The budget that Finance minister Nirmala Sitharaman presented in Parliament is just an interim one, but in an election year, even an interim budget is consequential as a signal of priorities. The NDA government’s last budget before the general election offers an impressive, aspirational vision for a Vikshit Bharat, or developed India, by 2047. To get there, though, will need a more deliberate and direct focus on good job creation.
…Our young country has high aspirations, pride in its present, and hope and confidence for a bright future,” said the finance minister. Yet data reflect significant labour market distress.
The latest round of the Reserve Bank of India’s Consumer Confidence Survey (RBICC) suggests that a vast majority of those earning an average monthly income of less than INR 25,000 per month believe that the general economic situation in the economy has worsened compared to a year ago. This is exactly inverse to those earning INR 50,000 or more; in this category, a majority believe that the general economic situation has improved. Where the economy is working, only the better off perceive it as working for them.
The government’s focus on youth and women is well placed. But as of 2022-23, 55.5% of 15–29-year-olds where not participating in the labour market. 32.9% of youth were not in education, employment, or training. The 1.4 crore youth trained under Skill India Mission constitute only .04% of 37.1 crore Indian youth. Against these realities, supply-side interventions, while important, are less effective if they do not link to good jobs.
The uptick in overall labour force participation is largely driven by an increase in rural female labour force participation. The rise in female labour force participation may, on the face of it, seem like something to celebrate, but it comes against a backdrop of heighted rural distress with a consistent decline in inflation-adjusted real wages over the last five years. Much of the increase in rural female labour force participation is driven by a rising share of women in
Agriculture, a sector associated with low-productivity, informal, poor-quality work and wages.
The increase of 28% in female enrolment in higher education over the last decade, and 43% enrolment of women in Science Technology Engineering and Mathematics (STEM) is commendable, but these numbers are slow in translating into job opportunities and labour market outcomes for most Indian women.
There has been a rise in non-agriculture informal employment from 68.4% in 2018-19 to 74.3% in 2022-23. Arguably a sign of not enough good jobs to absorb our large and growing population. The share of regular wage and salary workers with no social security increased from 51.9% in to 53.9% over the same period.
In the absence of enough good jobs, ‘entrepreneurship’ becomes a default solution. But is it really? Workers in self-employment, beyond the purview of labour protections and entitlements, increased from 52.1% to 57.3%. This is a heterogenous bunch, but a majority are those piecing together enough income to make ends meet. And there is significant evidence suggesting that small loans intended for entrepreneurial activity often end up being used to augment household expenses instead of creating viable, growing businesses.
From jobless growth to stubbornly high levels of informality, India has been battling a range of employment challenges for some time now. But good jobs are arguably more elusive today. Shifting demographics, technological upheaval, climate change, and the pandemic are restructuring India’s labour market in ways that are exacerbating inequality, making jobs increasingly precarious, and deepening economic insecurity.
Countering this needs a robust policy response codified in a national employment strategy. Such a strategy should prioritize labour intensive sectors to create more labour market demand, drive consumption, and economic growth. There is a need for regulatory frameworks that incentivize more and better opportunities and outcomes for women and youth. Job creation strategies must be decentralized to leverage the needs and assets of local communities. Education and skills training must be aligned to demand.
The provision of universal social security, moving from fragmented schemes to an integrated system, will not only create resilient workers, but it will also support own-account workers and micro businesses. This should be coupled with a range of measures to support small businesses that go beyond access to finance such as assistance with compliances; skills development; business and personnel management; technology access; and more. A national employment strategy can tease out all these tenets of an ecosystem conducive to the growth of good jobs.
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