Highest Unemployment in 45 years: An Analysis

HIGHEST UNEMPLOYMENT IN 45 YEARS IN INDIA

Author: Ms. Jyoti Jha, JEMTEC, School of Law

“Unemployment is a great tragedy. The man who goes about hopelessly seeking work in order to earn bread for his children is a living reproach to civilization.”…………………………………………………..Carlos Saavendra Lamas

Unemployment is one of the major concerns for almost every country including India. Unemployment refers to a circumstance where people looking for jobs are unable to get work. It is the condition of not being able to find sustainable paid work. In other words, when skilled labor is left competing for jobs because of less demand for labor or excess supply of labor, and a large number fails to find suitable jobs, the economy can be said to be a state of unemployment.

India is a signatory to the International Labor Organization, its various treaties, and conventions. ILO defines unemployment as “Persons of legally working age that is unable to find an activity for wages or profits despite a willingness to work and available on the job market.”

The unemployed comprise all persons of working age who were: a) without work during the reference period, i.e. were not in paid employment or self-employment; b) currently available for work, i.e. were available for paid employment or self-employment during the reference period; and c) seeking work, i.e. had taken specific steps in a specified recent period to seek paid employment or self-employment. The two broadest categories of unemployment are voluntary and involuntary unemployment. Unemployment can be classified into four types further-

• Frictional Unemployment
• Cyclical Unemployment
• Structural Unemployment
• Seasonal Unemployment
• Vulnerable Unemployment
• Disguised Unemployment

CAUSES OF UNEMPLOYMENT & ITS DETRIMENT IMPACT

The caste system- It’s been more than 60 yrs of India’s independence but the caste system is still prevailing according to which a work is supposed to be performed by the people of a specific caste. It is one of the reasons for unemployment in our society.

Increased population growth- In one of the survey US claimed that India will the country with the highest population till 2025. The increasing population rate is also one of the reasons that our government is not able to cater to the need for jobs even after initiating certain major policies for employment generation.

Slow economic growth- Economic growth is measured in terms of GDP. India’s economy has been expanding but the uneven growth has meant there are not enough jobs created for millions of young Indians entering the workforce each year.

Slow industrial growth- The industrial growth will lead to a positive effect on employment by generating job opportunities for the unemployed class. The government came up with the Startup India Scheme with an aim to grow the industrial sector and provide self-employment opportunities for the young generation. But despite such initiatives, the unemployment rate is increased this year. One of the reasons is political instability which resulted in undesirable outcomes.

Loss of small-scale/cottage industries- Small scale industries form a major part of our industrial sector. It provides bread and butter to various unskilled workers who are not having sufficient education and training. Its growth has been a major objective of economic planning but still due to slow growth rate it is unable to serve the demand.

• Labour immobility- Mobility of labour in India is low. Due to attachment to the family, people do not go far off areas for jobs. Factors like language, religion, and climate are also responsible for low mobility. The immobility of labour adds to unemployment. All these factors add to unemployment.

Unemployment has a major impact on a person’s standard of living. Prolonged unemployment can lead to an erosion of skills, basically robbing the economy of otherwise useful talents. The elevated unemployment often correlates both with less volunteerism and higher crime. Elevated crime makes sense because absent a wage-paying job, people may turn to crime to meet their economic needs or simply to alleviate boredom. Unemployment leads to higher payments from state and federal governments for unemployment benefits, food assistance, and Medicaid. In February 2017, payments from state and federal governments for unemployment benefits totaled $2.96 billion. Also, unemployment can have a self-perpetuating negative impact on businesses and the economic health of the country.

PROBLEM OF UNEMPLOYMENT AMONG EDUCATED PEOPLE

The high unemployment rate among graduates and postgraduates is a serious issue and to address. The main reason for unemployment was the nonavailability of jobs matching with education/skill and experience. This clearly brings out the prevalence of skill mismatch in the labor market which renders even highly qualified individuals jobless.

Ten million Indians with graduate, post-graduate and technical degrees were looking for work, meaning that 15% of all Indians with the highest level of education were seeking a job. Kerala had the highest graduate unemployment rate at over 30%.[1] Of the 116 million Indians who were either seeking a job or available for work, 32 million were illiterate and 84 literate. Among literates, unemployment rates were higher among the better qualified, highest of all among the 7.2 million people with a technical diploma or certificate other than a degree. Schemes of government for educated unemployed[2]:-

• Prime Minister’s Rozgar Yojana is established for educated unemployed youth.
  • Scheme for Educated Unemployed for employment generation in urban localities (SEEGUL)
  • Scheme of Self-Employment for Educated Unemployed Youth (SEEUY)
  • Schemes for the State Governments (Educated Unemployed Youth)
  • Scheme for “New Initiative in Skill Development through PPP” by Planning Commission of India.

LAWSON UNEMPLOYMENT COMPENSATION

The idea of unemployment insurance and unemployment compensation began in the United States in 1932. Through the Social Security Act of 1935, the Federal Government encouraged the individual states to set up unemployment insurance plans.

In India also Congress government has passed the Federal Unemployment Tax Act, authorizing the IRS to collect federal employer tax annually used to fund state workforce agencies as well as the costs of managing the Unemployment Insurance & Job Service programs in every state. It also pays half the cost of extended unemployment benefits and sets up a fund that states can borrow from to pay benefits. Regular unemployment compensation benefits are usually paid up to 26 weeks in most states. Depending on the rates of unemployment, additional weeks are sometimes given as well. In most states, the amount of unemployment compensation given is equivalent to half the earnings, up to a certain amount.

When receiving unemployment compensation, it is also a requirement to actively seek employment. The following circumstances may disqualify you from collecting unemployment benefits, depending on state law:

•           Fired for misconduct

•           Quit without a legitimate 

•           Left to get married

•           Attending School

•           Resigned due to illness

•           Involved in a labor dispute

•           Self-employed

MEASURES TAKEN BY GOVERNMENT TO CURB UNEMPLOYMENT Under the dynamic leadership of Hon’ble Prime Minister Shri Narendra Modi, the Ministry of Labour and Employment has taken several initiatives, legislative as well as administrative, to generate employment.

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)[3] enacted on 2005, with the aim to enhance the livelihood security of the households in rural areas of the country by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

2. Prime Minister Employment Generation Programme (PMEGP) was launched in August 2008 with the objective to generate employment opportunities in rural as well as urban areas of the country by providing credit linked subsidy for setting up micro-enterprises.

3. Swaranajayanti Gram Swarozgar Yojna (SGSY)[4] came in to effect on 1999, with the aim at bringing the rural BPL families above poverty line by organizing them into Self Help Groups (SHGs) through the process of social mobilization and their training and capacity building, provision of credit linked subsidy, technology inputs, etc. in order to enable them to be self-employed and taking up some income generation activity.

4. Swarna Jayanti Shahari Rozgar Yojna (SJSRY) for urban areas a holistic scheme implemented in 1997 with the aim to provide gainful employment to the urban unemployed and underemployed poor population and to help them set up self-employment ventures and also through providing wage employment by utilizing their labour construction of socially and economically useful public assets. Besides the above-listed schemes there may be some other schemes of the Centre/State governments from which the households have got benefitted during the reference period, are also included under the category of ‘Other schemes’.

New initiatives

The Ministry is implementing the National Career Service (NCS) Project as a Mission Mode Project for the transformation of the National Employment Service to provide a variety of employment-related services like career counseling, vocational guidance, information on skill development courses, apprenticeship, internships, etc.

“Pradhan Mantri Rojgar Protsahan Yojana“[5] is being implemented by the Ministry of Labour & Employment with the objective of promoting employment generation. Under the scheme, the Government of India will pay the Employee Pension Scheme (EPS) contribution of 8.33% for all new employees enrolling in EPFO for the first three years of their employment. This will incentivize employers to recruit unemployed persons and also to formalize informal employees. The scheme is applicable to those having earnings up to Rs. 15,000/- per month. A budget provision of Rs. 1000/- crore for the Year 2016-17 for this scheme has been made.

Make in India aims to transform India into a global hub of manufacturing, whose share in GDP would rise to 25 percent by 2022. “There are encouraging signs that Make in India is the positively impacting generation of jobs,” says Chandrajit Banerjee, director-general, CII. “Make in India has the potential to emerge as a force multiplier to provide the emerging workforce with new livelihood opportunities.”

The government hopes to create 100 million new jobs by 2022. The firms estimate that 7.2 lakh temporary jobs are likely to be created in the next one year. It would add 8-13% of the current jobs pool as an investment into manufacturing, engineering and related sectors rise. They say the Make in India initiative has led to an increase in hiring in these segments as well as e-commerce and Internet-related sectors.

OUTCOMES OF GOVERNMENT POLICIES

The results show that about 24 percent of the households MGNREGA, PMEGP, SGSY, and SJSRY. All States/UT’s have shown a positive number of households benefitting under MGNREGA during the reference period except Delhi and Chandigarh, where even not a single household was benefitted from MGNREGA.

The North Eastern States, except Arunachal Pradesh, Assam, Meghalaya, and Sikkim had more than 70 percent of the households have benefitted from the scheme MGNREGA. On the other hand, the lowest i.e. 0.2 percent households benefitted under the MGNREGA scheme was recorded for the Union Territory of Dadra & Nagar Haveli during the reference period.

The percentage of households benefitted from remaining schemes was negligible across all social groups.

RECENT REPORTS ON UNEMPLOYMENT

An official survey that has been withheld by the government shows India’s unemployment rate rose to a 45-year high during 2017-2018, the Business Standard newspaper reported. The assessment by the National Sample Survey Office conducted between July 2017-June 2018, showed the unemployment rate stood at 6.1 percent, the highest since 1972-73, the newspaper reported. The report said that joblessness stood at 7.8 percent in urban areas compared with 5.3 parts in the countryside.

According to Business Standard, the report states that unemployment was last this high in 1972-73. Joblessness for rural male youth (aged 15-29) went from 5% in 2011-12 to 17.4% in 2017-18. For rural women in the same age group, joblessness went from 4.8% in 2011-12 to 13.6% in 2017-18, according to Business Standard.

The same was true for educated people: “For educated rural females, the unemployment rate ranged from 9.7 percent to 15.2 percent during 2004-05 to 2011-12 which rose to 17.3 percent in 2017-18,” the newspaper quoted the NSSO report as saying.[6]

The labour force participation rate (number of people of working age actively seeking jobs) also went down, according to the report. The LFPR, which has been decreasing from 2004-05 went from 39.5% in 2011-12 to 36.9% in 2017-18.

Pronab Sen, former chief statistician of India said unemployment in India has been rising since 2012 but the attempts to suppress the publication of data were not a solution.

  BY-JYOTI JHA

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[1] www.thehindu.com/

[2] www.iaspaper.net/educated-unemployment

[3] www.nrega.nic.in

[4] https://sarkariyojanalist.com/

[5] https://pradhanmantri-yogana.in/

[6] https://thewire.in/