Piecemeal approach?

In the last article, we discussed the conceptual issues regarding unemployment, such as the data sources, types and measurements of unemployment, and how the issue was addressed in the first six five-year plans. In this article, we will take up the discussions in the next six plans, beginning with the seventh plan.

Unemployment during 7th-8th plans

The seventh plan (1985-90) admitted that economic growth alone would not lead to ‘trickle down’ of the benefits, and specific and targeted programmes for employment generation were necessary. The plan also stated that there was no need to be skeptical of the latest technology, and that this should be accepted: what needed to be done was adapting, training and retraining so that no jobs were lost. The plan also gave equal importance to wage and self-employment schemes. As per the 38th round of NSS, the backlog of unemployment (for the 5+ age group) at the beginning of the seventh plan was estimated at 9.2 million, and another 39.38 million would join the labour force during the plan. Hence, the required employment generation during the plan was 48.58 million. It was expected that 40.36 million jobs would be generated through various schemes like NREP, RLEGP and IRDP. These would arise mainly in agriculture, irrigation, small-scale industries, housing, transport and the rural non-farm sector.

The eighth plan (1992-97) was implemented even as the massive economic reforms were unfolding and liberalisation was under way. The strategy adopted in the eighth plan was to treat employment and economic growth together, and to focus not only on creating jobs but also to raise productivity of existing employment. In the context of the economic reforms, the impact of various macro-economic and labour policies on employment would have to be kept in mind: in particular, the credit policy would have to be more employment friendly. In terms of numbers of unemployed, there was an increase over the earlier plan. The backlog of unemployed at the beginning of the eighth plan was about 23 million, as per the plan document. With an addition of 36 million in the labour force during the plan period (1992-97), the number of jobs required would be 59 million. Another 36 million would be added during 1997-2002, making the number of jobs required over the ten-year period 1992-2002 to be 94 million. This translates to an employment growth of 4 per cent per annum if the goal of providing employment to all is to be achieved by the end of the eighth plan, and around 3 per cent per annum if it is to be attained by 2000 AD. The sectors where these jobs were to be generated are: agriculture, through increasing land and labour productivity (more irrigation, more cropping intensity etc.); animal husbandry; and land and forests in the agriculture and allied sectors. Other sectors where jobs would have to be found are the rural non-farm sector, large and heavy industry, medium and small-scale industry, transport and communications.

In the ninth plan (1997-2002), it was recognised that a bulk of the labour force had low education levels, and the focus was on the growth of sectors which could provide maximum employment to such people. At the same time, there was a need to raise the education and skill levels of the workforce. The plan document also admitted that the problem of providing jobs was proving undaunted because of the rise in the labour force on the one hand and “a secular downward pressure on the employment intensity of the growth processes”. Based on the labour force participation rates, it was estimated that the labour force would rise by 52 million in the ninth plan (this was a revision from the earlier projections of this period in the eighth plan), 58 million in the tenth plan and 55 million in the eleventh plan. The ninth plan also estimated that 416.2 million jobs would be generated during the plan, which would bring down the unemployment rate to 1.66 per cent from the 1.89 per cent of the eighth plan, and would fall further to 0.86 per cent in the tenth plan. The ninth plan also underlined two important issues related to unemployment: the need to raise the education and skill levels, particularly in the agriculture and allied sectors, and the need for providing security of employment to casual workers.

In the tenth plan (2002-2007), unemployment was recognised as one of the foremost problems. The document estimated the addition to the labour force in the tenth plan at 35 million, and the backlog at the beginning of the tenth plan was also about 35 million. Thus, 70 million jobs needed to be generated during the tenth plan. However, assuming an 8 per cent growth rate, only 30 million jobs were possible to be generated, which would leave the unemployment rate (number of persons unemployed per 100 persons) at 9.79 per cent at the end of the plan, which would be higher than the 9.21 per cent at the beginning of the plan. It was suggested that additional jobs could be generated with some modifications in strategy, and that additional jobs would come from agriculture and animal husbandry, small and medium enterprises, rural non-farm sector and social sectors like education and health. As it turned out, as per the 61st round of NSS for 2004-05, employment growth in the tenth plan improved over the previous period. During 1999-2000 to 2004-05, about 47 million work opportunities were created as compared to only 24 million in the previous period 1993-94 to 1999-2000. During this period, the government set up the Montek Singh Ahluwalia task force on employment opportunities in 2001. The report was sharply criticised because it failed to outline a workable strategy to achieve the target of 100 million jobs in the next year, set by the then prime minister. It relied predominantly on the private sector involvement in agriculture and industry to generate these jobs. A special group for the same job was set up under the noted economist SP Gupta in September 2001, which found that jobs had fallen in the 1990s, and that the organised sector’s ability to generate jobs had come down to zero due to rising capital intensity and policies like ‘rightsizing’. The special group suggested that the focus should shift to the unorganised sector, where labour-intensity is higher. In the organised sector, only finance, education and health had positive employment elasticities.

The eleventh plan (2007-2012) document noted that while total employment rose in the tenth plan, the labour force grew even faster, which raised the unemployment rate. The backlog at the beginning of the eleventh plan was estimated at about 35 million, and with another 45 million addition to the labour force (this was revised down from the 52 million in the Approach Paper to the eleventh plan), total job requirements were 87 million. However, the Approach Paper called for the creation of 70 million jobs, which the plan document later corrected and suggested that 58 million jobs would be created. It was estimated that jobs in agriculture would actually fall and the additional jobs would come from manufacturing, construction, transport & communications and services such as IT, tourism, healthcare, education, banking, insurance, retail and media. As it turned out, the rate of unemployment declined from 8.3 per cent in 2004-05 to 6.6 per cent in 2009-10, and in this respect, the eleventh plan was a success.

The twelfth plan (2012-17), again emphasised the need for faster inclusive growth so that poverty and unemployment could be addressed. IT set a goal of 50 million additional jobs and skill training and certification of another 50 million people through various institutions such as Industrial Training Institutes (ITIs). Export of products of employment-intensive industries was also suggested as a measure to generate additional jobs. The Approach Paper to the twelfth plan laid a strong emphasis on skill development, and suggested a sharp increase in jobs in manufacturing so that the surplus labour expected from the rural and agricultural sectors could also be absorbed. This would require a step up in skill development and simplifying regulatory measures in areas of labour, industrial disputes and social security of organised and unorganised sector workers. Employment-generating sectors identified in the twelfth plan were: textiles and garments, leather and footwear, gems and jewellery, food processing industries, handlooms and handicrafts.

Conclusion

Unemployment has been an immense challenge and intractable problem through the plan years. Not only have there been conceptual and statistical problems, the targets in various plans have been largely artificial and unachievable. In terms of better statistics, the Periodic Labour Force Survey (PLFS) has begun from April 2017, which gives an update on urban unemployment every three months and rural and urban unemployment every year. There has also been a renewed emphasis on skill development in the last few years, which is expected to provide additional jobs and raise labour productivity. In the rural areas, the wage employment scheme, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) continues to be an important source of employment. All in all, many correct bits and pieces have been put in place, but there is a lack of an overarching employment policy or strategy. Admittedly, the problem is complex, with many moving parts, from the regulatory framework to sectoral policies to the overall macroeconomic framework. So, the answer also has to be multi-faceted.

The writer is Addl. Chief Secretary, Dept of Mass Extension, Education and Library Services, Govt of West Bengal.