Last month, several parts of North India witnessed protests by students who appeared in the non-technical popular categories examination conducted by the Railway Recruitment Board. This was to fill 35,000 posts, for which 12.5 million candidates had applied. While the RRB’s decision to set up a committee to look into the issue may have pacified the students for some time, it is unlikely to offer any solution to the huge employment and earnings problem in the Indian economy.
As an employer, the Railways is our second largest after the Ministry of Defence. But its problem lies not with the recruitment process but with the large number of applicants for low-skill jobs. How big is 12.5 million? This accounts for about 10% of all people in the age group of 20-25 in the country. So every tenth person in this age group was an applicant for the lowest grade employment in Railways.
None of this is unknown, and several data sources, including the government’s own estimates of the Periodic Labor Force Survey (PLFS), reflect the magnitude of our employment crisis. Even by the PLFS, the unemployment rate for the age group of 18-25 is 24.5% for 2019-20, which is not only very high, it is also the highest in the world if smaller and conflict-ridden countries are excluded. Is. With a labor force participation rate of around 40%, this also means that every tenth of the country’s youth is unemployed by the official definition. While this may appear high, even this is a gross underestimation of unemployment in the country. A significant majority of those who took to the streets to protest against RRBs are unlikely to be caught as unemployed by our official figures. Most would be counted as students rather than unemployed. A small minority of them would actually be working for private establishments, but would be looking for a better job with tenure security, better pay and social security, which is lacking in informal jobs. According to PLFS estimates, two-thirds of regular salaried employees in 2019-20 did not have a written job contract and most did not have any social security.
Underestimation of unemployment is as much a statistical issue as it is an economic reality. According to official estimates, one-third of our population remains poor, despite improving living standards and increasing per capita income. For these families who have to feed themselves, being unemployed is a luxury they can hardly afford. By default, they tend to accept work at whatever wage is available. The social stigma associated with being unemployed also means that many people would prefer to work in agriculture and other enterprises as a form of employment, even if they are not contributing to production. For many others, being trapped in an informal work arrangement on exploitative wages may be their only option. Even with the best definitions and survey mechanisms, accurate estimates of unemployment are difficult to obtain, given the complexity and multitude of work systems that exist. But efforts to better understand the problem by strengthening our statistical system should be the priority of the government.
Unfortunately, while this government has shown little respect for official figures, denying unemployment as a major challenge to the economy is no longer a statistical issue. It has already become a public issue in almost all states, which are in the midst of an electoral battle to elect governments. Several political parties, including the Bharatiya Janata Party, have promised unemployment allowance to woo voters.
Recognizing the gravity of India’s employment crisis is just the beginning for us to address this problem, which is arguably the biggest problem of the economy. Ideas like unemployment allowance or urban employment guarantee are unlikely to solve the problem completely. Even as temporary relief from the crisis, these are insufficient. However, the politicization of India’s job shortage should lead to discussions on long-term solutions.
The country needs policy incentives not only to create additional jobs, but also to ensure that the jobs thus created provide fair wages, security of tenure and social security. Given that the incentive structure built into the current policy regime favors capital-intensive growth at the expense of labor use, a structural solution to the problem of employment would require a closer re-examination of the prevailing structure of production.
At a time when our economy is grappling with low demand and income crunch in rural economy, reviving rural demand through public expenditure is not only the need of economic revival, it is also the best way to increase the employment content of growth. Is.
Himanshu is Associate Professor at Jawaharlal Nehru University and Visiting Fellow at Center de Sciences Humanes, New Delhi
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