Job Scene is Worse Than What We Think, ‘Achhe Din’ Years Away
Sample a few screaming headlines:
- Jobs created in the eight important sectors in 2015 were equal to only one percent of the addition to workforce. These sectors had created nearly 7 times more jobs in 2011, according to a BloombergQuint report. Additional data released subsequently has shown that the situation has remained the same since then.
- The pace of job creation over the past couple of years—at roughly 2% per annum—is significantly lower than the pace of job creation in the 2006-11 phase at nearly 4 percent, according to a Mint report. The Mint has analysed the job creation trend among corporates and therefore does not take into account the pace of job creation in the informal sector and government enterprises.
- According to a PTI report, the size of the working-age population increased by 300 million between 1991 and 2013 in India, while the number of employed people increased by only 140 million. That is to say that even during growing years, the economy could meaningfully employ only half of the new entrants, leaving the other half fending for themselves.
- Recent International Labour Organisation (ILO) report says that while the unemployment rate globally is expected to fall this year, it is going to go up in India in 2018 and 2019.
Scary, aren’t they? Why has berozgaari (unemployment) remained a recurrent theme in our lives all through and why has the situation worsened in the last few years? Constant factors like the bulging size of the working population due to high fertility rates, tepid investment growth, messy urbanisation, falling contribution of the manufacturing sector in the overall scheme of things, regional disparity and over dependence on moribund agri sector for sustenance has remained the same all through.
Fear of ‘Asardar Sarkar’ Has Stifled Private Investment?
What has worsened the situation in the last few years is a combination of two related factors- growing role of government in our lives and the consequent impact on risk taking abilities of individuals and entrepreneurs. There is no denying that the role of government, not just in perception as Asardar Sarkar (effective government) but also in its reach through various agencies to our bank accounts, our insurance policies, our buying-selling behaviour and through Aadhaar linking, has grown manifold in recent years.
Government Investment Is Mere 12% of Our Economy
Asardar Sarkar can effectively distribute doles but cannot create jobs. Asardar Sarkar works with the assumption that it can plug loopholes and thereby save money, increase tax collection and cut subsidies and therefore have substantial savings for rainy days. The belief is that it can invest its way out of seemingly bad days. Effective government is seen to be in hyperactive mode, which is always a good political statement.
What the proponents of the all-encompassing and omnipresent government do not consider is the government’s very limited role in stimulating demand, kickstarting investment and therefore accelerating economic growth and job creation. Government’s investment is little more than 10 percent of our economy. Even if the government goes on a massive investment spree, its ability to move the economy along is very limited. What can have lasting and durable impact is acceleration in private investment.
Poor Credit Growth Data Shows Companies Aren’t Confident Enough to Invest
Credit growth data, however, shows that private investment growth has been non-existent for the last few years. Why? Since I have been part of the news industry for more than 20 years and claim to have some understanding of how this industry works, I will restrict my observations to this sector alone.
Other than the unprecedented credibility crisis, legacy players – both print and television – have been battling unprecedented slump in readership/viewership. While the viewership of English news channels has been constantly declining, that of Indian language channels has almost plateaued, signalling their inability to reach out to more viewers. Newspapers of all languages, on the other hand, have been struggling to fend off challenges coming from multiple fronts – technological changes and a shift in readership habits being the most important ones.
No Expansion Without Innovation
Why are legacy players, mostly in the electronic space, not able to expand their reach? I can think of just one reason – their inability to innovate because of the fear, mostly perceived and sometimes more than that, of Asardar Sarkar. Channels look similar in content, anchors follow identical scripts and reporters exhibit the same bias. There is a fear of unknown and therefore the grudging urge to follow the beaten track. Can we expect innovation in such a scenario?
Falling or flat viewership means lack of new or additional investment. Job opportunities therefore have vanished. A more open environment, on the other hand, would have facilitated innovation and helped expand the viewership. Jobs inevitably will follow, turning the seeming demographic disaster into a dividend.
The story, unfortunately, is not confined to the media industry alone. The status quo mentality has gripped most other sectors, stifling growth and innovation. You look around and you will have some answer to the great unemployment puzzle.
And finally, some food for thought by way of a question. Why have all big companies (Google and Apple, among others), propelled by innovation, originated in the US in recent years? Concomitant benefits of an open society?