• Akash Satyawali

Earlier this year, India witnessed violent protests erupting in response to the cancellation of the railway recruitment exam. Dejected students who had been preparing for the exam took to the streets in large numbers. Similar scenes emerged after the government announced the ‘Agnipath’ scheme. Both these instances point to the massive unemployment crisis that has been brewing in India. The job riots, a first in recent memory, reflect the growing frustration amongst the young men and women.

As per the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in August 2022 touched a twelve-month high of 8.3 percent. The youth unemployment rate is as high as 42 percent. Nearly every second young person is without a job. The situation worsens as people with higher educational qualifications have to face higher unemployment rates. Every sixth graduate is jobless. The data proves that we are amidst a massive job crisis and the ill-effects are showing.

The origins of the distressful present and bleak future lie in the first tenure of the Modi government.

Origins of the Job Crisis

On November 8, 2016, PM Modi announced demonetization an exercise that had put a brake on economic activity. The result was the loss of 50 lakh jobs. Some months later, the government conducted its periodic labour force survey (PLFS). The PLFS 2017-18 revealed that unemployment had reached a 45-year high - the highest recorded unemployment rate. We would think that a responsive government would have focused its energies towards solving the crisis, but this government is neither responsive nor responsible. They responded by hiding the report, releasing it only after the 2019 general elections.

As the employment situation was stabilizing post-demonetization, the Modi government announced a hasty Goods and Services Tax (GST). High tax rates and a complex system eroded revenues of the micro, small, and medium enterprises (MSMEs)and resulted in the closure of several units - contributing to more job losses. The manufacturing sector was particularly hurt. The third contributing factor to the job crisis was the mismanagement of the COVID-19 pandemic. The sudden lockdown created a humanitarian problem in the form of reverse migration. With businesses closed, job losses compounded. In weeks following the lockdown, nearly 2 crore jobs were lost.

A Wasted Demographic Dividend In the run-up to the 2014 general elections, then PM candidate Narendra Modi and the BJP made tall promises regarding job creation. These promises were quickly forgotten after they assumed power. Post-demonetization and a hasty GST, job-less growth turned into job-loss growth. As COVID-19 raged and Modi government was caught unprepared, the jobloss turned into massive job destruction.

Because of its large educated young population that enters the labour force each year, India has a distinct advantage over developed countries. According to one estimate, 12 crore people would have entered the workforce since 2016. The high proportion of young people in the labour force is called the ‘demographic dividend.’ If used well, the young workforce can be crucial in achieving a high growth rate and creating prosperity amongst all sections of society.

It is the government’s responsibility to generate opportunities for the youth. The economic policies should be geared towards ensuring that enough jobs are being created to absorb those who enter the workforce. Unfortunately, the Modi government has presided over the reduction of the workforce.

A Tenure of Job Destruction

In 2016, more than 41.2 crore were employed. By 2021, only 40.4 crore had a job. During a period when 12 crore people were eligible to enter the workforce, the total employment decreased by 80 lakhs. This amounts to 3 jobs lost every minute, 182 jobs lost every hour, and 4400 jobs lost every day. This data is an indictment of the Modi government and sheds light on its false promises. The economic mismanagement is turning the demographic dividend to waste. The government has failed to generate jobs and a large population is left frustrated and helpless.

A report in the Indian Express shows how the labour force participation rate (LFPR) is stagnant at 40 percent and the employment rate has fallen to 37 percent (data for December 2021). This implies that three-fifth of the working age population has no hopes in the job market. This despondent attitude is the direct result of government’s economic mismanagement. Compared with other countries, India has an abysmal LFPR. In United Kingdom, Germany, and France, the LFPR is above 70 percent. In Australia, Canada, Japan, Russia, the LFPR is above 60 percent.

The dismal situation is hurting the prospects of the youth. The youth employment rate has fallen to 10.4 percent. Of every 100 young men and women, only 10 have a job.

Loss of Salaried Jobs

A worrying part of the job crisis is the loss of salaried jobs. Workers prefer salaried jobs as they ensure a steady income and often come with social security benefits like insurance, gratuity payments, etc. Since 2016, over 60 lakh salaried jobs have been lost. There has been little progress in ensuring recovery of these jobs. Loss of salaried jobs forces people to take on informal work that may not be commensurate with their educational qualifications.

A thriving manufacturing sector is most important to create good jobs for the skilled workforce. Here, we must also recall that the government targeted creating 10 crore jobs through the ‘Make in India’ programme but has ended up with serious job losses. Between 2016-17 and 2020-21, half of the manufacturing jobs were lost. The manufacturing sector was employing over 5.1 crore people till 2016-17, in five years, employment was down to 2.7 crore.

Job Creation in the Government 0.3 percent

The governments, central and states, are one of the biggest employers. When the private sector fails at generating jobs, the government must step up. In the last union budget, the government has targeted creating 60 lakh jobs in the next five years. It is important we look at the record of the last eight years.

The Minister of Personnel, in a reply in the Lok Sabha, informed the House that in the last eight years, 22 crore government job applications were received whereas only 7.2 lakh were provided employment. For every 1000 applications, only 3 jobs are being created in the government sector.

What’s worse is the continuous drop in recruitment. The number of candidates appointed has dropped 70 percent since 2014-15. In 2021-22, only 38,850 candidates were recruited against 1.86 crore applications.

Failure of MUDRA Yojana BJP claims that fewer people are looking for jobs because the PM MUDRA yojana has led to a self-employment revolution. PM Modi, in an interview, famously asked that if someone selling pakoras and earning Rs. 200/day, shouldn’t that be recognised as employment. The answer is a loud ‘NO’. When young people demand jobs, they expect opportunities that earn them a regular income that is more than Rs. 200/day (Rs. 6000/month). They recognize that Rs. 200/day is way less than the minimum wage. In fact, it is less than the MGNREGA wages in some states. 93 percent of the MUDRA loans were of the ‘Shishu’ category, where the loan amount is less than Rs. 50,000. The average loan amount in this category is Rs. 19,411. Creating gainful employment requires bigger investment, and the government must open its eyes to the reality. Women in the Workforce Women have been the worst affected due to the job crisis. The lack of employment opportunities has pushed women out of the workforce. Women’s labour force participation rate has fallen to an abysmal 9 percent. One-tenth of the working age women are now not even looking for jobs. This is in sharp contrast with the global standards, where the female LFPR is 47 percent. Keeping women out of the workforce is proving costly. According to one analysis, achieving gender parity by 2050 will add over 4.7 lakh crore to the economy. The women who are in the workforce must brave extremely challenging odds. The unemployment rate among young women is as high as 70 percent. Solutions to the Crisis Welfare-oriented policies will go a long way in generating jobs. Take the example of Chhattisgarh. In August, the unemployment rate in the state was 0.4 percent, the lowest in the country. The Congress government’s initiatives have focused on raising demand and supporting the rural economy. Modi government must draw lessons from the state. It must reorient its policies to increase demand and invest in job creating sectors like manufacturing and construction. Increasing demand creates a virtuous cycle of growth. So far, the government has focused on supply side measures in the form of loans and tax exemptions. Investing in a direct income support scheme, like NYAY, will boost demand in the short run and create growth opportunities. ‘Make in India’ must go beyond advertising and catchy slogans and lead to ease of business for the entrepreneurs. The unemployment crisis is turning deadly. The latest Accidental Deaths and Suicides in India data records13,714 suicides by ‘Unemployed Persons’. The job crisis is man-made and reversible. The government must wake up before it is too late.

The Author is a National Coordinator at the Research Department, All-India Congress Committee.