Nobody will quibble about inflation control being high on the governments agenda. But what is surprising is that the unemployment issue seems to have been pushed to the backburner. In a country where about a third of the population is below the poverty line, there is absolutely no economic rationale to justify this indifference to unemployment. Neither the 1997-98 budget nor the Economic Survey for 1996-97 has much to say on unemployment. The Ninth Plan merely pays lip service to the problem with some standard statements about generating employment.
Such complacency is dangerous, for growth does not necessarily create employment opportunities across sectors. An unemployed person is a wasted resource as well as a potential social misfit. The long-term effects would be a weak base of productive assets and resource diversion to feed the unemployed.
S L Shetty, director, EPW Foundation, says, It is true that economic growth does create employment but the rate of job creation falls behind the growth in job seekers. One should read data on employment in India with caution as it is fraught with a number of definitional and methodological problems.
According to the National Sample Survey, the employment position has improved between 1987-88 and 1993-94. Significantly, most of the employment has been generated in the farm sector and not in manufacturing. This is due to large scale distress employment. Economic growth does not create jobs commensurate with the rise in the number of job seekers, or evenly among different sectors, adds Shetty.
As a result, rising unemployment is becoming a serious issue, with incumbent economic and social implications. While the population rose by 1.98 per cent annually, the labour force grew by about 2 per cent a year during 1951-61. In the sixties, growth rates stood at 2.21 per cent and 2.50 per cent. The figure was stagnant in the seventies. The next decade saw a marginal drop in growth at about 2.11 per cent and 2.40 per cent respectively. While the population is expected to rise by about 1.9 per cent annually till the year 2001, the labour force may grow by 2.2 per cent.
In the past five years, the economy has grown by more than 6 per cent annually, but employment in the organised sector (public and private sectors) has grown by a measly 0.4 per cent a year. It accounts for about eight per cent of total employment and has not generated much growth in the recent past. In fact, there is a noticeable stagnation in employment generation. Between 1991 and 1995 the number of employed in the public sector rose from 191.6 lakh persons to 194.6 lakh persons. For the same period, the total employed by the private sector rose from 76.8 lakh to 80.6 lakh.
In 1995, within the private sector, manufacturing industries with a 58 per cent share accounted for the bulk of employment generated. Community, social and personal services contributed 19.9 per cent. The trend has been the reverse in the public sector. Community, social and personal services with 48.8 per cent constituted the largest employment generator. It was followed by transport, storage and communication with a share of 16 per cent, which, in the private sector, accounted for a meagre 0.7 per cent.
Sudha Deshpande, Professor of Demography, Department of Economics, Mumbai University, says, I firmly believe that economic growth is the only solution to rising unemployment. She attributes the rising unemployment to the capital intensive strategy of economic growth followed all these years. The reason for this is that capital has been made cheaper than its true market price through a number of concessions.
Deshpandes views on the issue are strong. I would say that in a capital scarce economy, pricing should reflect market forces. Unfortunately, we have created a situation that encourages labour saving technology, she says. Employment generation will receive a push only when this imbalance is set right.
The Ninth Plan approach paper says: Recognising the high incidence of underemployment and increasing casualisation of labour, there is need to enhance employment opportunities for the poor. In this context, the Ninth Plan will seek to implement a national Employment Assurance Scheme (EAS). The EAS, flagged off in 1993-94, is aimed at providing assured employment to all persons in rural areas who are unable to find it. The scope of the scheme has been enlarged to include horticultural activities. Over 2.23 crore persons have been registered under this scheme. As a result, between 1994 and 1996, employment mandays generated rose from 274 million to 347 million. And in the first 10 months of 1996, about 134.72 million mandays were generated.
This does not, however, give the full picture. Employment data is hard to come by. Although some of it may be dated, it does indicate the general trend. For instance, the labour force as a percentage of the population in India has been steady over the years. In any employment scenario, demographic factors play a crucial role. The Planning Commission has estimated that the labour force was 37.4 per cent of the population in 1995 as against 36.9 per cent in 1991.
A worrying factor here is that the share of unemployed within the labour force is gradually on the rise, from 4.3 per cent in 1991 to 5.5 per cent in 1995. In the last two years, unemployment must have gone up as the labour content of production has been declining. With employment opportunities stagnating and a simultaneous growth in population, unemployment would rise at a steady clip. The Planning Commission has estimated that the labour force between the ages of 15 and 59 years would rise from 2946 lakh in 1992 to 3930.2 lakh in 2007. Creating jobs for them would be a daunting task.
Shetty attributes the increasing unemployment to three factors. He feels that production is gradually becoming less labour intensive. This means a fall in the production employment content. Secondly, over the years, the quality of employment has been deteriorating. Companies are replacing their permanent workforce with contract labour. This, in turn, is adversely affecting the workers wage earning capacity resulting in declining purchasing power. The cumulative effect on the market has been a sharp increase in the deprivation of labour with serious implications on their productivity.
The Abid Hussain Committees recommendation for total dereservation of the small scale sector may also have serious repercussions on employment generation. Nearly 40 per cent of the manufacturing units in the unorganised sector come under the broad rubric of small scale industry. This is a sector that has always generated employment. Between 1990-91 and 1995-96, the total number of employed increased by 21.8 per cent to 152.6 lakhs. The total dereservation of this sector would mean the entry of large players including multinationals, who would insist on capital intensive technology, further affecting employment levels.
The 1997-98 outlay for rural development and employment is Rs 9,096 crore, an increase of Rs 1,271 crore from last year. In 1996-97, rural employment and poverty alleviation received a planned grant of Rs 668.60 crore, while the urban development, employment and poverty alleviation programme attracted Rs 152.80 crore.
The government has also adopted various programmes to reduce poverty and unemployment. These include the Nehru Rozgar Yojana (NRY), the Prime Ministers Integrated Urban Poverty Eradication Programme (PMIUPEP), Jawahar Rozgar Yojana(JRY), Integrated Rural Development Programme (IRDP) and Prime Ministers Rozgar Yojana (PMRY). It remains to be seen if all these developments will have an effect on labour. Last year, the target of mandays achieved was 4288.58 lakh, a drop from 8258.25 lakh mandays during 1995-96. In 1997-98, Jawahar Rozgar Yojana is estimated to generate about 520 million mandays of employment.
Despite all these efforts, economists continue to be sceptical. As Deshpande points out, Employment generation schemes play an important role in times of economic exigencies like drought, famine or floods. They do not alleviate unemployment and cannot be a permanent feature of an employment policy.
In the past five years, the economy has grown by more than 6 per cent annually, but employment in the organised sector (public and private sectors) has grown by a measly 0.4 per cent a year.
