THE EXCHANGE. The spectre of jobless growth

The quest for sustainable livelihoods or rozgaar is the core of the development agenda of the present government. How this is achieved — through manufacturing, agriculture, services, self-employment — is a matter of detail. But it is worrying when formal or organised areas of employment provide fewer opportunities for a sustained livelihood.

As one example, the Asia-Pacific Human Development Report just released by UNDP says that by 2050 more than 280 million people will enter the jobs market in India, a 33 per cent increase from current levels. To put this in context, between 1991 and 2013 our economy absorbed less than 50 per cent of entrants to the jobs market. This is disturbing, both from a broader economic perspective as well as a social-balance-and-stability angle.

The most recent trend in private sector jobs is outlined in a CARE report that points out that despite the economy growing at a good pace, employment seems to have grown meagrely, at 4.1 per cent and 0.3 per cent respectively in FY14 and FY15. The report says there was no clear explanation for this, despite the fact that employment should increase when companies expect a buoyant future as was being projected.

More importantly, core physical sectors such as manufacturing, mining, construction and non-financial services had negative employment growth ranging from minus 3.8 per cent to minus 17.4 per cent in FY15. Of course, this study is restricted to corporate employment based on published figures. Reliable data on small and medium enterprises or self-employment is hard to come by.

Further, the largest part of our population (60 per cent) directly or indirectly engages in agriculture, yet accounts for only 15 per cent of GDP.

Therefore, vast numbers of people still scrape by through working in marginal agriculture or informal and poorly paid jobs, implying that ‘under-employment’ (that is, earning below acceptable or sustainable levels) is just as serious a problem as unemployment.

The need of the hour is to make livelihood creation central to development strategies rather than just projecting it as natural fallout of growth. We spend much time debating and projecting GDP growth, foreign diplomacy, NRI enthusiasm, FDI flows and other jargon. Beyond a point, black money, tackling corruption and so on also begin to appear to many as political or diversionary tactics with nebulous outcomes.

All these mean absolutely nothing to an empty stomach, more so if this suggests a longer wait for the individual to get some form of employment. It is easy for idle youth to start believing that policies only benefit the advantaged; meaningful discourse start getting sidetracked by demands for reservations, subsidies and the like. Such short-term agendas get driven by political expediency and result only in re-allocation of jobs, rather than job creation.

In short, there is no escaping the fact that the leadership must bring rozgaar and employment to centrestage in all their plans, achievements and articulations. This central message has been missing for a long time. Without this obvious single-minded focus — no matter what good is achieved at the macro level — the youth will begin to feel their mandate has been let down.

It needs to be accepted that organised manufacturing is no longer the answer to generate large-scale employment, as it was in the past. Limited opportunities due to increased mechanisation and productivity, and specialised skills needed for select process areas are now facts of life.

So, while the credible Make in India mission holds significance for propelling India to an economic power with justifiable global standing, to anticipate that it provides comprehensive solutions for employment is to expect too much. We also have to contend with more countries providing job security to their own citizens, as well as the global entry of producers with lower costs than India.

Encouraging people’s entrepreneurial instincts — whether they create mom-and-pop undertakings countrywide, or deliver results under the Startup India or Stand-up India missions — will generate sustainable outcomes. Of course, the concept of ‘start-up’ must be more comprehensive than what it may today be perceived as (for example, IT or e-commerce based, logistics or service delivery platforms, etc).

Policymakers need to also take notice of recent startling data. Studies show that close to 90 per cent of youngsters completing engineering or management studies are actually unemployable.

In essence, this is due to the lack of a comprehensive and practical education leading to a gap in ‘right-skilling’ vis-à-vis the true needs of the economy. Unless we are able to package our development and workforce initiatives into a combined (say) ministry of manpower, where training and end-user needs for human resources are truly convergent, such anomalies will persist.

The recent policy direction of improved financial returns and security in agriculture and its related sectors perhaps holds the highest promise. The allure of doubling farm incomes has sparked debates on whether this implies doubling of real or notional incomes. Either way, any material improvement makes the nation more productive and self-sufficient and helps address underemployment.

But the key is to double incomes based on output and intellect, and not through subsidies. Here, the government may be able to leverage returns through its own spending on creating agri-related infrastructure. Distribution and logistics-based infrastructure initiatives require a financial boost. An agri output boost is possible through aggregation of land parcels through pragmatic policy.

For a variety of staple crops, improved quality of seeds and better irrigation are keys to boosting output, and hence farm incomes. Massive expansion in fruit and vegetable output can also boost earnings. At the same time, a vibrant food processing industry will help in balancing out seasonal spikes and improve the longevity of produce while reducing its national waste. Learning from some West Asian countries, there may be ways to put much arid land to use for growing quality fruits in large quantities for exports. Israel and others have made their mark — why can we not follow their success to get our fingers into less volatile global niche markets?

We need to address the frustrations arising from jobless growth before they take firm root. In an otherwise rosy projection of the future, this is the one dimension that must seriously concern us.

This column explores ideas and opinions on Indian enterprise and economy. The writer is an entrepreneur and former president of Ficci. The views are personal

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