Unemployment—A ticking time bomb

Every one needs to work, even the wealthiest person. Barring a small number who are job-givers, most people are job-seekers. They seek jobs on farms and in businesses, factories, banks, schools, colleges, hospitals etc and, above all, in the government. The largest number of jobs are generated in micro, small and medium businesses.

Jobs need education and skills. India's biggest strength is claimed to be its young work force. That is true, but it is also true that most young job-seekers have poor educational qualifications and few have special skills. Things have improved and will improve, but there is some distance to go before we can match the job-seekers and the jobs. Meanwhile, we must find jobs for the millions that will enter the job-market every year that is, by one estimate, 15 million persons every year.

Mr Narendra Modi won the election in 2014 on the strength of his numerous promises. He promised practically everything to everybody, including unearthing black money stashed abroad and putting Rs 15 lakh into the bank account of every Indian! Some promises, as confessed by his party leaders later, were pure 'election jumla'. However, there was one promise that attracted to his fold millions of young men and women, and their families too—that was the promise that he would create 2 crore jobs a year.

Two and a half years later, the young men and women and their families are asking the question "Where are the promised jobs?". The government's and the BJP's response is thundering silence. Why has the roar before the election become a whimper? Why have the confident claims become lame excuses? Why has an otherwise eloquent Prime Minister become tongue-tied and at a loss for words?

Jobless growth?

There is empirical evidence to support the case that, in the last two years, India has witnessed a period of jobless growth. The last quarterly survey released by the Labour Bureau revealed that:

*Employment generation in eight labour intensive sectors was a mere 1,35,000 in 2015 compared to 4,90,000 in 2014 and 12,50,000 in 2009 (when the survey began);

*Worse, employment actually declined in the last quarter of 2015; and

*Contract jobs also declined by 21,000 during January-September 2015 compared to an increase of 1,20,000 in January-September 2014.

Another study by Care Ratings showed that jobs growth was near-zero in 2014-15—about 0.3 per cent. Employment growth in manufacturing companies was actually negative at -5.2 per cent in 2014-15 (first year of NDA) compared to 3.2 per cent in 2013-14 (last year of UPA).

Job creation is not an easy task. Even in the best of times, job creation lagged behind the number of persons entering the labour market and actively seeking jobs. According to some estimates, 1,50,00,000 jobs were created during 2005-12, but it still left 5,00,00,000 unemployed. Imagine the consequences if no jobs are created, as it is happening today.

Report from the ground

The angst and anger over joblessness is spilling over into the streets. In my view, much of the unrest in universities can be attributed to the spectre of unemployment faced by university students. Agitations are drawing young men and women to the streets, even when the agitations are by socially dominant communities (Marathas, Patels). Crimes committed by young people have soared.

Wage increases have practically dried up, because employed persons would rather hold on to their present jobs than risk losing them by demanding higher wages. Voluntary retirements have also practically stopped because it is not easy to find another job. Sectors that are known to have high rates of churning (media, information technology) are also witnessing people holding on to current jobs rather than taking risks.

A GDP growth rate of over 7.5 per cent (as claimed) would be expected to create jobs. Why is that not happening? It is because of the skewed policy of the government that leans heavily in favour of capital intensive industries (tax concessions and other fiscal incentives to large corporates). Headline-making initiatives (Start Up India and Stand Up India) are welcome but the hard fact is that they do not create many jobs.

The job-creating sectors are languishing. Firstly, exports. The value of merchandise exports has declined, year upon year, in 2014-15 and in 2015-16. Secondly, micro, small and medium businesses. Credit growth to MSMEs is currently negative and has been so for many months. Thirdly, rural economy. Because of agrarian distress, few are venturing into non-farm activity in rural India and few non-farm jobs are being created.

A ticking bomb

Unemployment is a ticking time bomb. The BJP rode to power on the support of the young voters, especially the first time voters of 2014. Those voters are now in the age group 20-25. They will be in the age group 23-28 in 2019. More 18+ will join the ranks of voters as well as the ranks of the unemployed. Their parents and families are also watching and waiting for the promised "Achhe din". The day of reckoning is not too far.

P Chidambaram is a Congress Rajya Sabha MP and the former Union Finance Minister. He tweets at PChidambaram_IN