IASbhai Daily Editorial Hunt | 11th Nov 2020
Year from now you may wish you had started today.– Karen Lamb
EDITORIAL HUNT #236 :“Causes of Unemployment and the Pandemic | UPSC”
Santosh Mehrotra | J.K. Parida
Causes of Unemployment and the Pandemic | UPSC
Santosh Mehrotra was formerly Chair of the Centre for Labour, JNU, and J.K. Parida, a labour economist, teaches at the Central University of Punjab
Employment, finally an election issue
Several myths persist about job creation, which can misguide policymaking
SYLLABUS COVERED: GS 3 : Unemployment
What are the causes of unemployment in India. Examine the myths and realities of labour workforce -(GS 3)
- Types of unemployment
- Rising unemployment
- How did we get here?
- Myths and reality
- Way Forward
TYPES OF UNEMPLOYMENT
- FRICTIONAL UNEMPLOYMENT : This is unemployment caused by the time people take to move between jobs, e.g. graduates or people changing jobs.
- STRUCTURAL UNEMPLOYMENT : This occurs due to a mismatch of skills in the labour market it can be caused by:
- OCCUPATIONAL IMMOBILITIES : This refers to the difficulties in learning new skills applicable to a new industry, and technological change.
- GEOGRAPHICAL IMMOBILITIES : This refers to the difficulty in moving regions to get a job.
- TECHNOLOGICAL CHANGE : If there is the development of labour-saving technology in some industries, then there will be a fall in demand for some types of labour which have been replaced by machines.
- STRUCTURAL CHANGE IN THE ECONOMY : The decline of the coal mines due to a lack of competitiveness meant that many coal miners were unemployed.
- ECONOMIC RETARDATION : The economy had been slowing for nine quarters prior to the COVID-19 outbreak.
- UNEMPLOYMENT DATA : It did not release the National Sample Survey (NSS) on employment until a week after election results were announced.
- ADVERSE IMPACT : The pandemic and the poorly planned nationwide lockdown caused the economy to contract severely and livelihoods to disappear.
- HIGH MIGRATION NUMBERS : U.P. and Bihar have a disproportionately high number of out-migrants.
HOW DID WE GET HERE?
- GDP TRAJECTORY : For nearly 10 years after 2003, GDP growth averaged more than 7%per annum.
- NON FARM JOBS : Non-agricultural jobs in India were generated at a rate of 7.5 million per annum.
- CONSTRUCTION LABOURS : New non-agricultural jobs pulled over 5 million per annum out of agriculture and into construction and other work.
- DEMONETISATION : Demonetisation and the reluctance to competently handle the non-performing assets crisis sent the economy into a downward spiral.
- JOBLESSNESS : Post-2013, people are still leaving agriculture, but non-farm sector jobs are growing more slowly.As a result, joblessness has grown.
- EDUCATED UNEMPLOYMENT : The number of unemployed educated youth and a disheartened labour force increased to unprecedented levels by 2018.
- COVID-19 IMPACT : The COVID-19-driven collapse of the economy and jobs followed this year.
MYTHS AND REALITY
- ELECTION GIMMICK : Unfortunately, debates on youth unemployment did not attract much political/electoral attention until the election campaign.
- NEW JOBS CREATED : Only about 7% of the total employment is created in the government, including the public sector undertakings (NSS, 2017-18).
- SECTOR WISE JOBS : Of the total 465 million jobs in India, about 260 million are created in non-farm (in the industry and services) sectors, of which only 34 million are created in the government sector.
- VACANT POSTS : However, simultaneously, measures are needed to fill the vacant government posts.
- MASS DECLINE IN GOVT JOBS : There has been a massive decline of government sector job growth from 1.3 million per annum from 2005 to 2012 to only 0.4 million per annum from 2012 to 2018.
- FAILURE OF MUDRA SCHEME : It is clear that despite the government’s measuresyouth engaged asself-employed(MUDRA) declined from 81 million to 63 million between 2005 and 2012.
- SMALLEST LOANS BYPASSED : This is despite 95% of MUDRA loans being in the smallest Shishu category.
- LABOUR DEMAND CREATION : National Education Policy 2020 is likely to increase the supply of vocationally trained youth but it will have no impact on the labour demand conditions of the industries.
STARTING WITH SCRATCH
- BOOSTING SMALL SCALE INDUSTRIES : With appropriate support, these enterprises can grow into small and then medium enterprises.
- FOCUS : The health and education sectors and the police and the judiciary have too few government staff.
- ALLOCATION OF SEATS : These are sectors where the new government can expand government jobs.
- FILLING THE VACANCY : State and Central, the share of Groups C and D jobs is an overwhelming 89%, leaving 11% of jobs for Groups A and B.
- LOCAL INDUSTRIES : Supplementary measures should also include development of infrastructure and local industrialisation are necessary.
- RESOURCE ALLOCATION : Post-pandemic, most States will need to increase spending on public health.
Unemployment is a key economic indicator. High employment rates can be symptomatic of a distressed economy. Conversely, very low unemployment rates can signal an overheated one.
SOURCES: THE HINDU EDITORIAL HUNT | Causes of Unemployment and the Pandemic | UPSC