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The Hindu Editorial Analysis | PDF Download

Date: 13 February 2019


The shape of the jobs crisis

  • India has no industrial policy or employment strategy to ride the wave of its demographic dividend
  • Job creation has slowed since 2011-12, the year of the last published National Sample Survey Office (NSSO) labour force survey. I used Labour Bureau annual survey (2015-16) data and Centre for Monitoring Indian Economy Pvt. Ltd. (CMIE) data (post-2016), which has a sample size larger than the NSSO labour force surveys, to reach this conclusion. Both surveys cover rural and urban, and organised and unorganised sector employment; in other words, they capture both the Employees’ Provident Fund Organisation/National Pension Scheme (organised) as well as such employment as might be generated by Micro Units Development & Refinance Agency Ltd (MUDRA) loans or platform economy jobs. The latter two job sources are precisely what the government claims were not being captured by jobs data available. We have repeatedly stated that government claims on absence of ‘good’ data on jobs are simply untenable.
  • My analysis prior to the leak of NSSO 2017-18 data had shown that the jobs situation has turned grim since 2012. A JUMP NOW
  • What the leaked NSSO 2017-18 data have shown is that while the open unemployment rate (which does not measure disguised unemployment and informal poor quality jobs that abound in the economy) by the usual status never went over 2.6% between 1977-78 and 2011-12, it has now jumped to 6.1% in 2017-18. This was expected.
  • In the last 10-12 years, more young people have become educated.
  • The tertiary education enrolment rate (for those in the 18-23 age group) rose from 11% in 2006 to 26% in 2016.
  • The gross secondary (classes 9-10) enrolment rate for those in the 15-16 age groupshot up from 58% in 2010 to 90% in 2016. The expectation of such youth is for a urban, regular job in either industry or services, not in agriculture. If they have the financial wherewithal to obtain education up to such levels, they can also “afford” to remain unemployed. Poor people, who are also much more poorly educated, have a much lower capacity to withstand open unemployment, and hence have lower open unemployment rates.
  • What NSSO 2017-18 also shows is that as open unemployment rates increased, more and more people got disheartened and fell out of the labour force; in other words, they stopped looking for work. The result is that labour force participation rates (LFPR, i.e. those looking for work) for all ages, fell sharply from 43% in 2004-5 to 39.5% in 2011-12, to 36.9% in 2017-18 (a reflection mainly though not only of the falling female LFPR).
  • This shows up in the growing numbers of youth who are NEETs: not in education, employment or training. They are a potential source of both our demographic dividend but also what is looking to be a mounting demographic disaster.
  • Meanwhile, government economists have repeatedly told us that there is no jobs crisis.
  • Between 2004-05 and 2011-12, as many as 7.5 million new non-agricultural jobs were being created every year. The unemployment rate was only 2.2%.
  • The volume of open unemployment was almost constant (at around 10 million) until 2011-12, but it increased to 16.5 million by 2015-16.
  • Increased open unemployment, post 2011- 12, suggests that those in education prior to 2011-12 would start searching for nonagricultural jobs but did not find them. The latest NSSO data suggest that this situation had worsened further by 2017-18.
  • Across education categories
  • A sharp increase in the unemployment rate of the educated (based on our estimates of the Annual Survey, Labour Bureau) should have worried the government. My estimate is that the unemployment rate rose over 2011-12 to 2016 from 0.6% to 2.4% for those with middle education (class 8); 1.3% to 3.2% for those who had passed class 10; 2% to 4.4% for those who had passed class 12; 4.1% to 8.4% for graduates; and 5.3% to 8.5% for post-graduates.
  • Even more worrying, for those with technical education, the unemployment rate rose for graduates from 6.9% to 11%, for post-graduates from 5.7% to 7.7%, and for the vocationally trained from 4.9% to 7.9%.
  • While NSSO 2017-18 data show the share of regular wage jobs rising, especially in urban areas (and the share of selfemployed and casual wage work falling), this rise in nowhere close to the number of educated youth entering the labour force.
  • For an economy at India’s stage of development, an increase of workers in agriculture (of 20 million that took place over 1999-2004) is a structural retrogression, in a direction opposite to the desired one. Between 2004-5 and 2011-12, the number of workers in agriculture fell sharply, which is good, for the first time in India’s economic history. Similarly, the number of youth (15-29 years) employed in agriculture fell from 86.8 million to 60.9 million (or at the rate of 3 million per annum) between 2004-5 and 2011-12. However, after 2012, as non-agricultural job growth slowed, the number of youth in agriculture actually increased to 84.8 million till 2015-16 and even more since then (as the CMIE data would attest). These youth were better educated than the earlier cohort, but were forced to be in agriculture. DROP IN MANUFACTURING JOBS
  • Even worse, manufacturing jobs actually fell in absolute terms, from 58.9 million in 2011-12 to 48.3 million in 2015-16, a whopping 10.6 million over a four-year period. This is consistent with slowing growth in the Index of Industrial Production (IIP), which consists of manufacturing, mining, and electricity.
  • The IIP had sharply risen from 100 in 2004-5 to 172 by 2013-14 (in the 2004-5 series), but only rose from a base of 100 in 2011-12 in the later series to 107 in 2013-14, and to 125.3 in 2017-18. This is also consistent with exports first falling after 2013, then barely recovering to levels still lower than 2013. It is also consistent with investmentto-GDP ratio falling sharply since 2013, and still remaining well below 2013 levels. This holds for both private and public investment.
  • What is tragic is the growing number of educated youth (15-29 years) who are “NEET”. This number (70 million in 2004-5) increased by 2 million per annum during 2004-5 and 2011-12, but grew by about 5 million per annum (2011-12 to 2015-16). If that later trend continued (as there is evidence it has) we estimate it would have increased to 115.6 million in 2017-18. That is a 32 million increase in “NEETs” in our society over 2011-12 to 2017-18 — potential lumpen fodde.
  • These youth (“NEET” and unemployed) together constitute the potential labour force, which can be utilised to realise the demographic dividend in India. Will a new government at least recognise there is a crisis? • I estimate that the number of new entrants into the labour force (currently at least 5 million per annum), and especially educated entrants into the labour force will go on increasing until 2030. It will thereafter still increase, though at a decelerating pace. By 2040 our demographic dividend — which comes but once in the lifetime of a nation — will be over.
  • China managed to reduce poverty sharply by designing an employment strategy (underpinned by an education and skills policy) aligned to its industrial strategy. That is why it rode the wave of its demographic dividend. Unfortunately, India has neither an industrial policy nor an employment strategy, let alone the two being aligne
  • Is our political class listening? Or are our educated unemployed and NEETs meant to be merely used as political fodder? That is the trillion rupee question for the fastest growing large economy in the world, about to become the fifth largest in the world.

A case for Commons sense

  • There needs to be a review of how biodiversity and natural resources are governedWhen 196 countries met at Sharm el-Sheik, Egypt, last November for the 14th meeting of the Conference of Parties to the Convention on Biological Diversity (CBD), a key question on top of the agenda was how to govern biological resources (or biodiversity) at different levels for the world’s sustainable future.
  • The meeting had come at a significant time: it was the CBD’s 25th year of implementation, countries had approximately 350 days to meet global biodiversity targets, and there was the backdrop of a damning report that humans have mismanaged biodiversity so badly that we have lost 60% of resources (which can never be recouped). Finally, there was growing concern on how the Convention’s objectives of conservation, sustainable use and equitable sharing of benefits were being compromised, including by the parties themselves.
  • For thousands of years, humans have considered natural resources and the environment as a global public good, with communities having diligently managed these resources using the principle of ‘Commons’.
  • In simple terms, these are a set of resources such as air, land, water and biodiversity that do not belong to one community or individual, but to humanity. All developments we see in the establishment of civilisations across the world as well as agricultural development feeding the world today are a result of such ‘Commons’ being managed by communities for centuries.
  • Then came the urge of those with money and power to privatise these resources for individual prosperity in the form of property management principles, intellectual property rights and others. In one form the CBD — a multi-lateral environmental agreement that has provided legal certainty to countries through the principle of sovereign rights over biodiversity — also contributed to states now owning the resources, including their rights on use and management.
  • Today, states control and manage biodiversity with strict oversight of who can use what and how. The intent of the CBD and having sovereign rights was to manage resources better. But the results of such management have been questionable. A key reason cited is that ‘Commons’ and common property resource management principles and approaches are ignored and compromised.

Why ‘Commons’?

  • According to estimates, a third of the global population depends on ‘Commons’ for their survival; 65% of global land area is under ‘Commons’, in different forms. At least 293,061 million metric tonnes of carbon (MtC) are stored in the collective forestlands of indigenous peoples and local communities. This is 33 times the global energy emissions in 2017. The significance of ‘Commons’ in supporting pollination (the cost estimated to be worth $224 billion annually at global levels) cannot be overlooked.
  • In India, the extent of ‘Common’ land ranges between 48.69 million and 84.2 million hectares, constituting 15-25% of its total geographical area. ‘Common’-pool resources contribute $5 billion a year to the incomes of poor Indian households. Around 77% of India’s livestock is kept in grazing-based or extensive systems and dependent on ‘Commons’ pool resources. And 53% of India’s milk and 74% of its meat requirements are met from livestock kept in extensive ‘Common’ systems.
  • Despite their significance, ‘Commons’ in India have suffered continued decline and degradation. National Sample Survey Office data show a 1.9% quinquennial rate of decline in the area of ‘Common’ lands, though microstudies show a much more rapid decline of 31-55% over 50 years, jeopardizing the health of systemic drivers such as soil, moisture, nutrient, biomass and biodiversity, in turn aggravating food, fodder and water crises. As of 2013, India’s annual cost of environmental degradation has been estimated to be ₹3.75 trillion per year, i.e. 5.7% of GDP according to the World Bank.

Why the concern?

  • ‘Commons’ becoming uncommon is a major socio-political, economic and environmental problem. While the state can have oversight over resource management, keeping people away from using and managing ‘Commons’ is against effective governance of ‘Commons’.
  • The sovereign rights provided for, legally, under the CBD should not be misunderstood by the state as a handle to do away with ‘Commons’- based approaches to managing biodiversity, land, water and other resources.
  • Current discussions under the United Nations should focus on how and why ‘Commons’ have been negatively impacted by progressive pronouncements to save the earth and people.
  • Another key concern is the changing sociopolitical impact of migration. Gone are the days when we can consider ‘Commons’ as resources relevant only for rural communities. ‘Commons’ are now a major provider of livelihood options for both urban and peri-urban populations. The relevance of ‘Commons’ impacting urban dwellers cannot be overlooked with more urbanisation happening. Prelims facts
  • After several failed attempts to equip the infantry with a basic rifle, the Army on Tuesday signed a contract with Sig Sauer of the U.S. for 72,400 SIG716 assault rifles for front-line soldiers deployed in operational areas.
  • “A contract for 72,400 assault rifles through fast track procurement was signed with Sig Sauer on Tuesday,” the Defence Ministry said in a statement. The entire lot will be delivered in 12 months. • Of the 72,400 rifles, 66,400 are meant for the Army, 2,000 for the Navy and 4,000 for the Air Force. The broad parameters for the weapon are an effective range of 500 m and weight of less than 3 kg. The new rifles will replace the Indian National Small Arms System (INSAS) rifles.
  • The Defence Ministry also issued the Expression of Interest (EoI) for a deal to buy 111 naval utility helicopters. This is the first project to be executed through the strategic partnership policy. Under this, the chosen Indian private company will team up with the Original Equipment Manufacturer to build the product in India.
  • The EoI follows the Request for Information (RFI). The Navy will likely issue a detailed Request for Proposal (RFP) at the end of the third quarter of this year to short-listed Indian companies.
  • The copters will replace the ageing Chetak fleet. INDIA INKS CONTRACT FOR 72,000 ASSAULT RIFLES U.S. FIRM TO DELIVER ARMS IN 12 MONTHS Rajasthan to scrap education criterion The Rajasthan Assembly on Monday passed two Bills which seek to end the minimum education criterion for panchayat and civic poll candidates.
  • The House passed by voice vote the Rajasthan Panchayati Raj (Amendment) Bill, 2019 and the Rajasthan Municipality (Amendment) Bill, 2019
  • The previous Vasundhara Raje-led government had introduced education criterion in 2015 which required a candidate to pass Class X for contesting zila parishad, panchayat samiti and municipal elections.
    • For contesting elections for sarpanch of a panchayat in scheduled and non-scheduled areas, it was mandatory to pass Class V and VIII, respectively.
    • Replying to the debate on the Rajasthan Panchayati Raj Amendment Bill, 2019, Panchayati Raj Minister Sachin Pilot said that the present government is committed for development of every section of the society. Punjab signs MoU for biofuel project In a bid to tackle stubble burning and boost the renewable energy sector, the Punjab government on Monday signed a Memorandum of Understanding with Delhi-based Virgo Corporation for a ₹630 crore biofuel project. An official statement said that the technology for the project will be provided by the U.S. giant Honeywell. The MoU was signed here in the presence of Punjab Chief Minister Amarinder Singh and U.S. Ambassador to India Kenneth I. Juster. Capt. Amarinder said the project would go a long way in containing the environmental pollution due to stubble burning, besides supplementing the income of farmers by helping turn the unmanageable agro-waste into raw material for producing biofuel. “Every paddy season, the State generates nearly 20 million metric tonnes of paddy straw, which would be scientifically utilised for manufacturing biofuel,” the Chief Minister said mountains
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