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India’s season of job losses

India’s season of job losses
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First Published: Thu, Feb 05 2009. 11 05 PM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Thu, Feb 05 2009. 11 05 PM IST
Around half a million workers have lost jobs in recent months, according to the labour ministry.
That is official confirmation of what the anecdotal evidence has already told us—that the export slowdown in employment-intensive businesses such as textiles and jewellery making has led to growing unemployment.
Illustration: Jayachandran / Mint
The number needs to be put in context. India’s total labour force has at least 500 million people and only one out of every 10 of them is employed in the organized sector. The other nine are in low-wage and low-productivity jobs in the rural and urban unorganized sector, where job losses are a permanent reality.
There are two points of comparison here: The International Labour Organization says that globally 198 million people will be unemployed this year, an increase by 18 million over 2007. China has already lost around 20 million jobs in its export industries and could be sitting on a political powder keg as these disgruntled millions go back to their villages.
None of this, however, means that India should not worry. There are both social and political reasons why those who are losing jobs in this downturn deserve attention, as job losses may mount in the coming months. What can the government do?
India does not have much of a social security net. The government’s most prestigious social security scheme—the National Rural Employment Guarantee Scheme—does not cover urban workers. Public finances are already under strain thanks to the profligacy of the Manmohan Singh government during the boom years, when record tax revenues should have been used to slash the deficit and create space for a massive fiscal stimulus during a downturn.
There are two indirect solutions worth considering. First, industries that are employment-intensive should be moved ahead in the queue of distressed industries seeking government help. It would make more sense to lend a helping hand to textile companies rather than airlines.
The second indirect way to help struggling workers is to be more wary of food inflation. Though the inflation rate tracked by the financial markets is falling—and we may perhaps even see mild deflation later this year—many of the prices of items that make up large chunks of working-class household budgets are still rising very rapidly. Food is the most obvious example.
There is a danger that higher job losses will provide ammunition for various business lobbies to get more money out of the government, to shield shareholders rather than workers. There should be a clear deal that money handed out to help struggling sectors is used to protect jobs rather than shareholder wealth.
How can workers who have lost jobs be helped? Tell us at views@livemint.com
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First Published: Thu, Feb 05 2009. 11 05 PM IST