OFFICIALLY, India entered into "job-loss" growth period in 2017-18, with the Periodic Labour Force Survey (PLFS) revealing a 45-year high unemployment rate of 6.1% and the study of its unit-level data by the Azim Premji University revealing nine million job losses between 2011-12 and 2017-18 "for the first time in India's history".
Two years later in 2019-20, the country witnessed structural shifts in jobs. PLFS reports revealed agriculture's share of jobs reversed that year, going up from 42.5% in 2018-19 to 45.6% in 2019-20 and 46.5% in 2020-21. Manufacturing's share, on the other hand, went down from 12.1% to 11.2% and 10.9%, in corresponding years. Jobs also moved away from formal to informal and high productive, high income to low productive, low income and vulnerable ones. The best-quality jobs, "regular wages/salaried", shrank from 22.8% to 21.1% during 2017-18 and 2020-21, while vulnerable "self-employment" went up from 52.2% to 55.6% — with unpaid workers ("helper in household enterprises") within this group going up from 13.6% to 17.3%. Even casual workers fell from 24.9% to 23.3% during the period.
These developments were predictable since India had gone through a long "job-less" growth phase. The 12th Five-Year Plan document made it official in 2013 by saying that five million jobs were lost in manufacturing between 2004-05 and 2009-10, although the total number of jobs went up by 2.76 million.
But, even as the Centre prepares for Budget 2023, little seems to have changed in terms of policies.
Betting On GDP, Manufacturing
India's policy response has always veered towards high GDP growth and manufacturing, but neither worked.
High GDP growth is marked by a shift from job-less growth in earlier years to job-loss growth in recent times. Dependence on manufacturing continues through Make in India and Production-linked Incentive (PLI) schemes. Make in India hasn't made a difference as manufacturing jobs continue to slip. The PLI scheme is largely focused on high-skill, capital-intensive sectors, including semiconductor, drones, telecom, electronics, white goods, solar PV modules, speciality steel, etc., and unlikely to produce too many jobs.
The proposed Development of Enterprises and Services Hub (DESH) Bill of 2022, which seeks to replace the SEZ Act of 2005, provides additional sops to SEZ units by (i) extending 15% tax concession to both greenfield and brownfield ventures for an extended period and (ii) allowing SEZ units to sell domestically (which is not allowed for exports-only units) by paying foregone duties on inputs but not on final goods. The finance ministry is learnt to have shot it down, fearing more tax disputes.
One must recall what the trade liberalisation of 1991 did to jobs. According to a large body of studies, it "displaced" exports from traditional, labour-intensive sectors such as textiles, natural/cultured pearls, vegetable products, animal products, prepared foodstuff, and hides and leather (all of which declined) to skill and capital-intensive ones such as machinery, base metals, chemicals, transport, rubber and plastics etc. (all of which rose).
India surely needs big businesses and exporting units because they provide better quality (high-income) jobs. But it needs more labour-intensive ones for millions of unskilled and semi-skilled workers who dominate the workforce. It needs more jobs in rural areas in particular because urban workers have fled there and refuse to return — causing labour shortage of 68% in Tier-1 cities and 32% in other cities in 2022, according to an industry estimate, swelling the ranks of MGNREGS workers.
The government needs to revive small and medium enterprises (SMEs), but there's no data on the number that shut shop permanently due to demonetisation, GST and Covid-19. A survey by private enterprise Global Alliance for Mass Entrepreneurship recently said 14% MSMEs permanently exited their businesses during the pandemic. Last heard, the Emergency Credit Line Guarantee Scheme (ECLGS) had extended '3.58 lakh crore to 11.9 million MSME units — 18.8% of all MSMEs (63.4 million)' — by November 30, 2022. How are the rest 81.1% doing? There are no answers.
Why PLFS Is Inadequate
Lack of clear and definite data on jobs is also chronic and needs immediate corrective steps through specific budgetary provisions.
The Centre trots out the Employees Provident Fund Organisation (EPFO) data to claim job creations since 2018, claiming 1.5-1.6 million new jobs every month. Such claims were scotched right at the beginning by the then chief statistician of India, Pravin Srivastava, who said the EPFO data was "not" about job creations but "a proxy for formalisation". A year earlier, the NITI Aayog's report of the Task Force on Improving Employment Data, too, said the same. Nonetheless, the slew of incentives towards formalisation of jobs is a good step.
But the question is: Why does the Centre not cite the right data, the PLFS, for job creation claims?
That is because the PLFS doesn't directly reveal how many jobs are created or lost. The Azim Premji University analysed its unit-level data for 2017-18 to reveal the net loss of nine million jobs. Until 2014, it was done by the Planning Commission, which provided yearly and sector-specific data (from job and other surveys, inputs from states, etc).
That is also because the past four annual PLFS data (2017-18 to 2020-21) give a misleading picture. They show worker-population rate (WPR) and labour force participation rate (LFPR) rising and the unemployment rate (UR) falling — all positive indicators. But they don't explain how that happened when India was reeling under the twin shocks of demonetisation and GST (GDP growth fell from 8.3% in FY17 to 3.7% in FY20) and the 2020 lockdown, which sparked a massive distress migration (GDP growth fell to -6.6% in FY21).
While no official account exists about job loss from demonetisation and GST, the Rajya Sabha was informed in February 2022 that 2.3 million workers had lost their jobs during the 2020 lockdown. The quarterly PLFS reports are restricted to urban areas.
Government Vacancies
Another good step is to fast-track filling up of government vacancies. After promising to fill 1 million vacancies in Central ministries and departments in June 2022, the Centre has given 0.15 million job certificates in October and November. But there exist very large vacancies in CPSUs, PSBs, autonomous institutions (central universities, colleges, schools, hospitals etc.) and in non-civilian central armed police forces (CAPFs) and defence forces, about which no comprehensive data is available.
For example, on December 12, 2022, the Lok Sabha was informed that 35.3%, or 11,175 posts, of faculty members are vacant in central universities, IITs and IIMs. There were 11.6%, or 0.13 million, vacancies in CAPFs (BSF, CISF, CRPF, ITBP, NDRF etc.) as on January 1, 2021. Another 0.14 million vacancies existed in the Army, Navy and Air Force, as on July 22, 2022; the four-year Agnipath scheme will only fill 46,000 of this, leaving a net vacancy of 90,000 by the end of 2022.
Then, there has been a steady decline in the number and quality of government jobs over the years.
The Railways abolished 72,000 Group C and D posts in six years during FY16-FY21. Hiring temporary and casual workers has been on the rise. A study by the Indian Staffing Federation (ISF) revealed in 2014 that (i) 43% government jobs (Central, state, PSUs and local bodies) were temporary (ii) 2/3rd of incremental formal workforce was temporary, with 80% in casual jobs (iii) high incidence of professionals and high-skilled workers, including architects, engineers and teachers, professors were on short-term contracts and (iv) 56% of those working in government schemes like ICDS, NRHM, NRLM (Anganwadi and ASHA workers) were "honorary" workers, getting "honorarium", instead of wages/salaries. ASHA and Anganwadi workers (around 2.5 million) have long agitated for proper remuneration.
It is not as if India has a bloated public workforce. In fact, the truth is far removed. It has a very low count of public servants, just 6.8% of the total workforce (PLFS of 2020-21), which is well below the OECD average of 21.1% in 2020 and 17.4% in 2021. In terms of public servants per 1 lakh population, India's 139 was very poor against the U.S.' 668 in 2015 (according to the 7th Pay Commission, 2015).
The challenges are not just the lack of job creation but also structural distortions, which are deeply entrenched and systemic. How does one address such a complex situation? The only way is to develop a vision, expressed through a national policy with strategies, plans and a clear roadmap. India's neighbours adopted their national employment policies (NEPs) long back, such as China (2002), Sri Lanka (2012), and Nepal (2017). Why can't India do so?