On the highway to demographic disaster

A 37-year-old software professional, Krishna (details changed) in a leading Information Technology (IT) company in India’s Silicon Valley, Bengaluru, was more engrossed in putting finishing touches on a project, when, instead, he was given the pink slip last month. Suddenly, his world crashed. His high instalments for his house loan, car loan, children’s education, etc. stared at him and, another job seemed a distant prospect as the IT sector faces of one of its largest retrenchment drives.

In fact, according to the Mint, India’s seven biggest IT companies are planning to ask at least 56,000 engineers to leave this year!

Congress Vice-President Rahul Gandhi flagged the issue on Friday. Questioning the NDA government’s “commitment and capability”, he also tweeted: “Sad to see our youth let down by this Govt's lack of vision (sic).” His tweets ignited more questioning on the country’s unemployment scenario.

However, the IT sector is only one segment of the unemployment problem.

REALITY VS PROMISE OF 1 CRORE JOBS

Prime Minister Narendra Modi, in his run-up to the 2014 general elections, had promised one crore jobs every year if the Bharatiya Janata Party (BJP) came to power. Forget creating one crore jobs every year, the BJP-led government has even been unable to keep pace with the numbers of the previous UPA government.

According to the Labour Ministry, in the eight most labour-intensive industries, such as textiles, leather, etc, the number of new jobs created has fallen from 9 lakh in 2011 to just 1.35 lakh in 2015 (this figure has been quoted by the Economic Survey 2017). These figures are particularly alarming since more than one crore new people enter the job market every year.

The fact is that during the last 30 years, India’s working age population (15-59 years) has increased by 31 crore, but the number of workers—including both wage and self-employed—could increase only by 17 crore. The picture has only been getting more dismal.

What is more worrying is that while the share of the young in the working-age population has been rising, the share of the young who are actually in the workforce has been declining. “Hence, the dependency ratio has been rising instead of falling. Alas, there will be no demographic dividend unless the government can change the scenario,” says Naresh C Saxena, former secretary, Planning Commission.

In fact, the country may be staring at a demographic disaster if jobs can’t be created.

The available government data show that, of the total 48 crore workers in India, half are self-employed and another 30% are casual workers. Out of the remaining 10 crore workers (regular wage employees with most being contractual), only 3.5 crore have decent jobs with some degree of social protection. Saxena points out that half of these “decent jobs” are in the government.

That is with jobs shrinking in the private sector, there’s been an increased lure to the government sector. However, Saxena points out that “opportunities for new government employment are shrinking.” There were about 2 crore jobs in the government sector in 1992-93 which has now shrunk to 1.7 crore only. “Lack of decent jobs has led to unrest amongst the youth,” he point out.

The Patidar movement that started in PM Modi’s home state Gujarat to the Maratha agitation to the Jat agitation in Haryana has the common denominator—middle and high castes demanding reservation in government jobs. That is, the hard reality that is not being addressed properly is that joblessness is already creating social tensions, and it is only likely to blow up big time soon.

CHANGING GLOBAL TRENDS & GOVERNMENT’S RESPONSE

The main problem, perhaps, is that the Centre or its thinktank, Niti Aayog, don’t seem to be acknowledging changing technologies that kill jobs or are just not keeping up with the changing times. Bringing more “investments” into the country doesn’t mean more jobs anymore. There needs to be a complete overhaul in the policy outlook.

The era of the ‘Fourth Industrial Revolution’ has arrived where Artificial Intelligence (AI), robotics, 3D printing and so on are already set to massively replace human jobs. Many of the IT job cuts have been due to AI and the like. The International Labour Organisation (ILO) warned that more than half the factory jobs in the ASEAN (Association of South East Asian Nations) countries of Southeast Asia could disappear over the next few decades.

In fact, in an earlier interview to National Herald, leading scientist RA Mashelkar highlighted a prediction based on World Bank data that 69% of jobs in India are at risk of being replaced by automation. “It should be a serious concern for all of us and we should be looking at a comprehensive mitigation strategy,” Mashelkar had said. But what are we doing about that?

The ILO says the industrial segment that would be affected most by the new trend is the one that is often viewed as having the maximum growth potential in India—textiles and garments—where, by way of example, one cutting machine could replace 15 workers. “India needs to plan how it is going to deal with these ticklish issues,” says Saxena.

The Small and Medium Enterprises (SMEs) have the highest potential of creating jobs, but their growth is constrained because of bureaucratic hassles in obtaining clearances and bank loans, Saxena points out.

India’s rank in ‘Ease of doing business’ has hardly improved in the last three years from a lowly rank of 130 out of 189 countries, and Prime Minister’s desire to break into the top 50 by 2018 remains distant.

The focus of the government, instead, as it enters its fourth year, has now been on “collecting” employment data. The Prime Minister recently set up a task force, headed by Niti Aayog Vice-Chairman Arvind Panagariya, to evolve a methodology that could generate “timely” and “reliable” employment data.

But, some questions arise:

• Has job creation become a key priority only in the fourth year of the National Democratic Alliance (NDA) government?
• What is the point of evolving a methodology to generate the employment data this late? Shouldn’t this have been done much earlier and focus on job creation undertaken?
• Would this also turn out to be another gimmick which would paint a rosy image of the job scenario, with no proper way of verifying the claims? It may be noted that the changed methodology of calculating GDP did show better numbers, but these are still disputed.

Then, irrespective of the ground reality, the government may go on claiming that jobs were being created in large numbers—which could be the main highlight for the election year, 2019.

Niti Aayog Member Bibek Debroy, at a FICCI (Federation of Indian Chambers of Commerce and Industry) event on May 11, acknowledged that “nothing had changed substantially in the last one year” on the jobs front and there was the need to “create 10 to 12 million new jobs” every year. While he was disputing the data provided by the “current official data on labour and employment,” the point is arguing over the data is not going to help and creating jobs should be the focus. Nothing else.

A paragraph was added at 19:28 hours.