India's Unemployment Crisis is one of the new NDA Government's biggest challenges

                                  Nirmala Sitharaman, India's new Finance Minister

Can Nirmala Sitharaman, India’s new Finance Minister, dig India out of its unemployment mess

June 1, 2019, Aranmula,  Updated on June 3, 2019                                                                                                         

Jobs data for the Indian economy was finally released in May 2019:                           

The Indian economy has had a rough time with National GDP dropping to an unexpected low of 5.8 % (in the last quarter of 2018-19). The Modi Government, in end May, emboldened by its election result of winning 352 NDA seats in the Lok Sabha, officially released long overdue jobs data. (In case you are wondering, yes it was duly vetted by the National Statistical Commission).

According to The Print *¹, the government confirmed that unemployment in India, overall had risen to a 45 year high of 6.1 percent. Some observers point out however that this 45-year high report (since 1974) may be misleading as the way these figures are calculated has changed over the years. 

The situation, no matter how you look at it is serious. The Center for Monitoring the Indian Economy (CMIE) on May 31st, 2019 estimated the unemployment rate at 7.2 percent (urban 8.6 and rural 6.5 %.) At the state level it is reported that in May 2019, Tripura had a heart stopping unemployment rate of 30.2 %! Other states with high unemployment are: Chandigarh, Haryana and Kashmir with unemployment rates of 18.4, 18.3 & 16.7 % respectively. Low unemployment rates for May 2019 are Tamil Nadu (.4%), Goa (1.3%) and Telengana (2%).

In fact, 45 years ago, disquiet about unemployment (especially in Andhra Pradesh) had resulted in the passage of Article 371 D of the Indian Constitution which safeguards the rights of local people to education and employment opportunities.  

In 2019, of particularly concern is unemployment among youth:

Unemployment (%) among youth 15-29 years old is reported as follows:

Rural Male     Rural Female
17.4                13.6

Urban Male    Urban Female                                                                                                  
18.7                 27.2

The survey covered over one lakh households with nearly 4.3 lakh people contacted.

Job losses between 2016 and 2018 from demonetization and ham handed GST implementation: 

The Center for Monitoring the Indian Economy had previously announced in January 2019 that nearly 11 million people lost jobs in 2018 after the demonetization of high value notes. in late 2016 and the chaotic launch of a new goods and services tax (GST) in 2017, millions of small businesses were deleteriously impacted.

Not all the news is doom and gloom however, the Indian electorate has set aside its economic disquiet and given the NDA another chance to fix its own economic mess.

Expectations of the New Government and advice from Media concerning Unions:   

                                                                           

1.    Simpler, more practical labour law is needed:                                                                            According to Andy Mukherjee of Bloomberg, writing in the Business Standard *² “A signature reform investors expect from Modi's second term is a new labor law – a single, flexible code to replace a plethora of antiquated rules.”        

                                                                

2.    Non-affiliated, company specific unions could also help:

Says Philanthropist C Balagopal in the magazine Destination Kerala*³, What is needed for the betterment of working conditions and better industrial relations, is to have non-affiliated trade unions, one to an industrial enterprise…… This would ensure that the trade union is focused on the issues within that company." A company union, encourages members to cooperate with the management in ensuring that the company runs efficiently. Balagopal goes on to say, "we should do what the Germans have done: enact rules that make it necessary for labour representatives to be inducted on the board of directors of companies”.
When this writer, interviewed Mr Balagopal he also spoke eloquently on behalf of unorgnized workers that often did the work of unionized workers, for a fraction of the cost. He said, unorganized workers in unionized companies should have a path to full union benefits.

3.    Union Reform is good, helping unorganized workers is a more pressing issue:

Gopal Rai of the Delhi Government has also long been an ardent proponent of supporting unorganized workers by providing them with greater entrepreneurial opportunity*⁴. He has directed the leadership of the Shramik Vikas Sangathan (the AAP’s apex labour union) to develop pilot entrepreneurial programs for micro entrepreneurs. 

The problem says Rai quoted in CitizenzNews.com is that “only 3 percent of the working population is supported by traditional labour unions. Some 93 percent of the nation’s work force lies outside the organized sector of the workforce.

Rays of Economic Hope and openings for higher employment opportunity:

1.    Let’s hope that the new government will have learn from past mistakes.

The NDA government has hit the ground running by including some new but experienced faces. 

The new Finance Minister, Nirmala Sitharaman was previously Commerce Minister and may be a good coordinator of economic affairs despite her relative inexperience.

S Jaishankar’s taking on the role of External Affairs Minister (he was a former Ambassador to both China and the United States) will help on matters of trade.

Ministers like former Finance Minister Arun Jaitley who have been hamstrung by health issues are out of the picture.

2.    The current trade war between the United States and China, offers much economic potential and new employment opportunities as both China and America look for new trade partners. India will have to move fast on issues like land acquisition. Says Andy Mukherjee in Business Standard, “China is importing more from other countries to cut reliance on US suppliers. That's helping India slash its annual trade deficit with China by $10 billion to $53 billion annually.”

Employment remains a vital issue as India is a young country with a median age of 27.9 years in 2018. India’s educational system is sadly not geared to the jobs that will be available tomorrow. Even today, the most lucrative jobs for Indians are abroad. The Government, industry and the educational sector will have to rise to that challenge.



Written for CitizenzNews by Pravin J P Arapurakal (Citizenznews@gmail.com)

*1 https://theprint.in/economy/polls-done-modi-govt-releases-jobs-data-that-showed-unemployment-at-45-year-high/244163/

*2 https://www.business-standard.com/article/economy-policy/why-pm-modi-chose-nirmala-sitharaman-for-the-finance-ministry-job-119060100111_1.html

*3 https://www.destination-kerala.com/trade-unions-are-good-business-and-industry?fbclid=IwAR0IHxwnGzbeQayVdxeVEsw1Sy2AF-OdJt66MRK03LWSSObImwaUxBdixD8

*4 https://www.citizenznews.com/2019/03/india-uninc-could-provide-jobs-nation.html