Is there a case for privatising India’s employment exchanges? The answer should be obvious even though the government continues to be in a denial mode.
Take the Delhi Employment Exchange, one of the biggest exchanges in the country with a network of nine district exchanges and five zonal offices. But the success rate of the exchange is a low 0.5 per cent, compared to an average 15 per cent of even a mid-rung private placement agency.
It’s difficult to get data on expenditure of employment exchanges, or on what it costs the budget to get people jobs, but back-of-the-envelope calculations with the state budget suggest that it costs the Delhi government (and, therefore, citizens) Rs 2.28 lakh for a single placement. But that’s still better than another employment exchange at Chitradurga in Karnataka which has not provided a single job in the last four years. To be sure, Chitradurga is not an exception.
These calculations have been made by India’s largest staffing solutions company, TeamLease, in its India Labour Report, 2009. The annual report, the fifth by the market leader in human capital, cites many other examples of such colossal wastage of public money.
So what do India’s 968 employment exchanges do? On matching supply and demand and providing employment, as of December 31, 2007, 39.97 million people were registered with these exchanges to seek jobs. As far as their performance is concerned, in 2007, 263,540 people got jobs through these exchanges, although as many as 7.3 million people got themselves registered in the previous year alone. Most placements (according to a Rajya Sabha Question dated March 18, 2008) were in Gujarat (178,346), Tamil Nadu (23,757), Kerala (10,962), Maharashtra (8,207), West Bengal (5,304) and Rajasthan (4,544). If one leaves out Gujarat, the numbers are insignificant.
Apart from the typical problems associated with the work ethics of government babus, the TeamLease report gives many reasons why India’s employment exchanges have proved to be defunct. The mandatory Employment Exchanges Act of 1959, applicable to public and private sector units (excluding agriculture) that employ more than 25 people, is not as compulsory as one may think. For the private sector, the mandatory requirement only applies below a threshold level of wages and these have not been revised for years. Whatever the law may say de jure, there is nothing mandatory about employment exchanges de facto.
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For the public sector, a Supreme Court judgment in 1996 said that appointments no longer had to be from the pool that was registered with employment exchanges, as long as job vacancies were suitably publicised. PSUs also set up channels like Staff Selection Commission, Banking Service Commission and Railway Recruitment Board. The Directorate General of Employment and Training’s website itself says, “Therefore, employment exchanges are left with only stray cases that too at lower levels of employment. On the placement side (regular wage employment), the role of employment exchanges is definitely going to be not very significant”.
So far, no state has had the courage to go in for privatisation of employment exchanges despite an Administrative Reforms Commission recommendation in 2002 that employment exchanges be downsized. However, the encouraging sign is that some states have experimented with allowing private placement agencies to get into the picture.
For example, even a state like West Bengal has permitted private training organisations to offer training at employment exchanges. The Karnataka government plans to rope in private partners to run its employment exchanges. TeamLease, for example, will set up a centre in Bangalore as a common platform for job seekers. While the private company will set up the building and infrastructure to run the service, the state government will pay for the training costs. The training will be provided through Gurgaon-based Indian Institute of Job Training in which TeamLease acquired a majority stake earlier this year. The Karnataka government in fact plans to upgrade at least a third of the employment exchanges this year with private partners.
Predictably, the lead in this regard has been taken by the Gujarat government. A Gujarat government official says public-private partnerships are the best way forward as the state at one point had over 1.1 million registered job seekers with 42 employment exchanges. However, the exchanges could secure placements for only about 75,000 job seekers each year. The problem did not end there. Surveys found only 25 per cent of those who got employment were offered quality jobs while the rest had to be content with unskilled, low-paying jobs.
The state then thought of devising a system for efficient collection of the private sector’s job vacancy data and offer placement on those vacancies to the job seekers on the live register of the exchanges in a decentralised manner. That’s how the Rojgar Sahay Kendras were born as an additional facilitator between the employers and the job seekers, leading to decentralisation of placement services.
Going by the encouraging results of such initiatives, more states would do well to take the cue from Gujarat.