Growing economy, burgeoning joblessness

17 March 2000
The Times of India

Growing economy, burgeoning joblessness

By Siddharth Varadarajan
The Times of India News Service

NEW DELHI: When a peon at the Institute of Economic
Growth approached Prof B.B. Bhattacharya for
help in applying for a permanent post with the Delhi
Municipal Corporation, he was only too glad to provide a
reference.

The peon returned later in the day looking
dejected. Four thousand applicants had turned up to fill the
40 posts advertised. ``There was complete chaos and
fist-fights broke out. No interview could take place and
the police had to be called to clear everyone away,''
said Bhattacharya. A small incident, perhaps, but one the IEG
economist considers symptomatic of an unemployment
situation that is getting ``explosive''. For, despite the
economy growing at five per cent every year for the better part
of the past two decades, job creation has lagged far, far
behind. Jobless growth', that bane of Europe, has reached
India in right earnest.

In the Rajya Sabha on Thursday, Prime Minister
Vajpayee agreed that joblessness had reached ``really
alarming'' levels. Blaming rising population levels and
the induction of new technologies for unemployment, he said his
government had a plan to create ``one crore new jobs
every year''.

Prof Bhattacharya is not impressed. ``How are
they going to create these jobs? Can Vajpayee force the
private sector to employ people? In the past, too,
governments have pretended to do something but nothing has
happened.''

Jayati Ghosh of JNU is equally dismissive,
arguing that unless public expenditure on the social sector
and infrastructure in rural areas increases and
policies hurting small-scale industries are reversed,
employment will not increase.

But just how bad is the employment scenario in
India? According to the Planning Commission, the
growth rate of employment in the organised sector has
declined from 1.44 per cent in 1991 to 0.46 per cent in 1998, the
last year for which data is available. Officially, the
national unemployment rate is around 2-3 per cent. But
since, as ILO economist Ajit K Ghose has argued in a
recent study, unemployment in India is a luxury most people
cannot afford, underemployment and part-time
employment should also be taken into account.

Based on data up to 1993-94, he concluded that
the "effective rate of unemployment'' was around
12 per cent and that the rate had not fallen despite the
economy growing at a faster rate. "One striking
fact,'' he notes, "is that the incidence of poverty is far higher
than the rate of unemployment, however measured, i.e. many of
those counted as employed are engaged in very low
productivity and low- income activities.''

According to Jayati Ghosh, the latest sample
survey data shows that the situation has since got even
worse. One clue: non-agricultural employment in rural areas,
which had earlier begun to increase, has now registered
an absolute decline. In urban areas, she says, the
elasticity of employment is close to zero, i.e. higher
output is not leading to more jobs. And finally, there has been a
big increase in casual labour and a fall in the labour force
participation rate.

Bhattacharya identifies the lack of investment
in human capital as one of the causes of the
unemployment crisis. "In East Asia, growth originated from improved
productivity, which in turn resulted from a better educated
and healthy workforce,'' he points out. "Here, the
government thinks benefits will trickle down from the top. There
is no attempt to invest in social infrastructure.''