Unemployment in India

Numbers always tell a story. Economic statistics are quite adept at that. Colorful, vivid stories. And sometimes scary ones.

416 Positions Available. Number of applicants? North of 1,00,00.

With odds like those, you are a 100 times more likely to be admitted into Harvard, a school which prides itself on exclusivity and has a bit of a thing about being the most selective university in the world.

If you, like me thought that the 1,00,000 people would be applying for something real special, maybe a lottery ticket to star right next to Aishwariya Rai, you’d have completely missed the mark. The 1,00,000 was comprised mostly of the youth hoping to get a shot at one of the personnel jobs that were being offered by the Indo-Tibetan Border Police, a moderately volatile region.

A quick list of personnel jobs? Washerman. Barber. Stable hand. Cook. Provisions stocker.

The salary? Rs. 5,000 a month.

While an intense surge of patriotism among the young blood of Bareiley in Uttar Pradesh can’t be discounted, taking a moment to reflect on the fact that the area is considered to be moderately stable does seem to put things about the current unemployment epidemic into perspective.

Isn’t the Unemployment Rate in India Under Check?

How would we know? We weren’t even measuring the unemployment rates in India before 2008. Yes, there were statistics but they were all guesstimations sprinkled with data gathered form the Statutory and Voluntary Returns that were blended into the Usual Principal Status Basis.

As far as internationally accepted norms of unemployment measures go, the Labour Bureau of the Government of India put out its first ratified report with a survey on the unemployment levels in India in 2009. This is the first report of its kind both in scope of process and with regards to casting the statistical net wider than what the National Sample Survey Organization, which would provide data to the Labor Bureau in the past would have done.

The Unemployment Percentage in India for 2009 is 9.4%

A quick list of things that the report does not (and can not) completely take into account:

1. Disguised Unemployment

2. Frictional Unemployment

3. Part-time employment

4. Any kind of seasonal/predictive input from the individuals surveyed

So what did the mammoth report truly indicate – the percentage of the population that were chronically unemployed? There were 40,000,000 people in 2009 who were capable and willing to work, but couldn’t find work after more than 90 days looking for work!

Less than .01% of that number is estimated to be the number of people who’re capable of working but choose not to do so. Since the calculation of unemployment is a reductive process – we first calculate the employment and then subtract that number from the total to get to the unemployment numbers, it is inevitable that the data will be slightly dirty.

And The Unemployment Rate In India For 2011 is…

10.9% s reported by the American CIA World Factbook which is an estimation of an estimation. And the official Indian Labour & Statistics number? Non-existant.

Apparently, the difficulties with regularly reporting and measuring the Indian unemployment rate are deemed to be greater than the benefit that is to be had by having these numbers at hand.

What we get instead is an essay on unemployment in India in the form of sectorized quarterly updates the latest of which is the Tenth Quarterly Report On Effect Of Economic Slowdown On Employment in India for the period of January to March, 2011. While the data presented is not as comprehensive as the 2009 report, the different industry sector breakdowns are useful as far as predicting the trend vector goes.

Causes of unemployment in india

With a population as big as ours, with wealth distribution as it is, pointing out a generalized list of things that cause unemployment in India is an affront to good economic study.

Instead of focusing on the causes, it is infinitely more beneficial to study the different factors that contribute to the double digit unemployment in India. Working with such a framework lets us study bot the contributing factors as well as their interconnected consequences.

Nº1. There aren’t enough jobs

The most obvious, yet the biggest defining symptom of the state of unemployment in India is the fact that there aren’t enough jobs.

The major contributing factor to this problem would be the one-two punch delivered by the slow pace of development and the recent shift in resource allocation for existing resources. Case in point, the decline in manufacturing jobs in the Punjab and the rise in services jobs in Gurgaon & the NCR.

Compound that with the fact that there aren’t enough new job vacancies being created.

Nº2. Fewer new jobs & Youth Unemployment In India

If the problem of the existing workforce being benched wasn’t bad enough, the unchecked (and still rising) population of the country is putting a heavy load on the infrastructure of the country which includes the capitalist and industrial mechanism as well.

The growth rate of the population wouldn’t be so bad if a considerable portion of them weren’t plagued by malnutrition, rampant illiteracy and succumbing poverty.

While the economy might be growing by a decent sum, the population, more importantly the uneducated and unhealthy are growing at a faster rate. This is something we, as a country just can’t work our way out of.

A good lead in this direction, one that has been promised by the Indian government, would be similar to China’s ‘One Child, One Family’ Law. The Indian motto of ‘Hum Do, Hamare Do’ was an unequivocal disaster compared to the Chinese initiative.

While there are slightly plutocratic loopholes left open in the Chinese programme, the biggest reason why it works out so well is now that individuals have only one child, all their resources – time, money and attention are focused on one single individual instead of half a dozen. And we’re not even considering the uptick in the mother’s long term health.

Nº3. Shifting Industry Priorities Have Exacerbated the Problem of Unemployment in India

The times, they’re a chaining. And for once, India is managing to keep up with the rest of the world, even lead the charge if you ask some economists.

The world’s industrial hubs have been divided between the BRICS countries and the demarkation of the where the industries are heading is clear as daylight to anyone paying attention. Manufacturing is divvied up between Brazil, South Africa and China with the lion’s share of the manufacturing of the world going to China.

India, obviously has become the software and services out-sourcing hub of the world. If you’re looking for India’s Brazil, then you’ll have to go beyond the confines of the BRICS. The Philippines comes in at a distant second. If India were to ever lose out place as the leader in services and software outsourcing, it would be of our own accord.

So isn’t this supposed to push the employment levels up? Yes, it sure does. Except now we have close to 30% of the youth growing up illiterate, and a greater deal more unable to read and write high-school level English.

Nº4. Unemployment Problems in India as a result of the commoditization of the green revolution

Hooray! There is new demand in the country. All the programmers and call center employees have to eat don’t they? The local farmer is about to strike gold!

Unless Monsanto comes in. Or if the farmer with the larger bits of land decides to import American combine-tractors by the score. What do you do then? Since you can’t afford the money for the tractors, or get a loan, you decide to put everyone in your family on the job.

The slow growth rate of agriculture and the influx of larger corporations has lead to a form of unemployment endemic to India and is one of those things that truly characterizes poverty and unemployment in India.

Nº5. Educated Unemployment in India – Can read and write but unable to find a stable job?

The thing about the educated unemployed is that they’ve been served up the short end of the stick. The state of W.E. literacy in India is so dismal educated and literate are used interchangeably. While education and unemployment in India, along with poverty have long been the proverbial albatross around our nation’s neck, the dynamic that these three problems share is evolving rapidly.

This is a problem that has however become limited to Tier 3 cities over the last decade. In many cases, as long as you can read and write, you should be able to start at about twice as much as the Indo-Tibetan Border Police form the leading paragraph is offering up.

Nº6. Rural-Urban Migration And Why Figuring Out Indian Agriculture Can Solve India’s Unemployment

The sixth factor contributing to unemployment in India is the rise in the migration of rural workers to the metros. Armed with a high school education and sometimes a degree, there are a number of people who’d rather make Rs. 10,000 as a clerk than Rs. 20,000 working at managing their fields.

The factors of labor are not intensively involved outside a certain strata and this has become quite the thorn in the administration’s side. Another thing that has gone unnoticed by most living in the metros is the impact the rise in food inflation has had for everyone in the rural areas.

Therefore, we end up with lesser smaller farmers and bigger farming corporations who have been accused of a range of infarctions from ‘suicide seeds’ to price fixing and anti- competitive farmers which results in higher food prices. Not a formula for feeding a growing economy, wouldn’t you say?

However, there is a way out, and it is nothing new for a veteran of Indian Economic policy. I’ll invoke a set of numbers once again and just like the first one, they have a story to tell that is thoroughly captivating.

Less than 3% of the Indian agricultural produce is processed in India. Compared to first world countries, this number is a rounding error. Close to 90% of the aggregate agricultural produce of the first world countries is processed. And there is a good chance that the 10% that isn’t is consumed by the organic foods brigade.

Value Addition As An Solution To India’s Unemployment Rise

It is all about Economics 101. And we already have examples of enterprises in India that have not only been successful as corporations but have managed to achieve extreme levels of social good.

I give you, Amul. A cooperative that has positively affected the lives of more than 100,000 dairy producers and farmers. They make excellent butter and they market it pretty well. Except, a massive number of educated individuals are employed by Amul to perform the marketing, sales, retail and distribution.

An atypical illustration of what is known as the multiplier – the cascading effect that an addition to those with expendable income produces.

Processing raw agricultural material is one of the most basic steps involved in economic growth and we are trending towards such an enormous demand that ignoring it is akin to butchering the gift horse.

The Indian Speciality – Types of Unemployment in India

Along with owning the state when it comes to being the world’s largest democracy and being on track to win the trophy for the world’s most populated country, we have also managed to spearhead a new kind of unemployment – disguised unemployment.

In addition to all the standard categories of unemployment, we have combinations of different categories of them. Since we aren’t a large manufacturing base, most of the kinds of unemployment that India suffers from are combinations of the more generic types of unemployment. Case in point, with the cyclical union instabilities suffered by the Maruti Suzuki Motor Corp., we get a combination of seasonal unemployment which is disguised as a cyclical form of voluntary unemployment.

The Many Flavors of Rural Unemployment In India

While the urbane forms of unemployment that India suffers from are pretty much close to their ideal definitions, when it comes to rural unemployment a lot more study is required.

Looking at all the data I could get my hands on, I’ve sorted the types of rural unemployment into four different categories.

1. Seasonal Unemployment

Isn’t the farmer going to be busy tilling his land in the offseason? Not if you’re part of the 70% of farmers who own so little land that they’re done with all of their off-season duties regarding in under a month.

That means that in order to support their family, they often have to work as sessional employees on other people’s farms or as daily wage laborers, often at renumeration that is far lower than what they would have earned had they owned more land.

2. Disguised Unemployment

Unless you skipped a week’s worth of Indian Social Studies classes, this is probably the most well know form of unemployment in India.

What many of us weren’t taught was that despite the reported rate of disguised unemployment going up, there is a rising number of people who’re inefficiently employed in rural India who aren’t factored in the reported numbers.

For the uninitiated, disguised unemployment is when on a field that can adequately be farmed by 2 people, 4 are employed. In most cases, the 4 usually belong to the same family and since they have an idle pair of hands, they all got o work not he same field.

3. Cyclical Unemployment

The import duty on tractors just got cut by half! The price of diesel and electricity is going to be subsidized for farming next month!

What do the bigger farm-owners do now? Buy a Rs. 50,000/yr tractor or keep aging twice of that amount to the laborer? It is obvious where this is going, but why this would contribute to unemployment without adversely affecting production is a different story altogether.

Rememberer the 70% farmer who was burdened by seasonal unemployment? Well, he just lost his off-season job!

Of course, policy changes and technological improvements are inevitable and they have been ‘taking away jobs’ since the industrial revolution began. However, developing a failsafe for the willing-to-work will require a few tricky policy maneuvers, for example, SEZs.

The reason that this kind of unemployment is known as cyclical unemployment is because it is caused by macro-scale cycles that are outside the control of the individual and in many cases, entire industries. These cyclic iterations include policy changes, technological innovation as well as the bane of the small farmer – rainfall.

4.  Structural Unemployment

While this might be considered a part of cyclical unemployment, it merits its own category because it is something that is easier to tackle.

For example, the use of synthetic cotton blends with rayon are becoming popular (I blame Lycra), which means that a big consumer of the cotton production – the clothing industry would be changing the factors involved in the production of their goods.

While the farmers will face the brunt of the decreased demand, many of the individual doing manual labor on the farm itself can be retrained for production level jobs in the garment industry quite easily. Combine that with a few policy based incentives and tax cuts to corporations and you’ll see a perceptible jump in the general welfare of the local community.

Why I Won’t Be Shorting India any time soon ?

Take your pick! That fact that we hardly had a rising number of jobs just over two decades ago. Or that fact that unlike China (or like Brazil) we are completely capable of consuming what we produce by ourselves.

Henry Ford would kill to be alive for the oncoming Golden Age that we’re headed for.