Youth in India faces a massive job crisis, government must act now

The country needs to generate one million jobs a month to meet the demand.

 |  The Bigger Picture  |  4-minute read |   27-02-2017
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A great deal has been spoken about India’s demographic dividend. By 2020, it is said, India will become the youngest country in the world, with its population’s median age at 29. That means a growing working age population which can purchase goods and services, and a growing middle class. China, by contrast, will have a population with a median age of 37.

But the reality for a poor developing country like India is that the working age population must have jobs and education that will provide them jobs which will give them a reasonable income.

Massive job demand

The problems achieving this goal are obvious. At 142, India remains near the bottom of the ease of doing business list and lags in the proportion of manufacturing in its GDP mix. Economic growth has been weak and has been further weakened by demonetisation. Private sector investment is just not taking place and corporate earnings are down.

India needs to generate one million jobs a month to meet the demand, but according to the government’s Employment and Unemployment Survey, 2012 and 2015, it produced 5 million jobs, a deficit of 29 million. Employment was inadequate for women, and even those that had jobs often had low quality ones such as labourers with no regular income.

Official figures show that after witnessing a slight uptick of 0.5 per cent in 2014, employment creation saw a slump of 67 per cent in 2015. The figures for the second quarter of 2016 indicate that in eight key sectors of manufacturing— construction, trade, transport, accommodation & restaurant, IT/BPO, education and health added just 77,000 jobs in the April-June 2016 period.

The government continues to speak bravely, if somewhat rashly on the issue. At a press conference earlier this month, the Union Minister for labour and employment claimed that the Union government would ensure jobs for 50 million people in the country by 2020. Given the trends outlined above this target hardly seems feasible, considering it means producing a little more than 10 million jobs per annum.

Clearly, the big danger is that the demographic dividend is becoming a demographic nightmare. This has two features— large number of people without jobs or having marginal employment and a large number of young people who have gone through the educational process, but have degrees and qualifications that simply do not provide them with the skills to hold down a good job which, of course, as we have seen from the figures above, are just not being created.

Political manifestation

This results in frustration and anger and is manifested in a variety of different ways. You can be sure that whether it is the stone pelters in Kashmir, Jat agitators of Haryana, Marathas marching in Mumbai or Hardik Patel and his patidars — all in varying measure — are a result of this joblessness.

The government has sought to address the problem through special schemes and its “Make in India” campaign. Unfortunately, outcome of the schemes like the Pandit Deen Dayal Upadhyaya Gramin Kaushalya Vikas Yojna and the Prime Minister’s Employment Generation scheme have been disappointing. They have created just 1,10,000 jobs in two and half years of the Modi government. In fact, the one that has done well is the one the government wanted to squeeze, the Mahatma Gandhi Rural Guarantee Employment (MGNREGA) scheme.

Figures speak

The problem does not lie with the Modi government alone. Manufacturing as a share of the country’s GDP has remained flat at a little over 15 per cent in the past decade. But it was the Modi government that sought to give the big push to change things through its Make in India scheme. To start with, the steps taken by the government to ease doing of business and the PM’s foreign tours helped FDI to jump to $ 45 billion in 2015-16, an all time high.

mgnrega_022717101135.jpg The Union Minister for labour and employment claimed that the Union government would ensure jobs for 50 million people in the country by 2020. [Photo: Indiatoday.in]

But looked at closely the figures revealed that after a record jump of $ 9.6 billion FDI in 2014-2015, FDI in manufacturing actually fell in 2015-16 and the per centage of FDI flowing to manufacturing fell to 23 per cent in 2015-16 from the figure of 35-40 per cent in the previous four years. FDI was indeed flowing, but to the services sector which did not generate the kind of jobs that manufacturing does.

Instead of focusing on the hard grind to promote manufacturing and hence jobs—through easing land use and labour laws and pushing private and public investment to build India’s infrastructure, the BJP is slipping back to a barely masked divisive agenda to win elections. The danger is that if the situation does not improve we will see more of the same in 2019 when Modi is up for re-election.

(Courtesy: Mail Today)

Also read - Is the ‘highest ever MGNREGA allocation’ the biggest sham of #UnionBudget2017?

Writer

Manoj Joshi Manoj Joshi

Distinguished Fellow, Observer Research Foundation.

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