Serious distortion in Indian job market needs urgent redressal

PM Narendra Modi’s assertion during his very first ‘Rozgar Mela’ of 2023 that opportunities for employment and self-employment are continuously improving was made in contradiction to the facts.

There’s a serious distortion in the Indian job market which needs urgent redressal, instead of hollows claims that enormously understate the extraordinary sufferings of the working classes.

That the majority of the working age people are out of job is a reality. The growth model Prime Minister Modi’s government has adopted is neither yielding enough jobs, nor producing decent jobs. Gig and informal jobs are rising fast, while formal and decent jobs with social security coverage have been shrinking in the last eight years.

In spite of Narendra Modi pre-election promise of 2013 to provide jobs to everyone, which called for generation of 2 crore jobs every year, unemployment is at a four-decade high.

In 2013, the unemployment rate was at 4.1 per cent, which rose to 6.1 per cent by 2017-18 as per the Periodic Labour Force Survey (PLFS), revealing it to be a 45-year high.

Under Modi’s reign, job losses broke all prior records of independent India.

That India entered an era of joblessness during the Modi regime is an established fact. The unemployment rate in December 2022 was 8.3 per cent as per the CMIE data, which was reported in the media. This attracted the Modi government’s attention after which Union Ministry of Labour warned people not to believe in such ‘non-governmental data’.

The Modi government has never wanted the people to know the real picture. For example, it tried to block the NSO data in 2019 that revealed unemployment reaching a 45-year high. 

It must also be noted that the Modi government does not provide latest data on employment and unemployment. Their quarterly data used to be six months old and does not cover the rural area.

The yearly data covers both the urban and rural areas, but is always stale and is suspected to be unreliable.

The very first year of the second term of Narendra Modi as Prime Minister witnessed great distortion in the job market. The PLFS report for the year revealed structural shifts.

The share of jobs in the agriculture went up to 45.6 per cent in 2019-20 from 42.5 per cent in the previous year. Its share increased to 46.5 per cent in the pandemic year of 2020-21.

Manufacturing’s share went down from 12.1 per cent in 2018-19 to 11.2 per cent in 2019-20 and 10.9 per cent in 2020-21.

The sector-wise structural change in the job market also distorted the quality of jobs available. Regular wages and salaried jobs, which are considered to be decent jobs on account of social security coverage, shrank from 22.8 per cent to 21.1 per cent during 2017-18 to 2020-21.

In contrast, vulnerable ‘self-employment’ went up from 52.2 per cent to 55.6 per cent during this period, while unpaid workers in the household enterprises increased from 13.6 per cent to 17.3 per cent. Even casual workers fell from 24.9 per cent to 23.3 per cent.

The Modi government clearly has no option but to praise the vulnerable ‘self-employed’ and asserted that even selling pakodas was a job. The vulnerability of this assertion was exposed during the lockdown when there were no one to sell or purchase the pakodas on deserted roadsides or marketplaces.

The job market that was already distorted by the twin shocks of demonetisation and GST had been further distorted by the pandemic.

Reverse migration from towns to villages has increased the workforce in rural areas again. They engaged themselves in the agriculture and allied activities in very low paying work. Such low paying employment or self-employment is in reality unemployment in disguise or underemployment. It has brought another distortion in the job market, causing surplus of labour in the rural areas while shortage in the cities.

A recent study has suggested that there is 68 per cent of shortage of the workforce in the Tier-1 cities while 32 per cent in other cities even in 2022.

The Modi government’s MSME policy saw demonetisation, GST and the pandemic kill millions of such units. The Global Alliance for Mass Entrepreneurship has said that 14 per cent of MSMEs have permanently exited from business during the pandemic. Even the Emergency Credit Line Guarantee Scheme (ECLGS) could help only 11.9 million MSMEs by November 30, 2022, which is just 18 per cent of the total 63.4 million before demonetization in 2016. No one knows what happened to 82 per cent of the MSMEs during this period.

It should be noted that this sector has traditionally been providing more than 90 per cent of employment.

Most of the MSMEs are also in the informal sector, and CTUs are claiming that informal jobs have been increased to 97 per cent of the total jobs.

As per the CMIE data for December 2022, only 41 crore people had jobs, and the unemployment rate was as high as 8.3 per cent. Obviously, PM Modi had no option but to conceal these ground realities and his own promise of providing decent jobs to all through ‘Rozgar Melas’ is unrealistic.

India needs a holistic approach to correct the labour market distortion now, since the country’s current job requirement can only be met when GDP would grow at 18 per cent, as highlighted by the recent State of India’s Livelihoods report.

It is high time for the Modi government to stop deceiving the workforce and come out with holistic measures to resolve the unemployment issue either by providing work or social security coverage.

(IPA Service)

Views are personal