Resignation of NSC members exposes government's unwillingness to tackle unemployment

Resignation of NSC members exposes government's unwillingness to tackle unemployment

Suppression of unpleasant employment data will not help; proper analysis of such data and strategic planning will do.

The sudden resignations of two non-government members of the National Statistical Commission  - an autonomous body supervising statistical reporting by the government - brings into sharp focus the Central government's persistent attempt to suppress inconvenient truth about high unemployment in the country.

The resignations are being seen as a protest against non-publication of NSSO's survey on employment and unemployment situation in India for 2017-18, which is believed to have presented a grim scenario. This is not surprising. The sixth annual Employment and Unemployment Survey (EUS, 2016-17) of the Labour and Employment too have been withheld as it reportedly shows the unemployment rate shooting up to 3.9 percent from 3.7 percent in 2015-16.

Also Read: In the age of automation, AI, companies focus on hiring people with soft skills: report

Suppression of unemployment survey data, howsoever unpleasant, is not only undesirable, it is counter-productive. Periodic data not only provides timely insights into the workings of the job markets and brings out different dynamics at play; it also helps in making intelligent policy and strategic decisions to overcome the situation. Political expediency should be the last consideration when it comes to the livelihood of millions.

Sharp rise in Unemployment

Even in absence of official data, it is widely known that unemployment has risen sharply in the past few years because of decisions like demonetisation and shoddy implementation of a badly designed GST, apart from factors that may be beyond the government's control.

The ILO's World Employment and Social Outlook: Trends 2018  report paints a gloomy picture. It says unemployed in India is expected to rise from 18.3 million in 2017 to 18.6 million in 2018 and 18.9 million by 2019. But the numbers are likely to be far worse because its estimates are based on an unemployment rate of 3.5 percent, while the withheld EUS 2016-17 reportedly shows that it has gone up to 3.9 percent. Even the fifth EUS of 2015-16  had shown an unemployment rate of 3.7 percent - much higher than that of ILO's.

That is not all. ILO report also says a very high number of the employed (72 percent) are in "vulnerable employment" - own-account workers and contributing/unpaid family workers - for 2017, 2018 and 2019. UNDP's Human Development Indices and Indicators 2018: Statistical Update   puts the number even higher at 77.5% for 2017.

More shocking revelations have been made by the CMIE's survey, which said 11 million jobs lost in one year between Dec 2017 and Dec 2018, when employment fell from 408 million to 397 million.  Earlier, it had said about 1.5 million jobs were lost in the first four months of 2017 - January-April 2017 - because of demonetisation.

Government's response disappointing

Having promised to create 10 million jobs every year before coming to power, the current dispensation has miserably failed to live up to it. Several of its employment-generating programmes have turned non-starters.

For example, the MUDRA loan scheme (started in 2015) was touted as a big initiative to generate self-employment, but closer scrutiny reveals that it is a mere re-routing of existing small loan schemes relying largely on the priority sector shortfall. It has neither improved credit flow to the MSMEs nor able to deploy funding available to it (with 40 percent lying idle in its accounts in 2016-17 and 2017-18).

Also Read: Indian sovereign bond yield touches 7.6% ahead of Budget 2019: report

The Start-up India scheme was announced with lofty claims of setting aside Rs 10,000 crore for boosting capital flow to start-ups and SMEs in 2014.  Nearly five years down the line, the official data shows only 72 start-ups were "sanctioned" Rs 605 crore. There is no mention of how much of fund has actually been disbursed. Knowing how the governments function, there could be a huge gap between the two. Interestingly, this data was last updated in September 15, 2017.  

The Skill India programme is now a forgotten slogan, having failed to address the skilling needs of industries or jobs to the skilled. So is the case with the other big-bang initiative, Make in India. Industrial production (IIP) has remained low and fluctuating. The growth rate in eight core sectors (coal, crude oil, steel, cement etc.) was 4.9 percent in 2014-15, went down to 3 percent in 2015-16, went up to 4.8 percent in 2016-17 and fell to 4.2 percent in 2017-18.  Capacity utilisation of the manufacturing companies has been fluctuating since 2014-15 and the first quarter of 2018-19 witnessed a sharp decline.

In sheer desperation, the government started peddling EPFO numbers as evidence of new job creation, forgetting that this data is part of its job formalisation drive called Pradhan Mantri Rozgar Protsahan Yojana (PMRPY)  - the government paying full employers' contribution of 12 percent towards Employees' Provident Fund and Employees' Pension Scheme for new employees since April 2016. This is not the same as new jobs as people switch jobs, duplicating EPF numbers. The data is unreliable and are regularly revised downwards as newspaper reports have periodically highlighted.  

Old employment guarantee scheme, NREGA, which was disdainfully dismissed as a living monument to UPA's failure in Parliament, is the only saviour, continuing to provide 40-50 days of work to 4-5 crore households every year.

Why job data is necessary

A reading of the quarterly reports on employment scenario (QES), which too have been discontinued by the government, provides several insights into the job market.

For example, such reports from 2009 to 2017 shows that certain sectors like construction and IT/BPO which were providing a bulk of employment for years stopped doing so in 2016 and 2017. Similar is the case with labour-intensive sectors of leather, gems and jewellery, transport and handloom.

On the other hand, more jobs are being created in health, education, trade, accommodation and restaurant sectors.

What the government should be doing

What the government has not denied is that 12.8 million youth are joining the labour force every year.  So, ideally, new livelihood opportunities should be created to that extent. But how to do that continues to remain a big challenge.

The signs of desperation among the unemployed are already there. For example, in March 2018, 25 million applied for 90,000 railway jobs.  There have been similar reports of 9.7 million applying for 12,000 class III government jobs in Gujarat or 3,700 PhDs applying for 62 peon jobs in Uttar Pradesh in August 2018.

In such a scenario, what should a prudent government be doing?

It should release the job data, carry out even more studies and surveys relating to employment-unemployment to gain as much insight into the workings of the job markets as possible. In the next stage, findings of such studies should be widely debate and all possible stakeholders be consulted so that appropriate policy responses could be framed and strategies could be worked out to address the issue of growing unemployment.

Also Read: SEBI plans to relax norms for REITs, InvITs to increase investors' access