19.06.2018

Jobs: The challenge of soaring unemployment, a year before 2019 Indian parliament elections

What lies behind the looming crisis over the future of jobs and how might it might impact the politics of India in 2019?

  • New Delhi, India. Photo by Patrick Beznoska on Unsplash

Three hours away from India’s national capital Delhi, where the dust never seems to settle, is the majestic Tijara Fort. Overlooking the hot plains of the Mewat region that straddle the states of Rajasthan and Haryana, Tijara is more about its glorious past than about its dismal present and uncertain future.

Recently, a government think tank declared the nearby district of Mewat as one of the most underdeveloped districts in the country. From here the journey to attain Sustainable Development Goals (SDGs) seems very distant. In Tijara as well as in the nearby areas, there is rampant unemployment aggravated by shrinking agriculture and a slowing manufacturing sector.

Therefore, it was pertinent that on a sunny 6 May, when a fierce dust storm was swirling in the sun-baked plains below the Tijara Fort, Friedrich-Ebert-Stiftung (FES) and Hardnews Magazine organised a conclave in the expansive interiors of the Fort to understand the looming crisis over the future of jobs and how it might impact the politics of India in 2019.

The context of the discussion was the unsettling realisation that job creation for a 12-million-strong youth population entering the labour force every year is less than a million. In the last general elections of 2014, one of the prominent issues was the promise of providing jobs to the young, who did not want to live off the dole.

According to an International Labour Organisation (ILO) study, titled World Employment and Social Outlook 2018, the rate of unemployment will hover at 3.5 per cent with more unemployed people joining this number. In this scenario, the claim that the economy is clocking up 7 per cent growth has given rise to the concept of jobless growth, a situation where growth in the economy is not accompanied by job creation.

The general elections of 2014 failed to meet the promise of providing jobs for the youth.

Nitin Sethi, Senior Associate Editor with the Delhi-based Business Standard, however, debunked the claim that India was witnessing 7 per cent growth. “If one goes over the previous matrix of growth, India is at best clocking three and a half or four per cent growth, which does sit comfortably with one per cent job growth,” he said.

In the past three years, the country has been subjected to two major policy decisions that have challenged the resilience of its economy: demonetisation of large-denomination  banknotes and a unified GST. As a result, many sectors have not revived and jobs have failed to return.

While presenting job trends, Hitesh Oberoi, Managing Director and CEO of Naukri.com that has the accounts of 70,000 companies, said that the boom in employment started in the beginning of the 2000s and continued until 2007-08. “It was led largely by the IT sector, until it stopped one fine day. After Lehman Brothers collapsed in 2008, Naukri’s collections went into negative and since then major sectors that provided employment, like cement and infrastructure, have not recovered, even though the services sector is back on track,” said Oberoi.

Gathering perspectives on the future of work and how it impacts the Indian polity and society, (left-to-right) Vimal Gupta, Mr. Gupta, Patrick Ruether, Avik Sarkar, Hitesh Oberoi, Anoop Kumar, “Future of Work and its Impact on Politics and Economy: Looking ahead to 2021”, 6 June 2018. Photo by FES India.

The owner of a medium-scale electrical appliances factory, Vimal Gupta, delved into his own experience to narrate how there was widespread confusion in the aftermath of the imposition of the Goods and Services Tax (GST) over its implementation, dealing a blow to small and medium scale industry.

In recent times, the services sector, too, has taken a hit with the advent of automation, a phenomenon by which a lot of roles that were earlier performed by people will be performed by Artificial Intelligence (AI) in the future.

According to a report by McKinsey and NASSCOM, titled Perspective 2025: Shaping the Digital Revolution that was released in February 2017, when automation kicks off, more than half of the IT workforce will cease to exist in the next three to four years.

In this context, Dr Avik Sarkar, Officer on Special Duty at NITI Aayog (a policy think tank of the Government of India) who watches AI and the digital impact on the economy, and Kiran Bhatti, a senior research fellow with the Delhi-based Centre for Policy Research, raised the issue of placing the focus on aligning education with skilling and also, re-skilling every two years.

The government in Delhi is aware of the job crisis, but it struggles to find an easy solution to it as the issue of unemployment gets enmeshed with identity politics.  

Massive protests have taken place in various states of the country—by Jats in western UP, Patels in Gujarat and Marathas in Maharashtra—all demanding reservations in jobs and educational institutions. All these people traditionally belong to agrarian communities and occupy the middle rungs in the caste hierarchy in India. For a long time, they had materially benefited from the green revolution of the early 1960s and felt little need for government jobs. However, with the agriculture sector becoming unprofitable and families staring at mounting debts, these communities have taken to the streets to demand either the scrapping of reservations for the disadvantaged castes, and if that is not possible, then they are asking for similar privileges for themselves. The unrest is a manifestation of the growing anxieties in the well-off castes about their future.

Local governments will have to ring-fence their economies in a manner that jobs are not threatened by big retail companies. 

The matter gains more significance with just a year to go before the next General Elections. The scarcity of jobs has the potential to change the narrative of the politics of the country in a far deeper way than is understood. The takeaway from Tijara was that the job crisis is becoming too serious to be ignored by the government, which needs to increase public spending to revive the infrastructure and the Micro, Small & Medium Enterprises (MSME) sectors that have been the mainstay of job creation in India.

There is also a need to revive the local economy, which has the potential to create a wide range of jobs. Revival of local economies can resist unnecessary automation as well as large retail, which is speedily entering the economy and could threaten millions of mom and pop stores. To prevent that, local governments will have to ring-fence their economies in a manner that jobs are not threatened by big retail companies. Besides, there is a need to democratise new technologies, re-skill the human capital and nurture it so that new opportunities arise out of these new technologies.

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Sanjay Kapoor and Shalini Sharma are with the Delhi-based Hardnews Magazine. For more information on the work by FES in India visit the country office website and follow the FES India Facebook fan page for daily updates.

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