Last week, pictures and videos of youths traveling through the northern Indian state of Uttar Pradesh to write exams for the Uttar Pradesh Preliminary Eligibility Test (UPPET) went viral. It is estimated that around 3.8 million candidates had registered for it, some of whom were literally putting their lives on the train to reach their exam centres. Railway stations were chock-a-block and so were train bogies.
What happened because of this test? Generally, government exams do not allow candidates to take the exam at their residence, forcing them to travel to their exam centres, which are often far away.
In the 90s, I faced a similar test while taking an exam to get admission in an engineering college run by the Government of Bihar. When I lived in Ranchi which was then in South Bihar (and now Jharkhand), my exam center was in Muzaffarpur in North Bihar.
Buses and trains going to Muzaffarpur were all packed. So there were hotels and lodges in the city, many students had to spend the night before the exam at the railway station. Neither Muzaffarpur nor Indian Railways had the capacity to handle this sudden and huge rush of students.
But this only explains why youth have to travel for government exams, it doesn’t explain people’s attraction towards government jobs in the first place. In fact, lower and middle level government jobs pay much better than most private jobs.
The Seventh Pay Commission, which published its report in November 2015, had asked the Indian Institute of Management in Ahmedabad to study the issue. The report states: “According to the study the total emoluments of a general assistant, who is the lowest ranked employee in the government, is 22,579, more than twice that of a general assistant in private sector organizations in the survey 8,000- 9,500.”
It clearly hasn’t changed. Moreover, a government job comes with solid job security, something that has become even more important in the post-Covid world. This explains why we regularly see news of engineers, PhDs and MBAs applying for low level government jobs.
Interestingly, the attractiveness of government jobs is visible in other developing countries as well. As Abhijit Banerjee and Esther Duflo write in the context of these countries in Good Economics for Hard Times: “Public sector workers earn more than twice the average salary in the private sector. And that’s not counting the generous health and pension benefits.” This leads to a situation where “government sector jobs are much more valuable than private sector jobs,” and noting that they are also very Rare are “it’s worthwhile for everyone to wait and stand in line for those jobs.”
Therefore, a good part of a youth’s working life is spent in waiting. This is clearly visible in the unemployment figures published by the Center for Monitoring Indian Economy. In September 2022, the unemployment rate for people in the age group of 20-24 was 41.9%. The unemployment rate in the age group of 25-29 years was 9.8%. In addition, unemployment was almost non-existent, with a rate of 0.8% for those in the age group of 30–34 years.
Now what does this tell us? This tells us that as a person reaches the age of 30, unemployment almost vanishes as a phenomenon. By this time, the age increases and many individuals become ineligible for most of the government jobs or the amount of effort one could put into writing the exam is finally exhausted. , This forces them to take up informal jobs in the private sector or alternatively become self-employed. And this has led to falling unemployment rates for Indians in their thirties.
The solution would be for an economist to cut salaries in government jobs and bring them in line with the informal private sector. But this is not practical, and given this, this problem is likely to prevail.
As Banerjee and Duflo point out: “In many developing countries, labor markets are characterized by this duality: a large informal sector without any security, in which many are self-employed due to lack of better options, and a The formal area where the staff is not only pampered but also strongly guarded.” It has many consequences. Firstly, many youths spend the best years of their lives pursuing a government job without ending up with one, instead of doing something more productive with their lives. Second, passive youth is bad for social stability. Third, it harms overall private consumption in the economy.
As Peter Zeehan writes in The End of the World Is Just the Beginning: Mapping the Collapse of Globalization: “Most of a person’s spending is between the ages of fifteen and forty-five – that’s the life window when people are buying cars. [two-wheelers in the Indian case] And homes… this kind of consumption-based activity is what drives the economy.” Given that many young people are unemployed by the age of 30, this dynamic does not work as it should.
Lastly, low consumption refers to the low demand for goods and services in the Indian economy. This means businesses do not need to expand their capacity. Data from the Reserve Bank of India tells us that the capacity utilization of manufacturing companies in India has been less than three-fourths for almost a decade. This leads to the creation of fewer private sector jobs. And so the cycle continues.
Vivek Kaul is the author of ‘Bad Money’.
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