The silent crisis of unemployment

By Prem Shankar Jha

Some months ago, the newspapers carried a truly extraordinary news item. Unfortunately the Indian media, and for that matter the Indian government, were so preoccupied with the run up to the Musharraf visit, that it passed almost unnoticed by the general public. The news item concerned the findings of a study of the unemployment situation in the country by the Planning Commission. The study had differed sharply with the findings of the National Sample Survey in its latest survey of the employment, that the number of unemployed had risen sharply in recent years. According to the Planning Commission, the number of those truly unemployed, that is, those who were looking for jobs and could not find them, had actually gone down. What had gone up was the number of those who were voluntarily unemployed, that is, those who did not want jobs.

The news item did not explain how the Commission had arrived at this new category of unemployment. Nor did it specify whether those who were voluntarily unemployed were simply not interested in working or had given up looking for a job.

It, however, left the readers with a strong impression that the Planning Commission considered the NSS data as alarmist and did not consider unemployment to be a serious problem for the policymakers. This may be the reason why the study itself attracted so little attention and why the newspapers made no mention of any suggestions it might have made on how to tackle the problem of unemployment. You cannot tackle a problem that does not exist.

Sharp decline in jobs

It is perfectly possible that the Commission's study did have a good deal to say on the subject. But its decision to swaddle the problem in a thick padding of tranquillisers has done untold harm because it has given the Government an excuse to ignore a huge but silent crisis that is overtaking the country. This is the crisis of unemployment. The economy's failure to create jobs has been obvious for a decade. While the average growth of job seekers has risen from 2.3 per cent in the 1970s and the 1980s to 2.5 per cent per annum, the average growth of employment in the organised sector has fallen from 2.1 per cent to 0.8 per cent in the 1990s. But this average is deceiving.

While employment grew by 1.1 per cent per annum between 1993 and 1997, with a sharp decline in the growth rate after 1997, especially in industry, its growth fell to 0.46 per cent in 1998, to 0.04 per cent in 1999, and to minus 0.15 per cent in 2000. The average growth in the three years was thus a paltry 0.11 per cent per year. In other words, one in 24 young job seekers succeeded in getting a job in the organised sector. A 2.5 per cent rate of growth of job seekers in the sector means that 6.72 lakh people tried to get jobs in the organised sector every year, but in net terms only 29,500 succeeded. In the last three years, therefore, India added just under two million young people to the educated unemployed.

If the Vajpayee Government does choose to ignore the growing crisis of unemployment, it will only be following in the footsteps of every government that has preceded it. For the original decision to ignore unemployment in the framing of India's Plans and it economic policies was taken as far back as in 1966 by the late Prime Minister, Indira Gandhi. Faced with dire warnings from the Planning Commission in the draft of the Fourth Plan that unemployment was growing apace because the Mahalanobis model of economic planning that India had adopted was creating too few jobs, Indira Gandhi threw out the draft plan and, referring to the observations of economists like Dr. Amartya Sen that developing countries tended to suffer from underemployment rather than outright unemployment ( a phenomenon reserved for industrialised countries) appointed a commission under the late Professor Dantwala to develop an appropriate index for unemployment or underemployment in India.

The Dantwala commission duly concluded that to capture unemployment and underemployment a developing country needed a family of indices that captured daily, periodic and permanent unemployment for men and women, and for urban and rural areas, separately. Out of this emerged the NSS's quinquennial surveys of unemployment. There was only one snag. The NSS estimates were so complicated and susceptible to so many conflicting interpretations that they were ignored by the media, the public and the Planning Commission. The problem of unemployment, therefore, was gradually forgotten. Over the next 30 years, India became the only developing country that systematically ignored the creation of jobs, gave it not even cursory attention in its Plans and policies, and framed its objectives solely in terms of the GDP.

Successive governments were able to get away with doing this because till the end of the 1980s, the increase in job seekers was only marginally higher than the increase in jobs. But that was because two thirds of the jobs created in the organised sector were in the government or public enterprises.

Employment in the State sector grew from seven million in 1961 to 11 million in 1971, 15 million in 1981 and 19 million in 1991. Then, after the crisis of 1991, it stopped growing. Till 1997, the explosion in private sector growth took up some of the slack. But with the disappearance of private investment in 1997 and the return to the 5 per cent Hindu rate of industrial growth, this too has come to an end.

It is possible that Mr. Atal Behari Vajpayee, Mr. L. K. Advani and Mr. Yashwant Sinha have ignored the disappearance of jobs because they have not as yet grasped its political consequences. But to do so all they need to do is ask themselves one simple question. If the next three years see the same trends as in the past three years, then by the time the next elections draw near another two million young, educated people will have failed to secure jobs in the organised sector. Thus the six years of BJP rule will have coincided with a growth of four million in the educated unemployed. Trends are likely to be worse in the unorganised sector, for it depends entirely on growth in the organised sector for its own survival.

Does any one of them believe that the BJP will be returned to power in 2004 under these circumstances? The BJP is not responsible for the collapse of industrial growth in late 1996. The responsibility for that rests with the government of Mr. Narasimha Rao, which killed the boom in investment in late 1995 by pushing interest rates up into the stratosphere. But the electorate will not forgive the BJP for not disavowing the past and tamely continuing with the policies that it inherited.

Send this article to Friends by E-Mail

Section  : Business
Previous : Phil Spender takes on new assignment in U.S.
Next     : Nalco to make detergent grade zeolite