Unemployment in India

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Sometime before in this month couple of things happened. In a reply to on job data highlights, it was known that the government hasn’t conducted any survey since 2016. It was a shocker for me. As a nation, when we talk about being the growth engine of the world, we need to know what is happening in our own backyard. Then sometime later, I was watching a news channel which was headlining about the protests of youth towards leak of SSC paper. Fast forward few days ahead, the students were protesting in Mumbai over examination of railways. There have been paper leaks before. But the nation has never seen protests in such a rage ever before. The reason is Unemployment. As we all know, these exams require a lot of effort, hard work and dedication. But now the difference is, the youth is tired of waiting.

The irony is no one can correctly tell you whether India’s job scenario is really bad as it is being said.

Right now, unemployment is scaling towards an all-time high. This makes every examination job critical. This leakage of exam papers, unavailability of jobs only contributes towards mounting mental pressure on young aspirants, who see their hard work, time and money spent on these preparations going down the drain. The SSC examination which saw a paper leak was for 9372 vacancies and it saw more than a lakh of aspirants appearing for it.

In a recent conclave held by a private news channel, noble prize winner economist Paul Krugman pointed towards the same. He warned that India may end up with mass unemployment if its manufacturing sector does not grow. “India’s lack in the manufacturing sector could work against it, as it does not have the jobs essential to sustain the projected growth in demography,” Krugman said. “You have to find jobs for people.”

He cited the examples of Japan and China. “Japan is no longer a superpower because its working-age population declined, and China is looking the same. In Asia, India could take the lead but only if it also develops its manufacturing sector, not only the services one.”

He also pointed out that India’s growth till now was majorly driven by the services sector. He said that while the world’s economies derived growth from their manufacturing sector, India grew from exporting its services, which was unprecedented. He mentioned that India did grow at a very good rate but high level of income inequality has cancelled out the advantage of such growth.

Upon further research, as per CMIE (Centre for Monitoring Indian Economy) report, the unemployment rate continues to remain elevated. For the week ended March 18, it was 6.8 per cent. The average unemployment rate during the past six weeks has been significantly higher than it was during the past year. In February 2018, the unemployment rate had shot up to a 14-month high to 6.2 per cent. It was 5 per cent in January and less than 5 per cent in the preceding two months.

The second warning in shape of report comes from the International Labour Organisation (ILO). In its latest report, ILO mentions that India could witness a higher unemployment rate of 3.5 per cent in 2018. Contrastingly, the report suggests that the global unemployment rate is stabilizing, but unemployment and decent work deficits will stay at persistently high levels in many parts of the world. As per the report, number of jobless in the country will increase to 18.6 million in 2018 and 18.9 million in 2019, against 18.3 million in 2017.

The unemployment rate has been rising and it is reflected when you see the youth protesting on the streets for jobs. The stress in job market is on the rise. While there are about 31 million unemployed youth in India as of February 2018, the number of job creation in 2018 is limited to an estimated 6 lacs. This is the highest number of unemployed people in India since October 2016. The effects of demonetization have not been tapered of yet. Demonetization led to shrinking of work force due to unavailability of money. The liquidity crisis further driven by scams and frauds has impacted the job market negatively.

In the rural India, agriculture is the principal occupation for the majority of population. However, agriculture keeps the cultivators engaged only for a limited part of the year. For the remainder of the year the village population remains idle as cottage industries are in a bad state. They are not able to cater to the rural population.

In order to mitigate the gap of income inequality, manufacturing sector of India needs to take a lead. Yes, globalization of services has just started and there is yet a lot to be done but, it also puts us at cross roads as well. India will get the first mover advantage, but also the rapid evolution in technologies will put it under pressure.

It is time now that we come out of oblivion and address the elephant in the room ‘unemployment’. As there will be new students joining the stressed job market every year, India needs to work and build on concrete solutions in order to remain the growth engine of the world.