Job creation by our mandarins

As news about the organised economy’s woes gets gloomier one ought to spare a thought for those waiting for a call from HRD heads in firms across the country. Institutes of higher education will churn out a fresh crop of aspirants with varying levels of skill for the organised economy.

In two years India will have entered mid-point of the Twelfth Plan, and judging by the bleak scenarios for output, investments and any other economic indicator one might want to use to measure the depths of the trough, employment is a major problem that looms ahead.

What is the policymaker’s long view on employment in India? For a glimpse of the future we turn to the Planning Commission and discover the Report of the Working Group on Employment, Policy and Planning for the Twelfth Plan (2012-2017). The title seems comforting; in these distressing times it evokes a sense of deliverance from the nastiness of the credit boom now gone bust, the inability of a debt-laden private sector to create the conditions for jobs. Help, the report seems to assure us, is at hand.

The title does not explicitly draw a causality between policy, planning and employment but the message is clear: with policy and planning, employment can hardly be far behind.

The tradition of planning

The document’s title evokes a past of planned economic investments, when the Commission was the mediating agency of a policy framework that set store by the regulation and administration of enterprise.

From the viewpoint of the last 20 years, the title’s sub-text appears confusing. What exactly is its role when it comes to employment in a regime that has done away with planning in the way it was understood during the Nehru years?

Can the Planning Commission plan or predetermine the pathways to more jobs? It could if the economy, the centres of job creation were still “managed,” controlled by administrative fiat or guidance.

The NREGA is one case of an administratively run agency of job creation. Its welfare aspect is determined by an ideology of social democracy and like the Food Security Bill makes the assumption that such a democracy can be best represented by legislative changes. The Planning Commission, as Rajeev Dhavan pointed out in his long introduction to Marc Galanter’s work on law and society in India, legitimises the view that social change could be effected by legislative enactments.

But the power of the Planning Commission, as the instrument for that social and economic change, drew sustenance from the Five Year Plans that appeared to contextualise its existence. The late D.R. Gadgil, Planning Commission deputy chief between 1967 and 1971, noted in the context of the second plan: “The plan is essentially a plan of economic development and employment orientation emphasises priorities without affecting end-objectives.” That was in 1961. Six years later, the scales were already falling from his eyes: “the most outstanding feature of the ‘planned’ Indian economy is the total absence of a policy frame.”

Loss of frame

It never acquired one even after he took over as deputy chairman just a few months after writing the aforementioned words in 1967. But he had presaged the drift in the Commission’s mandate. By the time liberalisation began the Planning Commission had become an actor in search of a script.

Today, with the social legislations now belatedly and half-heartedly in place, the Planning Commission appears to have found a minor role in the drama of a private sector led-growth.

But it is out of joint. Trumped by a competing ideology of private enterprise and the markets as the best clearing house for the distribution and allocation of resources, what can the Planning Commission do, or plan? It can no longer adopt “the approach to law and development” that assumes, as Dhavan pointed out, “relative autonomy and neutrality of the Indian State.” It can play even less an interventionist role in attempting, as Gadgil had hoped for, “employment-oriented” priorities.

Break and discovery

The result of a significant shift from, indeed a radical break with, the past economic philosophy of legislated social and economic change renders the report on employment in the Twelfth Plan devoid of content after a diagnosis of past employment trends.

For instance, the report tells us “As per the usual principal and subsidiary status (UPSS) {usual principal status (UPS) + subsidiary status (SS)} or usual status (US), 40 per cent of the population belonged to the labour force in 2009-10 against 43 per cent in 2004-05. The labour force participation rate (LFPR) for females was significantly lower than that of males both in rural and urban areas both during 2004-05 and 2009-10.”

“Similarly, both as per the current weekly status (CWS) and current daily status (CDS) the LFPR had declined in 2009-10 vis-à-vis 2004-05. LFPR was 38.4 per cent as per CWS while it was 36.5 per cent (CDS) in 2009-10 vis-à-vis 40.7 per cent and 38.1 per cent during 2004-05, respectively.”

Overall, “Work force participation (WPR) was again lower in 2009-10 vis-à-vis 2004-05 irrespective of the approach for measurement.

WPR was 39.2 per cent, 37 per cent and 34.1 per cent respectively as per the UPSS, CWS and CDS during 2009-10. In comparison, the rates were 42 per cent, 38.9 per cent and 35 per cent during 2004-05, respectively.”

It is instructive that the report does not offer a dynamic setting for the trends observed, a dissection of the economic trends that would enable us to understand the dismal trend — being recorded with such restraint, as to almost appear insignificant, and that too in an age of high growth to 2009-10.

The burden of challenges

It read like a report of the NSSO that simply records till one came across the chapter: “Employment Challenges for the Twelfth Plan.”

The use of the term “challenges” puts one in mind of a distant echo of a once-magisterial timbre reiterating the “autonomous” State’s social commitment, the tasks and threats before it. But it also enables the members to say nothing; the challenges are nothing short of parodies of old formulaic complaints or apologia by an inefficient and indifferent State failing to deliver on its social promises. Now they sound irrelevant.

“One major challenge to be addressed for the 12th Plan period is how to increase the share of formal sector employment opportunities. Movements and transformation of employment from informal sector to formal sector need to be analysed. Incentives have to be given for expanding organised sector employment.”

Oh! Really?

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