Near jobless growth in India: An anomaly or an outcome of economic reforms

1. What is a jobless growth?

2. Why is it happening?
3. Is it due to economic reforms?
4. Is our policy wrong?
3. What are its impacts?
4. What are we presently doing about it?
4. What can we do to improve?
5. Conclusion.

In 2016, a job advertisement had appeared for the position of peon in one of the
government departments of Uttar Pradesh. Like any other vacancy, this recruitment
could have been a normal affair, yet it was not so. Astonishingly, there were 23 lakh
applications for the post with less than 400 vacancies. What was more unfortunate fact
was many applicants were engineering graduates, PhD holders and well educated
students. This incident remarks the presence of unemployment in an economy which is
being hailed for an impressive growth in GDP despite global slowdown. Thus, jobless
growth is an economic phenomenon wherein while there may be a growth in economy
but the employment growth is either steady or is dwindling. India, has been witnessing
this kind of economic growth in the past few years.

Before independence, as most of the economy was highly dependent on agriculture,

people could find work in fields although disguised employment also existed. Post
independence, as the government went ahead with Five year plans to foster economic
growth and raise employment among citizenry, manufacturing was made the hallmark of
development. However, post 1991, after the liberalization, India opened up its economy
to the world. This move however, has not made any impact in bringing the much
needed growth in the number of jobs, though the economy started looking up and
achieved an impressive growth of more than 7% in GDP. Unemployment in India has
been a huge challenge for all governments since independence. The reasons, in the
present day, are due to many policy decisions, which are now in the favor of
globalization.

Jobless growth exists due to two important factors. One of them is the employability
problem. While, it is easier for services sector industry to recruit skilled people for white
collared jobs like those of IT engineers, English speaking call centre jobs or even banks,
yet transforming peasants into factory workers cannot happen without skilling. Besides,
the level of learning has also been found to be less than satisfactory. A survey by
Pratham Education Foundation noted that many students of class 5 couldnt carry out
basic addition or subtraction or read a class 2 level text. While the enrolment in primary
education has improved, yet the dropout rates still remain high. This was also reflected
in 2015 Economic survey, which observed that 6.8% of persons aged above 15 had
received vocational training, is also a reminder of the large dropout rates. Another
problem that exists with the educated unemployed is that of the level of the skills.
Industries have often remarked that most of the graduates remain low at skills, ranging
from the level of technical expertise to fluency in English, and are unemployable. While
the number of engineering colleges post liberalization shot up, the quality of learning
didnt keep pace with the needs of the industries. The reason for this stands the
Government spending in education, which has remained less than the 6% as
recommended by the Kothari commission way back in 1966.

Another factor stems from the economic reforms that have catapulted India to growth.
Economic reforms brought multinationals and many investors to India. However, their
contribution didnt improve the job growth scenario. The ease of doing business,
liberalization of FDI have no doubt brought much needed development and economic
growth. However, these initiatives tend to attract investment only in sectors which sell
their products to white-collar middle class. Besides, they have not created the much
needed manufacturing workforce. This also affects SMEs which are more labor
intensive and contribute more than 40% of GDP. Due to the economic reforms, while
the banking sector has found it easier to lend money to large corporate, SMEs still find it
difficult to raise credit even when there is mandatory priority sector lending for them.
The economic reforms also have propelled Indias economic growth a service sector
based one, directly from agriculture, without the development of manufacturing sector.
As the service sector is more skill based, a large population short of skills, has been
pushed into the informal sector, with lower pay and social security. Jobless growth is
therefore another outcome of the economic reforms, which have pushed informalisation
of labor or left educated as unemployed. Corporates with deep pockets have also
brought in automation which have resulted in lesser employment either due to the lower
level of skill or due to lesser requirement of manpower.

Thus jobless growth is an outcome of a mix of policy decisions as well as economic

reforms. It needs a holistic approach. On one hand, there is a need to improve
qualitative learning which needs investment in education, rather than leaving the sector
alone for private sector. On the other hand, skilling is required to produce an
employable population. Ministry of Skill Development and entrepreneurship has started
the Skill India program, PMKVY programmes for skilling Indian youth to improve their
skills and make them industry ready. Vocational training is an important skill and it is are
playing a leading role in this regard. Another area, that needs to be looked into is
entrepreneurship. Socially Indians are not known to be good risk takers and which is
why emphasizing the spirit of entrepreneurship is important right at the school level.
ATAL Innovation Mission and ATAL Tinkering labs can help in raising promoting
innovation among young children so that they aspire to be job givers rather just job
seekers. Start up India and stand up India can provide handholding to budding
entrepreneurs. Apart from these, the most important requirement is improving
government spending in education and framing a national policy on education which
focuses on better learning outcomes so that skilling starts right at the academic level.
Soft skills must also be made a part of the curriculum with focus on rural students.
Economic reforms are expected to bring in FDI which must also be utilized for
technology transfer and Make In India campaign which has the potential to improve the
way reforms generate employment.
Jobs are the only sense of social security for a India with a large middle and lower class
population. Economic reforms have the capability to improve the infrastructure and
promote development in India. However, making them inclusive and as an employment
generator needs a policy which focuses on the countrys vast human resources capable
of reaping economic dividends if provided with an opportunity to get skilled as well as to
start on its own.