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LATEST NEWS UPDATES | The shape of the jobs crisis -Santosh Mehrotra

The shape of the jobs crisis -Santosh Mehrotra

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published Published on Feb 13, 2019   modified Modified on Feb 13, 2019
-The Hindu

India has no industrial policy or employment strategy to ride the wave of its demographic dividend

Job creation has slowed since 2011-12, the year of the last published National Sample Survey Office (NSSO) labour force survey. I used Labour Bureau annual survey (2015-16) data and Centre for Monitoring Indian Economy Pvt. Ltd. (CMIE) data (post-2016), which has a sample size larger than the NSSO labour force surveys, to reach this conclusion. Both surveys cover rural and urban, and organised and unorganised sector employment; in other words, they capture both the Employees’ Provident Fund Organisation/National Pension Scheme (organised) as well as such employment as might be generated by Micro Units Development & Refinance Agency Ltd (MUDRA) loans or platform economy jobs. The latter two job sources are precisely what the government claims were not being captured by jobs data available. We have repeatedly stated that government claims on absence of ‘good’ data on jobs are simply untenable.

My analysis prior to the leak of NSSO 2017-18 data had shown that the jobs situation has turned grim since 2012.

A jump now

What the leaked NSSO 2017-18 data have shown is that while the open unemployment rate (which does not measure disguised unemployment and informal poor quality jobs that abound in the economy) by the usual status never went over 2.6% between 1977-78 and 2011-12, it has now jumped to 6.1% in 2017-18. This was expected. In the last 10-12 years, more young people have become educated. The tertiary education enrolment rate (for those in the 18-23 age group) rose from 11% in 2006 to 26% in 2016. The gross secondary (classes 9-10) enrolment rate for those in the 15-16 age groupshot up from 58% in 2010 to 90% in 2016. The expectation of such youth is for a urban, regular job in either industry or services, not in agriculture. If they have the financial wherewithal to obtain education up to such levels, they can also “afford” to remain unemployed. Poor people, who are also much more poorly educated, have a much lower capacity to withstand open unemployment, and hence have lower open unemployment rates.

What NSSO 2017-18 also shows is that as open unemployment rates increased, more and more people got disheartened and fell out of the labour force; in other words, they stopped looking for work. The result is that labour force participation rates (LFPR, i.e. those looking for work) for all ages, fell sharply from 43% in 2004-5 to 39.5% in 2011-12, to 36.9% in 2017-18 (a reflection mainly though not only of the falling female LFPR). This shows up in the growing numbers of youth who are NEETs: not in education, employment or training. They are a potential source of both our demographic dividend but also what is looking to be a mounting demographic disaster.

Meanwhile, government economists have repeatedly told us that there is no jobs crisis.

Between 2004-05 and 2011-12, as many as 7.5 million new non-agricultural jobs were being created every year. The unemployment rate was only 2.2%. The volume of open unemployment was almost constant (at around 10 million) until 2011-12, but it increased to 16.5 million by 2015-16. Increased open unemployment, post 2011-12, suggests that those in education prior to 2011-12 would start searching for non-agricultural jobs but did not find them. The latest NSSO data suggest that this situation had worsened further by 2017-18.

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The Hindu, 11 February, 2019, https://www.thehindu.com/opinion/lead/the-shape-of-the-jobs-crisis/article26252357.ece?homepage=true


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