Opinion | Jobless Growth 2.0: NDA govt’s and India’s challenge

Last week, a long awaited report of the National Sample Survey Office (NSSO) on jobs was scooped by the Business Standard newspaper. It revealed, much to the embarrassment of the Union government, that the joblessness situation had worsened since the results of the last survey in 2011-12; and, this, despite growth in gross domestic product (GDP) continuing to average over 7%. Take the two together, we have the return of the vexing problem of jobless growth.

The wheel has turned a full circle. This phenomena of jobless growth, first identified during the tenure of the Congress-led United Progressive Alliance (UPA), has now come to haunt the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA). The roles have been reversed: While the BJP was the challenger previously, it is now the incumbent burdened with the task of defending the numbers.

If the bumbling defence mounted by NITI Aayog last week is any indication, then the NDA has a political task on hand (For the record, UPA spin doctors had reacted similarly); only that unlike the NDA they didn’t seek to suppress the data, but chose to disparage the numbers). What the NITI Aayog has done is to focus the discussion on the government’s attempt to conceal uncomfortable news. Given the timing of the disclosure, with less than two months to go for the kick off to the general election, the political blame game is bound to worsen. While this is indeed a valid question to ask of the NDA, it is also time to examine in detail this phenomenon of jobless growth—which has baffled three back-to-back regimes beginning with UPA-1; the only government, which bucked this trend, was the NDA regime headed by Atal Bihari Vajpayee, when there was a spurt in job creation consistent with the economic growth trajectory.

According to the data published in the Business Standard, the labour force participation rate has declined systematically. It was 43% in 2004-05, 40% in 2009-10, 39.5% in 2011-12 and 36.9% in 2017-18. Even if we take into account the growth in population, the country would have barely created jobs in this period—while we continue to add people to the labour force. And bizarrely, this period also coincides with the best period of economic growth of the Indian economy.

Further, there is a gender twist to this jobless growth story. Almost the entire decline in the labour participation is triggered due to a sharp reduction of women in the workforce. The labour force participation rate of women was 29.4% in 2004-05, 23.5% in 2009-10, 22.5% in 2011-12 and 17.5% in 2017-18. While women make up nearly half of the population, they account for less than one-fifth of the workforce. The obvious question is what gives? Why are women withdrawing from the workforce; or at least that is what the data tells us. Scholars are already seized of the problem, but no one is really able to fully understand as to why this is happening. A piece published in Mint, and authored by Anu Madgavkar of the McKinsey Global Institute, attributes social reasons for this decline.

Another mystery is that the growth in the economy is accelerating, which could, given that jobs are not growing commensurately, only mean that Indian workers are becoming more productive. Anecdotal data suggests that this is very unlikely, especially since employment in the formal economy, which is where productivity gains accrue the most, is shrinking. Bulk of the new generation of jobs—like delivery personnel, beauticians, Ola/Uber drivers and so on—are coming up in the informal economy and, here again, the impetus comes from the consumer economy. If neither productivity nor jobs are growing, how is the economy expanding?

Clearly, there are some fundamental issues that are emerging from the latest jobs data. The fog index, which will be generated by an imminent political slugfest between the government and the opposition, will hardly generate the appropriate analysis. The best option is for the NDA to form an expert group sans ideology. It should draw from the best in academics, experts with domain knowledge of the labour economy and ensure bipartisan political presence. The mantra has to be ‘India First’.

Anil Padmanabhan is managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at anil.p@livemint.com

Read Anil Padmanabhan’s earlier columns at livemint.com/capitalcalculus