Create jobs where the job-seekers are

A recent TV programme that reviews the work of MPs in their constituencies threw up an interesting fact — the chief concern raised by people across constituencies was the lack of job opportunities — not corruption nor infrastructure issues. A clear message that people need jobs rather than freebies.

The finance minister recently said the unemployment rate has fallen and is about 5.5 per cent. Chidambaram added that the UPA has fared much better than the NDA, though the absolute number of jobs created had not increased during the UPA regime. How? Perhaps the reduced unemployment rate can be attributed to people taking up jobs out of desperation — jobs with no relevance to their field of study or specialisation.

Instances of engineering graduates joining the insurance sector and educated people in the rural areas taking up manual labour are common these days. A labour ministry report says many people in employment are actually overqualified for the job they are doing and, therefore, society is losing valuable skills and forfeiting stronger productivity growth than would have been achieved.

India produces over 7 lakh engineering graduates every year; over 60 per cent of them don’t find relevant jobs. Questions have been raised on the quality of graduates, their employability. On an average, over 10 lakh people will enter the job market every month over the next decade and this number is expected to rise. The much-hyped demographic dividend must be used effectively, before it is too late. But where are the jobs?

The job market is primarily a factor of demand (for skilled people) and supply (availability of the right people). Reports suggest that the situation is quite alarming, with over 25 per cent of under-30 degree, diploma or other certificate holders unemployed. In contrast, it has been argued in recent reports that unavailability of the “right” talent is costing the economy a whopping Rs 53,000 crore and that India’s talent adaptability ranking is among the lowest. The new government will have to quickly address this severe demand-supply mismatch.

India’s biggest challenge has been the low-productivity agriculture sector that employs 50 per cent of the people, but accounts for just 14 per cent of GDP. There has been a constant decline in agriculture-based employment over the past two decades, with people shifting to non-farm jobs in labour-intensive areas, such as manufacturing and construction.

The MGNREGA and the Pradhan Mantri Gramin Sadak Yojna are only helping more people take up non-farm jobs. But a CRISIL report states that incremental non-farm employment is expected to decrease more than 25 per cent to 38 million in FY 2013-19 as the economy has been treading a lower-growth path.

High productivity services sectors such as finance, insurance and business services, including the IT sector, provide employment for only 3 per cent of the population, yet account for about 20 per cent of GDP. However, these industries have limitations in adding millions of jobs every year in a highly competitive global environment.

India needs a multi-pronged ‘rural-oriented’ strategy to improve the employment scenario. First, the Government should focus on improving farm productivity. With over two-thirds of the population living in the rural hinterland, the focus must be on using science and technology to improve farm output.

Countries like Australia and New Zealand spend heavily on farm R&D. Seventy per cent of the value of farm output in such countries arises from the various sources of productivity growth, such as improvements in infrastructure and communications, higher quality inputs, and new technologies from research and extension activities.

Some advanced counties are even encouraging urban agriculture as a key theme, including production, processing and distribution of agricultural produce.

Considering India’s demography, just replicating ideas from other countries may not work; instead, the concepts must be adapted to improve productivity.

India also needs major changes in rural infrastructure — better roads, and a reliable power supply and communications set-up.

Second, it is time policy was tweaked to enable indigenous manufacturing and thereby generate significant job opportunities. Isn’t it intriguing that India does not have the infrastructure to manufacture mobile phones indigenously?

There is certainly an opportunity for India to become a dominant player in the global manufacturing sector. Should it adopt the German model, in which public and private sectors work together and generate jobs? Or focus on creating a good ecosystem for cottage/ small-scale industries to flourish — maybe with learning from Japan? There is an urgent need for the right government policies and impetus to spur job creation in the large manufacturing sector.

Third, skill development initiatives such as the National Skill Development Corporation’s (NSDC) programme to create employment-ready people are very important. Although NDSC has not met the job skilling and placement targets so far, this initiative must be pursued with greater vigour going forward to achieve the skilling target of 350 million by 2022.

The Government formed the National Skill Development Agency (NSDA) to support the NSDC by coordinating with it to create a framework for skill development. Eventually, the success of any such initiative is determined solely by employability.

It is imperative that the government accords the right priority to removing policy hurdles to create job opportunities, mainly in the rural areas. This, along with an increased focus on skill development, is urgently needed to address the serious demand-supply mismatch.

The writer is Advisor, Centre for Educational and Social Studies. Views are personal