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Business News/ News / India/  Govt job creation falls, adding stress to the labour market

Govt job creation falls, adding stress to the labour market

The number of govt jobs created declined 8.4% to 29,697 in September, from 32,429 in the previous month

The decline in new government jobs has been blamed on the Centre’s decision to curb expenses following the pandemic (Mint)Premium
The decline in new government jobs has been blamed on the Centre’s decision to curb expenses following the pandemic (Mint)

The government added fewer jobs in September, primarily because of less job creation by states, according to the payroll data of the National Pension System. As many as 32,429 jobs were created by the Centre and states in August. This fell by 8.4% to 29,697 in September.

The Centre’s contribution fell by less than 1%, while new jobs at the state level fell 9.7% month-on-month. States, which had reported growth in new employment additions for two straight months, reported fewer jobs from 26,084 in August to 23,559 in September, the payroll data showed.

“Government job creation this financial year was growing for the last four months, beginning May at the central level. However, it fell in September, almost coinciding with the government’s decision to not create new jobs," said a government official requesting anonymity.

The fall in new government jobs in September, the month for which the latest data is available, is because of the government’s decision to curb expenses following the economic slowdown in the country that came about as a result of the coronavirus outbreak, said economists and experts.

“State finances are not in a great position. The revenue-earning capacity is low because of the pandemic’s impact on businesses and this must be putting pressure on states to go slow on new recruitments. The central government’s announcement in September to pause the creation of new positions has a cascading impact on states as they must have weighed the merit of cost-cutting and delayed hiring for permanent positions," said K.R. Shyam Sundar, a labour economist.

“Yes, GST (goods and services tax) collection has picked up in September marginally and October visibly, but the collections were consistently low for five months since April, compared with the same period of last fiscal year. The labour market impact arising out of economic reasons always comes with a lag, hence, you are seeing the fall. You will continue to see muted growth in government job creation at least for the next few months," he said.

Shyam Sundar said that this will add to the existing employment challenges, especially for white-collar jobs.

GST collections in October stood at more than 1.05 trillion, crossing the 1 trillion mark for the first time since February, according to official data.

Prem Chand, general secretary, Indian Public Service Employees Federation, said the governments both at the Centre and state are gradually shifting to contract work to reduce cost.

“Instead of permanent jobs, authorities are going for short-term contract work and outsourced work. At the central ministries and departments, you can see a lot of low-paid contract workers in recent times, and even the support staff for top bureaucrats are privately sourced. Besides, replacement hiring after superannuation of employees are not happening proportionately," added Chand.

Shyam Sundar said while contract work cannot be termed as decent job opportunities due to lower salary and insufficient benefits, the subdued growth in government job creation will push a lot of people off the labour market. “People going off the labour market is a bigger worry as it leads to low labour force participation rate… hampers personal growth, family income and overall economic growth," he added.

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Published: 01 Dec 2020, 06:12 AM IST
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