Where are the jobs? Unemployment explained in 10 charts

India’s economy has grown steadily over the years, and one might hope that the progress would boost employment in the country. A recent analysis from Azim Premji University, however, suggests we are witnessing a 'jobless growth'.

In his four years as prime minister, Narendra Modi, in popular perception, has been extremely successful in garnering continued support from the masses, according to multiple polls. Several reasons can be attributed to his meteoric popularity—including the whopping Rs 4,343.26 crore spent on pro-Modi advertisements. But from the day Modi took office, the number one criticism of his government has concerned India’s growing unemployment crisis.

Data on the questions around unemployment in the sixteenth Lok Sabha’s question hour reveals more than 500 entries, reflecting the concern of the nation. Modi himself was on the receiving end of many jokes when he claimed that roadside hawkers earning Rs 200 a day by selling ‘pakoras’ (fritters) are “employed.”

Experts have repeatedly disputed data on unemployment. When a study published by Pulak Ghosh and Soumya Kanti Ghosh this past January—widely quoted by pro-Modi officials—claimed that the government created more than seven million formal jobs annually, economists and scholars denounced this figure as miscalculated. The government hasn’t made access to data any easier: in (year), the Centre officially discontinued the NSSO-EUS, causing an information blackout on employment data post-2011-12.

“Denial is not just a river in Egypt,” mused ecological economist Aseem Srivastava at a recent panel discussion in Bengaluru. Srivastava spoke on the panel with Mahesh Vyas, Managing Director and CEO of the Centre for Monitoring Indian Economy, and Amit Basole, a professor at Azim Premji University. Last month, Basole authored a report called the “State of Working India 2018,” which explains India’s job crisis and suggests policy solutions.

While economic growth corresponded with higher rates of employment in the 70s and 80s, that all started to change in the 90s. Now, GDP may be booming, but the job market isn’t. A 10 per cent increase in GDP now results in less than 1 per cent increase in employment. Open unemployment is now over 5 per cent overall, and a much higher 16 per cent for youth and the higher educated.

Unemployment is now at 5 per cent nationally, with a whopping 16 per cent among youth and the higher educated. As seen above, this change is particularly severe in the northern states.

Although the minimum salary recommended by the Seventh Central Pay Commission (CPC) is Rs 18,000 per month, a large majority of male (82 per cent) and female (92 per cent) workers earn less than Rs 10,000 per month. Nationally, most households (67 per cent) reported monthly earnings of up to Rs 10,000 per month in 2015.

One crore rupees of fixed capital in organised manufacturing could only support 8 workers in 2016. Back in 1983, that same amount of money supported 90 jobs. The rapid fall has subsided in the last decade with some growth in employment and wages.

Contract workers are nearly 30 per cent of all workers in organised manufacturing. Studies show that contract workers earn a fraction of the wages of permanent workers. Labour laws are also being subverted by deliberate under-reporting of workers.

Labour productivity in organised manufacturing increased by six times over the past three decades, but wages increased by only 1.5 times.

Surplus industries continue to account for more than 50 per cent of the service sector. Meanwhile, "new" industries are continuing to grow.

Female workers remain concentrated in few industries, such as textiles and garments, tobacco, education, health, and domestic services. Women remain underrepresented among senior officers, legislators, and managers (only 7 per cent in 2015). Although the gender pay gap persists, it’s improving over time. Now, women overall earn 65 per cent of men’s earnings.

Female labour force participation has declined over the past two decades, despite a fertility rate decline and an increase in the years of schooling among females. Female labour force participation is greater in Bangladesh, Sri Lanka, Ghana, Cambodia, Congo, Kenya, Nigeria, and other nations. Per the International Labour Organization database, India ranks 121 out of 131 countries in this respect.

Scheduled castes and scheduled tribes are over-represented in poorly paid occupations. Scheduled castes earn 56 per cent of upper-caste earnings, scheduled tribes earn 55 per cent of the same, and other backward classes earn 72 per cent.

Proposed solutions

The authors conclude the report with a discussion of potential policy solutions, which they admit are just "as well-known as the problems." The solutions focus on increased government spending on public services.

In agriculture: Increase public investment in the form of irrigation, extension services, local storage and value-addition capacity; increase outlays for MGNREGA; provide direct income subsidies; and create more social infrastructural investment in rural areas.

In manufacturing: Create non-farm jobs in rural areas; rethink the industrial craft sector as dynamic, not dying; and consider wage subsidies.

In services: Invest in "universal basic services" (UBS) as an alternative to "universal basic income" (UBI). This entails investment in public healthcare, education, housing, security, transport, and utilities.

Macroeconomic considerations: Don't over-emphasize the deleterious effects of debt.

Criticism of the report

The Azim Premji University (APU) report has received some criticism for its use of employment survey data. Pulak Ghosh and Soumya Kanti Ghosh, the economists who authored the above-mentioned report on the alleged creation of seven million new jobs, criticized the authors' reliance on the Quarterly Employment Survey (QES).

"We reiterate here that employment surveys unless properly and scientifically designed, will give wrong results," they wrote last week in The Print.

Instead, Ghosh and Ghosh recommend sourcing data from payrolls.

The authors of the APU report responded to the challenges raised by Ghosh and Ghosh, arguing that the APU report supplements the QES data with several other sources.

"Therefore to say, as Ghosh and Ghosh do, that our report ‘uses the QES as its basis’ as if this is the only data source used, is simply false," the authors wrote.

The authors also critiqued Ghosh and Ghosh's use of payroll data, writing that "these databases are yet to stabilise."