If all the criticisms of India's high economic growth being essentially jobless in nature are valid, then it would be logical to expect that slower growth would not result in an increase in unemployment. Well, it turns out that the symmetry may not always hold. The results of the 68th round of sample surveys by the National Sample Survey Office (NSSO), which focused on household employment patterns, do suggest that unemployment rose between June 2010 and June 2012. Since 2011-12 was a year of relatively slow growth, it is tempting to infer that the two are correlated and that the even slower growth during 2012-13 will only exacerbate the problem. But is this argument valid?
Looking at the unemployment numbers alone, perhaps it isn't. In January 2010, the unemployment rate by principal activity was 2.5 per cent; it rose to 2.7 per cent in January 2012. If subsidiary activities were to be taken into account, the unemployment rate was two per cent in 2010 and it increased to 2.2 per cent in 2012. Although in absolute terms this translates into about one million people more, it hardly suggests a strong relationship between slower growth and rising unemployment. Dividing up the workforce between rural and urban areas, the latter reveals a higher unemployment rate in both years, so the increase is not dramatic. Again, looking at the gender divide, female workers show higher unemployment rates than males but there isn't a significant difference in the increase in unemployment over this period.
In short, the government could take some comfort from the fact that rapidly rising unemployment in response to slowing growth does not pose the same political threat that it does in many of the advanced economies. Going by these numbers, people appear to be finding employment even when growth is sluggish. In fact, if the growth in wages commanded by unskilled workers across the country is any indication - they have almost doubled over the past five years - the job market is robust, if not booming.
So, why worry? Well, for at least two reasons. One, a relatively large proportion of the workforce is self-employed. About 57 per cent of rural workers and 42 per cent of urban workers fall into this category, with the proportion having risen slightly over the two years. It is obvious that the overwhelming majority of these "jobs" are of low productivity and high risk, offering far less prospects for socio-economic mobility than more traditional salaried jobs, which are apparently in such short supply. Two, the relatively comfortable picture on unemployment masks the somewhat more concerning situation on workforce participation. A lot of people, particularly women, seem to have opted out of the workforce. Some of this may be for good reasons - more education, for example - but if it is otherwise, it is generally believed that the longer someone has been without a job, the less likely he or she is to get one. If members of low-income households stop looking for jobs, what does this do to their families' long-term livelihood prospects? Understanding why these two tendencies are manifesting and directly addressing them must be a priority for the government. Growth and job creation are, in reality, mutually reinforcing.
