From UPSC perspective, the following things are important :
Prelims level : Not much
Mains level : Paper 2- Job creation by the government
The government recently announced that 10 lakh government jobs will be provided over the next 18 months on a “mission mode”.
- The government recently announced it would recruit 10 lakh people in “mission mode” over the next one-and-a-half years.
- The announcement came at a time when the unemployment rate for youth (aged 15-29 years) in urban areas has been hovering at over 20 per cent for the last several quarters.
- According to the Quarterly Bulletin of Periodic Labour Force Survey (PLFS), the youth unemployment rate, according to current weekly status, stood at 20.8 per cent in urban areas during October-December 2021.
- The annual PLFS report too shows that the overall youth unemployment rate, according to usual status (ps+ss), was at 12.9 per cent — 18.5 per cent in urban areas and 10.7 per cent in rural areas — during July-June 2020-21.
Three takeaways from the announcement
- One, the creation of employment is indeed a problem and can no longer be hidden from the public discourse.
- Two, the private sector, especially modern sectors such as the service and manufacturing sectors, which are dominated by multinational companies, have not created many jobs.
- Even if the Information Technology sector or the modern gig economy have created jobs, these are either very high-skilled jobs or low-skilled ones.
- Three, the government in the Nehruvian scheme of development occupied an important place in the labour market.
- The government is now forced to step in as persistently rising inflation, unemployment and underemployment threaten to politically affect it.
Employment data and issues with it
- Government is at present relying on the Employees’ Provident Fund Organisation/National Pension System/Employees’ State Insurance Scheme registrations and exits as indicators of the formal labour market.
- This could be misleading as companies may be increasing registrations to cross the threshold to become eligible to fall under any of these.
- Formalisation: Hence, this might be more a case of formalisation rather than employment generation.
- Second, media reports show that more than 85% of those aspiring for those 10 lakh jobs could be consumed by existing vacancies in Central government departments (8,72,243).
- The decline in PSU jobs: Third, 241 central public sector enterprises (CPSEs) have been shedding jobs in recent years.
- The decline in quality of jobs: Even though the labour force and workforce participation rates have increased marginally, there is a decline in the quality of jobs, viz. there is a rise in the unpaid segment of the self-employed and a rise in the share of the agricultural sector in total employment over the last three Periodic Labour Force Surveys (43% to 47%).
Role of the private sector
- The private sector creates jobs in response to market forces and while taking into consideration radically altering technological developments.
- We cannot avoid placing the government at the centre of employment creation beyond a certain point.
- Projects in the modern private sector consume a lot of capital to generate very few jobs.
- For instance, recently, there was a report that the Adani Group has invested ₹70,000 crore (or ₹700 million) in Uttar Pradesh to create merely 30,000 jobs.
- Foreign Direct Investment, which at any rate is highly capital-intensive, goes mostly into the non-manufacturing sectors.
- The government’s role in employment generation has entered into popular discourse and discussions on policy formation.
- The government should play a significant role soon.
- Government as principal employment generator: The government should re-establish its role as the principal employment generator through jobs in its ministries and CPSEs and through assured employment generation programmes like MGNREGA.
Employment is not merely about numbers and growth figures. We need to concentrate on enabling the creation of decent work and a sustainable labour market to which India is committed as a member of the United Nations and the International Labour Organization.