New Delhi: The greatest challenge that the Narendra Modi-led government faces in its second term is that of job creation. Several surveys over the past year have indicated that this is a major concern among voters.

The second round of the YouGov-Mint Millennial Survey conducted in early 2019 showed that most young voters, across party affiliations, were worried about jobs and unemployment.

The evidence on jobs so far presents a mixed picture. The results of the Periodic Labour Force Survey (PLFS) show that unemployment levels were at an all-time record high of 6.1% in 2017-18.

At the same time, the share of workers with a regular job (23%) was also higher than that recorded in any other official jobs survey in the past.

How far the PLFS survey results are comparable with previous employment surveys remains a matter of debate among economists and statisticians, with the report itself not providing a clear answer.

Nonetheless, evidence from other sources suggests that there might have been a modest rise in the share of workers with a regular job over the past few years.

As a Mint analysis (‘What company reports tell us about job creation’, 20 Nov 2018) based on data from annual reports of companies and from the Prowess database of the Centre for Monitoring Indian Economy (CMIE) showed, growth in corporate jobs picked up pace since 2016-17.

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The pace of job creation is, however, still lower than what it was during the boom period (2004-08) under the first term of the United Progressive Alliance (UPA) government, but it marks a recovery compared to the sluggish first half of the current decade.

Data from the Annual Survey of Industries (ASI) point to similar trends in factory job growth.

Thus, if we understand jobs to mean regular salaried work, jobs have not really shrunk in the country.

However, this does not mean that there is no jobs challenge in the country. The first challenge is that the proportion of regular salaried jobs is still small, with barely two among 10 people in the workforce having regular employment.

Growing that pie is important at a time when aspirations among the youth are rising. While most Indians are too poor to remain unemployed, and grab whatever work that comes their way, the aspirations are higher among the educated and the better-off.

This also partly explains the high youth unemployment rate. The educated youth are not willing to take up work that does not offer good pay or benefits.

The second big challenge is the precarious nature of even salaried jobs, with a majority of salaried workers lacking written contracts and basic benefits such as paid leaves, according to the PLFS report.

The third big challenge is low wage growth. The data reported by companies show that compensation growth has been sluggish over the past few years.

The pace of wage growth is far slower than what it was during the boom phase (2004-08), even after accounting for inflation.

The ASI data also points toward a similar trend, with real wages of workers in factory slowing down sharply since 2014. This suggests that many new jobs may have been created at the lower end of the corporate hierarchy, but companies are trying to cut or restrict high-paying quality jobs.

A sharp recovery in well-paying jobs is possible only if the investment cycle revives and India’s economic growth engine picks up pace once again.

An economic boom is the most effective answer to India’s jobs challenge.

Sriharsha Devulapalli contributed to this piece.

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