By now for those who recognise, it is obvious that economic growth of the kind we have had in India for the last two decades does not create as many jobs as anticipated by the Planning Commission, or the kind that can be counted by NSSO (National Sample Survey Organisation) surveys. Employment growth for the period 1993-94 to 1999- 2000 was 1% per annum, for the next ten years it was 1.5% per annum. The employment growth story is bizarre; by all estimates available there has been a virtual stagnation in employment during the period when growth was at its highest from 2004-05 to 2009-10. This is in line with a declining trend in employment growth over a longer period in India as also in the post reform period compared to the pre reform period. This does not show up in rising unemployment rates in India because of the slowdown in rate of growth of labour force and a decline in the labour force participation rates (LFPR). Somehow media euphoria about the high growth rates was never balanced by dejection about slow employment growth, in fact the implications of this decoupling are hardly even mentioned.
Changing dimensions of employment sector
In this last period, 2004-05 to 2009-10 the proportionate share of sectors in employment reveals that a sector called nonmanufacturing comprising construction has generated most employment followed by the service sector whose share has increased marginally. In the earlier period service sector had led to some employment generation. The traditional sectors‘ (agriculture and manufacturing) share of employment has declined. Despite stagnation in employment, the quality of employment has improved somewhat however in this phase with rising share of regular workers and rising real wages across categories of workers. The diagnosis is that people in the age of 15-59 are therefore now opting out of the labour force so as to seek education/train further. School and college enrolment rates are going up even for girls. Women in turn are opting out of work to return to domestic work! This is supposed to be a general beneficial consequence of rising incomes.
This period also saw the fastest decline in poverty. Quoting the report of the Planning Commission, “During the 11-year period 1993-94 to 2004-05, the average decline in the poverty ratio was 0.74 percentage points per year. It accelerated to 2.18 percentage points per year during the seven-year period 2004-05 to 2011-12. Therefore, it can be concluded that the rate of decline in the poverty ratio during the most recent seven-year period 2004-05 to 2011-12 was about three times of that experienced in the 11-year period 1993-94 to 2004-05.”
This rapid rate of poverty decline should have been matched by a commensurate rising rate of growth of employment. How else do people step out and stay out of poverty? How does the trickle down work? It cannot have been by welfare alone.
There appears to be a growth in survival strategies to stay above the line of destitution instead of measurable employment. That survival strategy consists of using welfare schemes specially food based and employment based ones along with multi-tasking, shifting between village and city, between self employment and casual work, between home based employment and casual employment, between different sources of credit, different kinds of casual work which is not reported as work to the interviewer. Under reporting of survival strategy is occurring specially among women workers, who bear the double burden of social reproduction and cultural prejudices against their work. Otherwise it is hard to imagine how women are coping with inflation and pressures of schooling their children. For women the problem of employment is compounded by their role at home, the need for work near home with flexible timings and work that compensates them adequately to cover the cost of neglected housework, lack of decent and safe work places. All these problems routinely discourage women workers.
Upgrading skills vital to increase employment rates
It may be highlighted here that, of the Planning Commission’s estimated 470 million labour force, 26% are illiterate and 49% cumulatively classify as primary or and below that level of education. The reason they may not be willing to seek employment (and hence the declining LFPR) is perhaps because they are discouraged by the lack of remunerative non-farm employment at their skill level. Such labour cannot be the mainstay of industrial growth.
Yet according to the Ministry of Labour and Employment little less than two thirds of the seats available for trade apprentices, graduate, technician and technicians apprentices were utilised. This does point to a demand side bottle neck for even trained labour implicating the nature of growth we are experiencing. The quality cost of this training and neglect of overall coordination between demand and supply for the labour market are also called to question.
The previous 11th Plan forecasted the creation of 58 million jobs of which estimates are that only 18 million were created. An achievement of 31 percent of target should have a sobering effect on any genuine planner. A future projection of 50 million non-farm jobs by 2017 has been made. This time the hope is that manufacturing sector will grow via a multiplication of existing incentives and inducements. Some of those inducements like liberal labour laws and wide scale popularity of contract and casual labour are exactly those that will not induce or enable labour to invest in upgrading its skills and training. Employers have no incentive or compulsion to do so. There is a commitment deficit on both sides that feeds into a spiral of low skills. To be believable this discourse of inclusion must state and control the terms of inclusion for the weaker bargaining party.
The need to manage labour market
Still an emphasis by the Planning Commission on market driven education and skills is touching but unreciprocated since markets are not driven by plans. Investment in education and training is a long term one and has opportunity costs like forsaking current employment, work experience over above the cost of education itself. What kind of returns and security does the labour market offer them? All the projections about increasing workforce with formal training from the present 10% to 25% and doubling the training capacity from the current 4.5 million is destined for the same one third achievement if left to the market .
What is the consequence of this failure to coordinate and manage the labour market? A a huge insecure labour force, not entirely illiterate, not destitute but not protected against inflation or external shocks is like an army of restless income gatherers and hunters ready to use any trick, any weapon or aggression to survive.
In this situation the recently announced National Rural Livelihood Mission and its urban counterpart acquire a special meaning. They deal with the employment and poverty issue simultaneously and treat them as sides of the same coin. The policy hinges around local skill formation, access to credit from cooperative or nationalised banks, wage employment, self-employment and formation of women’s self help groups (SHGs) and their federations. Available field work evidence, about the women’s SHG component, suggests that if implemented correctly leads to acceleration in social, financial, physical and human capital at the bottom of the pyramid. It supports group self-employment and individual self-employment among women and reaches the heart of darkness and the seat of social reproduction directly. It impacts the skill, training and cultural capital of the next generation too. The policy needs to be well funded and implemented by the local governments with earmarked permanent staff and structure.
The structure must be able to access resources and personnel horizontally and vertically in the administration machinery of the state. Some states have moved more rapidly than others. Kerala for example has set the pace and standard by its Kudumbashree-Poverty Eradication Mission. The achievements of this mission have been studied and commended on behalf of the Planning Commission. It is now recognised as a national resource organisation for replication across the country and must be perused with some real urgency.