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The persistence of the employment crisis

By Karan Thapar

For the vast majority of us, the economy boils down to a simple matter of employment and jobs. Without one most of us are broke. And nothing shatters self-esteem more than being unemployed. So, this Sunday morning, let’s analyze the budget in terms of the problem of employment and how effectively it’s been tackled.

The Centre for Monitoring the Indian Economy (CMIE), widely acknowledged as the principal authority on employment, says immediately after the lockdown over 120 million lost jobs. By December, when the Finance Minister was preparing the budget, employment was still 14.7 million below pre-Covid levels. Other surveys put that figure at 18 million. However, in January employment increased by 11.9 million. But compared to January 2020 it was still 9.8 million lower.

This hides the fact many who’ve found jobs were forced to accept lower levels of remuneration. Salaried employees were the worst hit. 21 million lost jobs. Within this category, white-collared professionals saw jobs reduced by 31%. The next worst affected were industrial workers. 26% lost jobs.

Dig deeper and the problem of employment has other worrying roots. India’s labor force participation rate hovers around 40%. The global rate is 66%. We’re far behind. It’s even worse when you focus on female labor participation. Official statistics establish its fallen 8% to 23% between 2011-12 and 2017-18. The CMIE puts it even lower at 11%. In comparison, female labor participation in Bangladesh is 30%, in Indonesia 39% and in Thailand 45%. India is the odd one.

So the conclusion is clear: the budget was presented when unemployment is a serious problem and against the historic background of very low labor participation and dismally worrying female labor participation.

Now, what did the budget do about this? Let me quote Mahesh Vyas, the CEO of CMIE: “The Government of India does not recognize any employment problem in the country”, said. “The Finance Minister’s speech contained no specific scheme to help the unemployed or to generate employment directly.”

Let’s start with rural unemployment. The National Rural Employment Guarantee Act (NREGA) is designed to tackle this. But the Finance Minister slashed next year’s allocation by almost 35%. So not only has NREGA’s importance diminished but, as Vyas picked up, Sitharaman “did not mention NREGA in her speech”. That silence is telling.

In interviews, the Finance Minister said the budget’s schemes to promote textiles and infrastructure, particularly roads and housing, will create a substantial number of jobs. But will they? Infrastructure has a long gestation period and its allocations are often unspent or tied up in bureaucratic knots. This is why Vyas says the allocation for roads and housing “is unlikely to make a material difference to employment”. He has a similar conclusion for the scheme to promote textiles. It’s “unlikely to move the needle on employment much”.

Not being an economist, I can’t confirm Vyas’s conclusions. But as our most widely acknowledged authority on employment his doubts and the language he’s used are worth noting. They could be an important note of caution.

What I find inexplicable and politically insensitive is the government’s lack of acknowledgment of the fact 120 million lost jobs last year. Their lives and their children’s futures could have been destroyed. Yet there were no words of sympathy and comfort. It’s almost as if we don’t remember the tens of millions forced to walk back to their villages, their lives decimated, their futures uncertain.

Once again, let me quote Vyas: “The Economic Survey and the Finance Minister’s speech did not recognize, in any manner, the fact that scores of millions of Indians lost livelihoods in 2020-21.” He makes a further telling point. Most people who lost jobs found ways of surviving without help from the government. It seems that will be the case next financial year too.

So, this Sunday, when you read glowing praise for the budget from industrialists and bankers don’t forget the unemployed millions who have found little succor. Many of them can’t afford a Sunday newspaper.

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