No talk of jobs will not make the issue go away

Before the elections, Prime Minister Narendra Modi, then Bharatiya Janata Party (BJP) president Amit Shah and then Union finance minister Arun Jaitley had offered anecdotal evidence to argue that it was not true that there were no jobs. And as part of their anecdotal evidence, the Prime Minister cited the figures of increased tourist arrivals in the country last year and the building of roads to say that these were generating more jobs. Of course, messrs Modi, Shah, Jaitley did not feel the need to refer to the exact number of jobs that could have been created by increased tourist arrivals and increased road building. They also said that the government was trying to create a solid database for job creation through the payroll data which was launched in September 2017. The latest figure for new contributions to payroll data for the Employment Provident Fund Organisation (EPFO) for 2018-19 is 61,12,223 and for April 2019 it is 10,43,044. The government has been arguing that this is the most reliable data for jobs that gives an accurate picture. There are problems with this because this is but a small segment of the total jobs in the country and the actual workforce that is employed in the formal and informal sectors.

Quite clearly, the number of jobs being created is not large enough to the proportion of the supply of those eligible to join the workforce and the number of jobs available in the market. The government is aware of it, and finance minister Nirmala Sitharaman has announced measures like allowing foreign companies to set up manufacturing units in India as part of the Make In India mission that could create some jobs in the country. The other announcement she made in the Budget speech was that of skilling people keeping in mind the demand for workers in advanced economies where there is a dip in population growth and there are not enough workers, as well as training people in advanced areas like robotics and Artificial Intelligence (AI).

Mr Shah had talked of self-employment as a way of dealing with the jobs problem, making it evident that the government is not promising jobs. It is a fair enough stance reflecting the new and pragmatic economic philosophy of the right-wing BJP.

Mr Modi and his colleagues in the government have been cleverly avoiding referring to the jobs issue. BJP politicians seem to subscribe to the view of 18th century English philosopher, Bishop Berkeley, who argued that things cease to exist once you stop seeing and thinking about them. Team Modi is following the Berkeleyan prescription of not speaking about the jobs problem and because you do not speak about it, it ceases to exist. The Opposition leaders constantly refer to the fact that unemployment is the highest in 45 years, though in actual percentage terms it is hovering at around 6.5 per cent. That is indeed a relative figure and does not convey the enormity of the problem as it exists today.

Full employment remains an economic idyll but the issue of job creation cannot be thrown out of the window because one can never attain it. Governments can feel happy if the percentage of unemployment is kept down, if not done away with. Unlike in advanced economies, India does not have an unemployment dole of any kind. The dole indicates the actual number of unemployed. The employment exchanges of the 1960s, which were so symbolic of the so-called socialist India have been relegated to economic archaeology. So we do not even have the number of unemployed even in a generalised sense.

The economic statistics in India are highly unsatisfactory, however much those in the government — ministers, officials and economists — may want to defend it bravely and sincerely. There is acute awareness in the government itself for the need to improve the accuracy of statistical information. The Modi government had ducked the issue of the numbers of jobs created saying that the existing methods were not satisfactory, and therefore they have created the payroll data. Over a long period, the payroll time series could turn out to be useful, but the problem of how to measure the job market remains unresolved. This uncertainty is of huge help to the government of the day because they can always get away with vague assurances and policy announcements.

One way of tackling the question would be to see the growth rates of the economy. It should be possible to estimate how a certain growth rate should be able to sustain a certain number of jobs. The higher the growth rate, greater should be the number of jobs. And this can be disaggregated in the growth rates of specific sectors, including infrastructure projects. The seven per cent growth rate of the economy in the last five years seems to be insufficient to create more jobs. Economists and commentators have been talking about “jobless growth”, but that can only be used to nail the government of the day. What is needed is the granular detail of the number of jobs fuelling a specific growth rate.

Mr Modi’s fond belief that if India becomes a $5 trillion economy there would be more jobs could make sense, but the Prime Minister and the government should show more courage in speaking about the jobs issue without the temptation to score brownie points. The temptation to cite marginal increases as reflected in the payroll data should be desisted. There is a need to acknowledge that it is a bigger problem and that the government along with other stakeholders is addressing the issue. It is bad management to create a constant feel-good mood when prickly problems are rearing their heads all round. The government would want to obfuscate, but others — economists working in state-funded public universities — should take ground zero surveys to get the real picture. It is worth displeasing the powers that be.