• Why our three biggest job creators are not creating enough jobs?

    • April 13, 2019
    • Posted By : globalcampus
    • 1 Comment

    According to a recent Pew survey, unemployment is one of the key issues in the upcoming elections. The controversial National Sample Survey Office (NSSO) survey data (whose findings are yet to get government backing) states that we lost over three crore jobs in the last six years. It also states that the unemployment rate (6.1%) in 2017-18 stood at a 45-year high.

    Anecdotally, during my travels in India, I do meet youth who are anxious about the situation; many are unemployed and many more under-employed. The huge number of applications for almost any type of government job is another indicator that we have a problem. Unlike inflation, which pinches us all, unemployment hits the unemployed really hard. I think it is fair to reach the conclusion that jobs are an issue in India, especially with the large youth population that enters the workforce every year.

    However, where many experts seem to err is in figuring out the causes for lack of job creation. Making things worse is the election season, leading to a lot of arguments like “it is all Modi’s fault”, or “it is all Congress’s fault”. Unfortunately, none of these are the reason why we have a job crisis.

    If we look at the economy, our GDP comes from three main areas which are also the biggest job creators — agriculture, manufacturing, and services. The first one is seeing fewer jobs because we haven’t undertaken the reforms that were needed a long time ago. Agriculture in India, whether at the farm level or the distribution and retail level, is not sufficiently organized and corporatized. We still have individual farmers tilling their land, which gets divided and sub-divided with successive generations. With few economies of scale, agriculture offers meager returns and is sometimes unviable to the point that farmers are committing suicide. FDI in retail could have given a push to agriculture too. Companies like Cargill and Monsanto have been given a villainous image before they have expanded in India. Are we helping farmers by doing this? Or are we simply preventing modern farming and capital from reaching this sector? Any wonder then that there is agrarian distress?

    The next big sector is manufacturing, which requires nothing less than a revolution to create a large number of jobs. Given the red tape in setting up factories in India, we haven’t seen a manufacturing explosion as China did in the 1990s. Our turn would have come if we had focused on reforms. Remember the Land Acquisition Bill of 2015? There was vociferous opposition to it, with many calling it a ploy to grab land from farmers. The actual land acquired would have been less than 1% of India’s agricultural land, as factories do not need more than that. It could have ushered the manufacturing revolution India is waiting for. The only way to get jobs to the interiors is if there is a factory within easy reach of a village by a factory bus. This will only happen if a factory owner can safely set up a plant. Not every farmer’s child wants to be a farmer. Some just want jobs. Now they don’t have them, because the same people who are shouting about the job crisis now ironically opposed the land bill and did not let it go through.

    Services is one major sector where jobs have grown relatively well in the past decade. However, the best jobs are limited to people from a certain background — fluent English, metro based and a certain pedigree in education. Lack of jobs in services has a lot to do with lack of skill sets in our graduating students. A recent survey revealed that 80% of engineering graduates are unfit for employment. A similar percentage of graduates from other disciplines can’t sit through a basic interview properly. Poor regulation of the education sector and lack of incentive for private capital to invest in education are some of the reasons why we have a workforce that has dreams and aspirations, but little skills to offer in the real world.

    Other macro trends also affect jobs. The rise of technology, for instance. Whether it is online shopping or online travel services, all are causing loss of jobs. There’s little one can do unless we as a nation decide to be at the cutting edge of tech as well.

    To solve the crisis, we need to go into the problems of each sector and carry out reforms that will make the economy grow fast. Anything less than 10% GDP growth (China and other Asian nations have seen such growth rates in the past) will not lead to a spurt in jobs. Blaming an individual or a political party will not solve any job crisis. Being honest with ourselves as citizens and having a reform mindset will. I hope we do what it takes. We owe it to the next generation.

    The Article has been written by Chetan Bhagat.

1 Comment

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