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Employment generation is a job half done

The gold standard for a good job—a written contract for 3 years along with benefits—is within reach for only 2% of the workforce. Art: Conditions Apply (from Triumph of Labour series) by Srinivasa Reddy N, watercolour on paper  (Courtesy: Srinivasa Reddy N/Apparao Galleries)Premium
The gold standard for a good job—a written contract for 3 years along with benefits—is within reach for only 2% of the workforce. Art: Conditions Apply (from Triumph of Labour series) by Srinivasa Reddy N, watercolour on paper (Courtesy: Srinivasa Reddy N/Apparao Galleries)

The solution to the jobs problem, which has been discussed in Delhi’s policy corridors for 20 years, is a swift expansion in low-skill manufacturing

In the eight years that Milan Poonia (25) has spent on the shopfloors of the firms that dot India’s largest automotive cluster in Manesar on the south-western edge of Delhi, his salary inched up from 8,500 to 10,200 a month (or, an annual hike of about 2.3%). When he entered the workforce in 2012—as a trainee at the Hero Motors factory—he had many dreams. “Technical pasand hai. Nayi nayi machinae dekhna chahta tha (I like the technical field. I wanted to see many new machines). I hoped to find passion and paisa (money)," he said.

Now, on the cusp of the 30th anniversary of India’s liberalization and in the midst of a long-awaited uptick in auto sales, Poonia is giving up.

He’s realized his polytechnic diploma cannot carry the weight of dreams. “I have worked in six different companies in the last eight years. No job lasted more than a year. Yeh naam ki naukri hai. Thekedaari hai. There is no life here. I am heading back to my village (in western UP) soon to try and set up a small mechanic shop. I have no savings (after the pandemic), but I’ll try."

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Thekedaari, or contract work, is a pejorative allusion to the traditional labour chowk. In Poonia’s eyes, India may have modernized, but the forms of work arrangement available to the vast majority of young Indians remains just the same. It merely got an English term. Disillusionment and hopes of self-employment (which is how most Indians still work) are an inevitable fallout.

On many counts, it could be said that the heady possibilities that seemed within reach when India opened up its economy in the early 1990s did not fully materialize. But that gap, between hope and reality, is perhaps the widest when it comes to the job market. Over the last 30 years, the bulk of the new jobs that were created fall into three broad buckets: construction, contractual and high-skilled services.

The last segment is the sole bright spot. By 2018, over 12 million people were employed in professional and business services—a catch-all term for a slew of new fields from computer programming to call centre work. However, India has more than 400 million workers. Among them, the vast majority who step outside a farm to scout for other opportunities have only two options: low-wage construction/contract work or no work.

“Globally, we stand out (among liberalized economies)," said Radhicka Kapoor, an economist at the Indian Council for Research on International Economic Relations (ICRIER). “The percentage of workers with social security benefits has actually declined."

The gold standard for a good job—a written contract for three years along with benefits—is within reach for only 2% of the workforce, Kapoor said.

“Because liberalization has not created that many employment opportunities, the bargaining power of labour has remained quite poor. People have to take what comes their way. That’s why so many people are willing to work in contract jobs."

In the dusty villages that dot the Manesar belt, where young auto workers stay in cramped row houses, there is even a term to describe the helplessness. “Time kar le (Do some time)" is a refrain understood by most of the young men (and it is mostly men, since women began to simply fall out of the workforce from the mid-2000s).

Interestingly, many of these young men who are stuck in unhappy short-term contract jobs have an undergraduate degree or diploma (the higher education enrolment rate for 18-23-year-olds shot up from 11% in 2006 to 26% by 2016). Most are also willing to work under “hire-and-fire" arrangements, with some having been in such jobs for a decade already. Yet, neither education nor greater flexibility for the employer has offered them a pathway to move up the salary ladder. Most remain stuck at a wage that is close to minimum wage.

While this is indeed a problem for those saddled with such jobs, it is not good for the broader economy either, said Jayan Jose Thomas, an associate professor of economics at the Indian Institute of Technology, Delhi. “There is a serious demand issue." And this is what the Atmanirbhar Bharat scheme—which expects domestic demand to pick up to compensate for exports underperformance—misses. India’s poor-quality, low-wage job market cannot create broad-based local demand.

The solution to the jobs and wages problem, which has been discussed and debated threadbare in Delhi’s policy corridors for nearly 20 years, is a swift expansion in low-skill manufacturing. The production-linked incentive (PLI) schemes that have been announced by the Narendra Modi-led government is just the latest in a long line of attempts.

“We have consistently missed the boat on labour-intensive manufacturing and, soon, there will be no boats left," said Naushad Forbes, co-chairman of Forbes Marshall and a former president of the Confederation of Indian Industry. If India needs to have a real shot over the next few decades, the mindset of many businessmen also needs to change, he said.

“Most Indian entrepreneurs think more labour is bad. They don’t see themselves making fortunes employing lots of people. A few decades of rigid labour laws between the mid-1960s and the early 90s created this mindset. Things have changed in the last 20 years, but the mindset has not changed," he said.

A large garment factory in India employs about 3,000-5,000 people, Forbes said, while a typical Bangladeshi garment factory has 20,000 people and a Chinese one has 50,000 people. “Perhaps if a few big foreign firms come in and employ large numbers of people, the perception will change," he added.

Among the many uncertainties that lay in the days ahead for India as it slowly recovers from the economic fallouts of the pandemic, one thing is certain, said ICRIER’s Kapoor.

“If the growth recovery is not going to be job-rich, then we are going to have serious problems. The amount going into the PLI subsidies over the next few years could be as much as 1% of GDP. And this is going to some of the biggest companies. Surely, we can link this spending more explicitly with an objective like creating employment," she added.

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