One of the downsides to a competitive electoral democracy is that politicians, both incumbents and challengers, pretend to have ready answers to complex problems for which no immediate solutions may exist. Worse, the political system effectively prevents them from even acknowledging a problem if they are in power, for you are unlikely to get elected if you tell the voter the truth.
Consider: How many parties or politicians will get elected if they address the jobs issue with these words? “We have a problem with creating enough jobs for young people. There are no easy answers or silver bullets. We promise to consult the best experts and find solutions. We will run pilot projects in various places, find out the best options and then expand the successful ones rapidly.” More likely to get elected are those politicians who promise to create three million government jobs or offer to raise job quotas for those deemed deserving.
As someone who wrote a book on jobs (The Jobs Crisis In India, 2018), I am both moderately negative on high-quality job creation and strongly positive on lower-quality jobs. Here’s what we already know about the problem.
Trends to keep in mind
One, jobs are growing, but not as fast as the GDP. This was demonstrated during the UPA years—when growth rates went up in the first term even as employment elasticity went down. While this seems to be improving of late—an RBI study noted that 125 million jobs were created during 2014-23, including 46 million in 2023-24 alone—we cannot presume the problem is over. While some commentators do not believe the RBI numbers, contrasting it with low consumption growth, the circle can be squared if we look at the points below.
Two, the job market has been polarising in most sectors, which means the demand for jobs is concentrated at the top (high-skilled) and bottom (lower-skilled) ends. The growth of technology is eviscerating good-quality jobs requiring mid-level skills. One clear evidence of this is in banking services, where the break-up between clerical and officer-level staff has dramatically shifted in favour of the latter: from a 50:50 split in 2010-11 among scheduled commercial banks, officers now comprise nearly three-quarters of the staff. And this is true even for public sector banks. As any bank customer readily admits, we no longer need to go to bank branches to get work done; we can do most of it through phones. In a UPI-mediated lower-cash future, even ATMs, credit and debit cards could gradually become superfluous. Banks need product sellers and tech staff, not counter staff.
Three, even where jobs are in demand, the trend is toward contractualisation. The Annual Survey of Industries shows a growing trend in the proportion of contract workers employed by factories, rising from just over 36 per cent in 2017-18 to nearly 41 per cent in 2022-23. The vast majority of workers in services are also gig workers. If you look out of any urban window, you will not fail to notice delivery boys (and girls) carrying supplies of food, groceries and various products to residential places.
Warehouses, retail counters and logistics companies are the big employers—but at moderate wages. Uber drivers eke out a slim-to-modest net income from driving you from place to place, that is unless they toil for 12-14 hours a day. Clearly, the quality of employment has gone down, even if the numbers of those employed are rising fast. This is at the core of the real jobs problem, which also explains the very high demand for higher-paid public sector jobs.
Four, we made a mistake in 1991 when we liberalised our economy. We opened up the capital markets before the other factor markets (labour, land, agriculture). While China brought in a hire-and-fire regime almost as soon as it started wooing foreign companies in the late 1970s and early 1980s, India has continued to retain its employment-decelerating labour laws. Today, it may almost be too late to entice employers to hire more labour when automation and technology may do most jobs just as well—and without leaving employers to cope with unions. I say too late because employers have already learnt to do with less labour, and they will need many more inducements to add to the workforce when labour-saving technology will do the trick. When did you last hear a major employer asking for a hire-and-fire option in the law?
Five, the biggest job category now is self-employment, both due to necessity and opportunity. According to the latest Periodic Labour Force Survey (July 2023-June 2024), nearly 48 per cent of those employed in manufacturing are self-employed, and the proportions are higher than 50 per cent in sectors like trade, transport and accommodation and food services. This is particularly true for women, where two out of every three employed women are self-employed. This is a comment both about the relatively poor working environment for women in formal jobs and also their preference for part-time or home-based work.
In his Sermon on the Mount, Jesus famously said that the meek shall inherit the earth. A 21st-century rephrasing would note that the Geek will inherit the best parts of the earth, while the Meek shall be entitled to lower-quality jobs that may need to be complemented by doles and subsidies from the welfare state.
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Steps to take
A few conclusions are obvious.
Talk livelihoods, not just jobs: The focus needs to shift from merely creating regular “jobs” to creating opportunities for livelihoods. Formal employment is not going to boom at a time when technology is going to make many skills redundant. This means reducing regulatory frictions for small businesses, especially family businesses. It also means making loans more easily available for micro-businesses. Mudra is just one such scheme that started at the right time. So is the SVANidhi scheme for street vendors. Helping formal sector startups scale is another thing governments must do.
Flexible banking: Given the gig nature of most jobs, banks need to devise deposit and lending schemes that are flexible, since income and spending streams may be lumpy and not steady as for someone holding a 9-5 job.
Information systems: We need much better labour market information systems not only at the national level but also at the local level (city and district levels). It makes no sense to a plumber in Bihar to learn that he is needed in Ernakulam, when he may prefer a gig nearer home, even if it pays less. Also, a to-be plumber needs to have a skilling centre closer to home.
Vocational training: Regular degree colleges (except in STEM areas) are a waste of time when teaching vocational skills may be able to deliver jobs quicker. The problem here is the average Indian’s preference for desk jobs as opposed to work involving tools and physical skills. Anecdotal evidence suggests that Muslims seem to disproportionately populate many of the gig services—as electricians, plumbers, auto and gadget repairmen, furniture assembly and delivery workers—while the rest seem to hanker after steady government jobs. The future is in these gigs, not government employment. A social campaign to prepare people for gig work is as important as just enabling skilling.
Information on jobs: District- and city-level jobs committees with industry, government and citizen representations will help gather and disseminate information on skill and job requirements quickly to the target population. Jobs cannot ultimately be planned from remote national or state capitals, especially when most job profiles may not endure. Consider the furniture business today: once dominated by carpenters, today ‘geeks’ on computers design the products, which are then mass-produced in factories. It is only assembly work that is left to the relatively unskilled. Skilled carpentry talent is becoming less and less important.
Jobs are our biggest national challenge, and the less we pretend we know how to fix the problem the more we are likely to do something worthwhile about it. Governments, whether at the Centre, state or municipal levels, would do better with less hubris on this issue.
R Jagannathan is editorial director at Swarajya magazine. Views are personal.
Good article. We need sane heads and politicians across the aile talkimg about quality of life including jobs. We should aim to target a life in india which gives quality services across housing, health and jobs while keeping a high GDP growth
Why play around with words. So much illegal emigration taking place, apart from those with valid travel papers. Some years ago, Minister Jayant Sinha wrote a column for ToI, making the case that huge job creation was taking place but it was not being captured by official statistics.
Jaggi says, “ even if the numbers of those employed are rising fast.” Can he substantiate?