Across the Aisle: The case of the missing jobs, writes P Chidambaram

Has the number of jobs in Indian firms that employ 10 or more persons increased since 1947? That is what we call ‘a no brainer’. The answer is yes. Amend the reference year to 2013-14. The answer will still be yes, unless the economy had been devastated by war or famine or natural calamities. A ship on a course, even without a firm hand at the wheel, will, under normal circumstances, sail forward.

The real question is not whether the total employment has increased since 2013-14, the last year of the UPA government. The BJP promised to create 2 crore jobs a year. In seven years, their ‘deft’ management of the economy ought to have created 14 crore new jobs in the formal and informal sectors, but it did not.

How many jobs?
A few days ago, the Ministry of Labour and Employment released a report on a survey of firms employing 10 or more workers in nine sectors that account for 85 per cent of the total employment (the formal sector). The report concluded that total employment stood at 3.08 crore as against 2.37 crore in 2013-14 (Sixth Economic Census), that is an increase of 71 lakh jobs in seven years. Extrapolating the number to cover other sectors, the increase would be, at most, 84 lakh jobs. The report appears not to have covered the informal sector or the farm sector. The report claims “most impressive growth” ranging from 22 per cent (manufacturing) to 68 per cent (transport) to 152 per cent (IT/BPO) — but, remember, all of this adds up to only 71 lakh jobs!

Since the government has discontinued the Periodic Labour Survey, we are compelled to look to other sources. The data is important for, to quote the government’s words, “evidence-based policy making and statistics-based execution”.

Other Credible Data
The most credible is the employment-unemployment data gathered and published by the Centre for Monitoring Indian Economy (CMIE). In a short note, Mr Mahesh Vyas has summarized the essential conclusions of the data at the end of the third week of September 2021. I have tried to capture them in a Table:

The CMIE is right when it says that “India’s recovery from lockdowns of Covid-19 has been swift, partial, exhausted…”. Mark the word exhausted. Boasting of any kind of recovery — V or any other alphabet-shaped — misses the crucial point that unless we reach the level of total employment that was achieved in 2019-20, and exceed that level, the so-called ‘recovery’ is illusory.

People must have jobs and the incomes that go with jobs. Any economic ‘recovery’ that does not restore the old level of jobs, and does not exceed that level, is meaningless to the people. Technology, new machines, new processes and Artificial Intelligence can bring growth, but if that growth does not restore old jobs or create new jobs, we have a huge problem at hand. The government has stubbornly refused to acknowledge that India has, indeed, such a problem; much less is it willing to take measures to deal with that problem.

Shrinking Force, Sliding Rate
The shrinking of the labour force indicates another serious problem. Both the labour force participation rate (LFPR) and the employment rate in August 2021 are significantly lower than the corresponding rates in February 2020 (see Table). The logical conclusion is that a significant number of people have withdrawn from the labour market (i.e., stopped looking for jobs) and the number of people working (employed) has also fallen. Unless these two ratios are reversed, there is no way to rapidly double the size of the GDP or outclass bigger economies like Germany or Japan.

The CMIE has also calculated the net cumulative increase in total employment between September 2020 and September 2021: it is a measly 44,483. Jobs were, and are, lost; new jobs are created; but if the net increase over 12 months is just 44,483, what does it say about the management of the economy and the pompous claims of the ministers and economic advisers? Mr Vyas observes, pertinently, that this “indicates a premature exhaustion of the recovery process. This is serious because while the creation of additional jobs has stalled, the flow of additions to the stock of working age population continues”.

There are more depressing conclusions if we subject the data to an analysis based on gender; or look at the numbers through a rural vs urban lens; or examine the ‘quality’ of the jobs. The agriculture sector has been the saviour. It absorbed additional labour of the order of 46 lakhs between March 2020 and August 2021, but rural India lost 65 lakh non-farm jobs during the same period. People shifted from non-farm to farm jobs, but this may be only disguised unemployment.

I wish the Prime Minister will address the issues of joblessness and jobs in his next Mann ki baat. Let him throw away the sanitised and summarised reports of the Ministry of Finance and talk to real people who have lost their jobs and young people who are desperately looking for jobs. They may tell him some bitter truths.