The Upsurge of Unemployment in India
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The Upsurge of Unemployment in India

The negative growth in employment in the manufacturing sector between 2011-2020 hampered the GDP despite the promising campaign 'Make in India'.

· 6 min read

Joblessness on the Rise in India - Background Context

After a series of denials and failure to recognise the employment crises in India, the government of India had to face the music of an unabated wide influx of data to the contrary which has now been re-established as misinformation.

To its remorse and disappointment, both pieces demonstrate an insufficiency in understanding the job's market situation.

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NSO’s Periodic Labour Force Survey (PLFS)

Comparing and taking into account the historical data for the period of 2004 to 2014 had a growth rate of 8% per annum and directly created around 7.5 million jobs in various industrial segments (non-farm jobs), the collective job created for the time period 2013-2019 was only around 2.9 million, which is the massive decline, however, on on the other hand, according to the same PLFS data, 5 million individuals were joining the labour force annually.

The NSO formerly mentioned it clearly that the two surveys may provide comparable data; However, they later claimed that the two surveys may not be comparable, which is absolutely absurd and misleading.

Unpaid Family Labour

Returning Home
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  1. The NSO's claim was made firstly between 2017-2018 and secondly, in 2019-2020, the Labour Force Participation Rate (LFPR) and the Worker Participation Rate (WPR) are rising and showing positive signs of improvement in the labour market.
  2. The harsh reality is rise and improvement in WPR and LFPR are inaccurate and misleading. This rise was caused mainly because of the spike in unpaid family labour mostly among women.
  3. Based on PLFS data, the claim, that there was an increase in employment between the years 2017-18, especially in the manufacturing sector is correct.
  4. However, it failed to accommodate the date from 2011-2012 and 2017-2018, clearly mentioning that the employment plunged by 3 million, hence recovery of the employment from the previous downfall is hardly any consolation.
  5. Despite the decorative 'Make in India' initiative, massive encouragement for people to get into the manufacturing sector, MSME funding & reliefs, the manufacturing contributor to the GDP had a steady downfall from 17% in the year 2016, followed by 15% and the to 13% in the year 2020.

Stagnation in Manufacturing Output and Urban Employment

1938 - Unemployment benefits aid begins. Line of men inside a division office of the State Employment Service office at San Francisco, California, waiting to register for benefits on one of the first days the office was open.
Photographer - Dorothea Lange
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  1. Excess_rigidity, hard-headedness in the mainstream manufacturing labour market and stagnant, incompetence labour regulation have created excessive awkwardness for the employers to create any new employment opportunities.
  2. According to the World Bank Report, the Industrial Disputes Act sank the employment opportunities in organized manufacturing by up to 25%.
  3. The stiff employment protection protocol forced the employers, especially from the manufacturing segment to adapt to the capital-intensive modes of production that former cost of the labour relative to the capital.
  4. The consolidated scenario, relative to rigidness in the manufacturing labour market, stiff labour regulation, and stringent employment protection legislation has created a never-ending deadlock situation, making India a biased state in terms of capital intensive manufacturing.

India going through a Joblessness crisis

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  1. The collective total number of new non-farm jobs created between 2013- 2019 was mere only 2.9 million, contrary to these figures 5 million were joining the labour force each year (Periodic Labour Force Survey).
  2. There has been a straight spike and massive increase in unemployment of at least 10 million amid to COVID-19 outbreak, despite the existing 30 million already pushed into unemployment in the year 2019.
  3. The negative growth in employment in the manufacturing sector between 2011-2020 hampered the GDP despite the promising campaign schemes like 'Make in India'.
  4. Contrary to the claim that between 2017-18, followed by 2019-20, the worker participation rate (WPR) and labour force participation rate (LFPR) seems growing, showing improvement in the labour market, however, this rise was caused mostly by increasing unpaid family labour, mostly by women.
  5. MSMEs which are mainly employment-intensive have been hit to the core by the COVID-19 pandemic. This left the masses of non-farm employers feeling jilted and thus does not go well with manufacturing employment generation.

India witnessed the reverse trend to a certain extent relating to progressive industrialization. The jilted of the non-farming employment, forced the labour forces to migrate back to their native states and thus the only mode of survival for them was agriculture and allied activities. As a result, in the year 2020, the workforce in agriculture and allied activities rose from 200 million to 232 million, negatively impacting the rural wages.

Employment in Agriculture and Allied Activities

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  1. In any given situation and scenario the recovery of the urban employment until March 2021, ignores the fact that urban employment hardly captures 1/3 of the collective total employment.
  2. Although agriculture output may have performed above expectation during the COVID pandemic, the free rations from the centre may have reduced and taken the edge off severe distress among the daily wage workforce.
  3. This primarily also ignores the fact that between 2019 and 2020 the utter/complete number of workforce in the farming sector increased from 200 million to 2032 million, negatively impacting rural wages. However, downright fall in the agriculture employment of 37 million during the time period 2005-2012, when the no-farming jobs were on steady growth, 7.5 million annually, resulting in raise in real wages and a declining number of families in financial distress.
  4. This positive structural change continued until the year 2014, the employment and wages in real industrial employment were inversely proportional to the number of poor families. Rising farm employment is a reversal of that structural change.

The issue of New EPFO data needs to look in

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There is an uncertain argument being put forward, in addition, to affirm that organized formal employment is improving citing the fact that the rise in new registration of the employee provident fund over the last two years.

The constraint of EPFO-based payroll date is the lack of particular data on the number of unique existing contributors. Also, the data from EPFO is biased to a certain extent, because employees leave, rejoin and change jobs throughout their career and thus freshly contribute to EPFO enrolment. This continuous revision of data cannot be considered a rise in employment.

There has been a straight spike and massive increase in unemployment of at least 10 million amid to COVID-19 outbreak, despite the existing 30 million already pushed into unemployment in the year 2019.

The Centre for Monitoring Indian Economy (CMIE) reports the unemployment rate has a nose fall from 43% in the year 2016 to 37% in just four years.

Conclusion

  1. The Republic of India needs an all-inclusive rigorous strategic solution to mitigate the unpleasant wave of growth in unemployment. Manufacturing being a considerable share of GDP needs to play a dominant role in solving the situation.
  2. 'Make in India' is a noble initiative from the government of India, it needs to percolate well into Indian minds and once understood will boost the manufacturing.
  3. 'One Size Fits All' is highly impossible and the same principle applies to manufacturing and other industrial activities, thus decentralization of Industrial activities is in need of time, so employment generation happens at the regional level.
  4. Socio-Economical and overall development of the rural region will suppress the phenomenon of migration of the rural to the urban, eventually will depressurise the urban area jobs.
  5. The supporting schemes of Skill India, Gem, Startup India and Mudra Yojana may help in the enhancement of one's skill set and employment generation in every region.