Big Employment Push | Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC PDF Download

Introduction

• The government’s mega employment push announcement, ordering the recruitment of 10 lakh people in the next 18 months. As per news reports, the announcement comes following PM Modi’s review meeting two months wherein he suggested that the secretaries of the central government take immediate steps to fill up existing vacancies in the ministries and departments. The prime minister had reportedly stressed that employment should be the focus of all government interventions in public and private sectors. 
• The decision is being seen as an answer to the frequent criticism of the government on the issue of unemployment. Opposition parties and experts have often flagged the issue of the economy not generating enough jobs to cater to the large number of unemployed youth.

Joblessness crisis

• The number of new non-farm jobs generated between 2013- 2019 was only 2.9 million, when at least 5 million were joining the labour force annually (NSO’s Periodic Labour Force Survey (PLFS)).
• There has been a massive increase in joblessness of at least 10 million due to COVID-19, on top of the 30 million already unemployed in 2019.
• There has been a negative growth in manufacturing employment between 2011 and 2020 despite schemes like ‘Make in India’.
• As against the claim that between 2017-18 and 2019-20, the worker participation rate (WPR) and labour force participation rate (LFPR) was rising, showing improvement in the labour market, this rise was caused mostly by increasing unpaid family labour, mostly by women.
• MSMEs which are employment-intensivehave been hit hard by the pandemic. This does not augur well for non-farm employment generation in India.

Issues with informal sector

• The informal sector is plagued by various constraints. Most firms are micro in size and deploy little capital.
• They have a small scale of production, substandard/unbranded quality of products, and localised scope of procuring raw material and marketing their products.
• They are vulnerable to business downturns and other market uncertainties, as reflected in high mortality.
• Their access to cheap, reliable and long-term credit sources is highly restricted.
• The sector also endures a lack of official identity and recognition of its existence and contribution.
• Atmanirbhar Bharat promises enhanced demand for domestically-produced goods and services, but the exposure to stiff global competition, especially for informal sector units, is imminent.
• Goods and services produced in the informal sector must conform to global standards, if not exceed them, and at a competitive pricing. Reconciling the hand-to-mouth existence of units in the informal sector with their stipulated globally competitive role in Atmanirbhar Bharat is a Herculean task.
• In such a scenario, the informal sector must embrace for three tectonic shifts with respect to internal transformation, strategic positioning and labour-market dynamics.

Atmanirbharta and informal sector growth

• One, enterprises must undergo drastic internal transformation, progressively converging at incremental formalisation through spontaneous and self-propelled transition into economically-viable units.
• Two, because the vision of the Atmanirbhar Bharat exposes the informal sector to global competition, entrepreneurs must embrace the subtle art of strategic positioning in global mega-supply chains.
• Three, India is a labour-surplus economy. The informal sector employs more than 80% of India’s workforce. The changes in the first two spheres (higher capital intensity-led enhanced labour productivity and ultra-flexibility in production cycles) may have severe repercussions on the availability and quality of jobs in India.

Major transformation needed in informal sector

• To alleviate these concerns, the first assumption is that the proportionate increase in expected demand must be more than the enhanced labour productivity to at least retain the currently employed workers.
• But we also must be mindful of getting trapped in catch-22 spiral. To continuously employ current workforce, we need to incrementally corner an extra chunk in product market, which necessitates increased competitiveness, being led mainly but not solely by enhanced labour productivity which tends to make a part of the workforce redundant cyclically.
• To generate good quality jobs, diversification (both horizontal and vertical) must be encouraged.
• Vertical diversification entails products not just be partly produced or assembled in India, they must be the end-products of fully indigenised and integrated production and supply chains, from design to made in India.
• Horizontal diversification involves expansion into newer products and markets, smartly aligning with India’s comparative advantage of surplus labour.

Conclusion

• India needs a new strategyto counter the phenomena of jobless growth. This requires manufacturing sector to play a dominant role.
• “MAKE IN INDIA” initiativea great step forward which will boost the manufacturing.
• Decentralisation of Industrial activitiesis necessary so that people of every region get employment.
• Development of the rural areas will help mitigate the migration of the rural people to the urban areas thus decreasing the pressure on the urban area jobs.
• Complementary schemes like Skill India, Startup India etc. can enhance the skillsets and employment generation.