the workforce dependent on this sector remains stubbornly high. Industry and services may be booming in terms of activity, but this does not appear to translate into the absorption of sufficiently large numbers of workers. That old fallback, the public sector, proved to be a rather costly way of job creation and is left well alone. Fortunately, even a government with support from the Left does not contemplate large-scale public sector employment. But, as re-assuring as that it, it leaves open the question: how are so many new jobs to be created?

Such a mammoth challenge cannot be addressed by a single, simple instrument. Many forces have to be brought to bear. Both demand-side measures that induce employers to hire more workers and supply-side measures that make more people more hire-worthy are equally important. Perhaps the most important requirement from the demand perspective is the removal of job security regulations that apply to industrial activity. Many people see these as imposing an unnecessary additional cost on employers, who theoretically have to keep paying workers even when they are not producing anything and, therefore, are a huge deterrent to hiring. However, expanded room to hire and fire cannot be created without providing temporarily unemployed workers with a safety net. From the supply side, even if employers are willing to hire more workers, they have to be sure they are getting the right skills. Evidence from the recent National Sample Survey on employment and unemployment paints a rather dismal picture of the degree of flexibility and adaptability of the average Indian worker. Apparently, even when opportunities arise in different sectors, he is either uninformed or unwilling or unable to uproot himself from the current activity and move to a presumably more promising one. This indicates the need for significant investment in both skill creation and information dissemination. Who is to do this and where are the resources going to come from? The initial answers to these questions have to come from policy-makers and economists, and only then can all the required pieces be put in place.

It also goes without saying that the government will have to look outside the country's borders for employment opportunities. In a traditional sense, this would mean migration, something that other countries have been solidly resistant to, and understandably so. Fortunately, this is the era of off-shoring; labour-intensive services can be delivered without moving people. The model has served India well in the IT and ITES sectors. Can it be successfully adapted to other activities? These questions have to be given priority by people who are engaged in thinking about the long-term prospects of the economy.