Creating employment in the long run

CategorySocial

Last Updated22/08/2024

The recent shift in the government's focus from disinvestment to employment reflects a belated yet crucial recognition of India's escalating job crisis. The unemployment crisis demands a more comprehensive and demand-driven approach rather than the supply-side measures currently being proposed.

The government's plan to have the top 500 companies take on one crore interns over the next five years is ambitious but unrealistic. The exclusion of micro, small, and medium enterprises (MSMEs) from this initiative is a critical oversight.The scale of the scheme, which expects each company to hire 4,000 interns annually, disregards the practicalities of workforce expansion, especially in an era where Artificial Intelligence is reducing job opportunities.

Employment-linked incentives are, in principle, a positive step. However, the government's strategy, much like the Atmanirbhar Bharat package, relies heavily on supply-side measures. This approach fails to address the core issue: a lack of demand in the economy. Without an increase in demand, companies are unlikely to risk lowering their profit margins by expanding their workforce.

Recent data, including a report from Citigroup Inc., highlighted the persistent job crisis, causing concern within the government. However, the Reserve Bank of India's (RBI) claim of creating 109 million jobs between 2019-20 and 2023-24 has been met with skepticism. The reality on the ground, as shown by the Periodic Labour Force Survey (PLFS), paints a different picture, with only a modest increase in labor force participation.

The "Make in India" initiative, aimed at boosting manufacturing, has failed to create jobs in key sectors. The decline in the manufacturing workforce from 12.6% in 2011-12 to 11.4% in 2022-23 highlights this failure. Industrial production in job-creating sectors like textiles, electronics, leather, and paper products has been negative.

The tragic incident in Delhi, where three students preparing for government exams drowned, underscores the desperation among youth seeking stable employment. The enormous gap between the number of government job applicants and those actually employed is alarming. With nearly 30 lakh vacancies in the Central government, the government has a crucial role to play in addressing unemployment. Timely recruitment, filling existing vacancies, and preventing paper leaks in competitive exams are essential steps.

Instead of relying on short-term, ineffective nudges, the government should focus on a long-term investment strategy in essential public services. Investing in green jobs could offer multiple benefits, including improving the quality of life, generating a productive workforce, and creating sustainable employment opportunities.