Jobs vs dole ... PDF Print E-mail
Monday, 09 September 2013 00:00
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Slow growth means 3.5mn less jobs each year

Given how most of the tens of thousands of layoffs taking place are in the informal sector, it is difficult to get accurate data on the numbers though, the production data tells its own story. But some broad estimates can be made even on the basis of the macro data, and that suggests a grim picture. It also explains why the government is anxious to push for populist schemes like the Food Security Bill. If you can’t give them jobs, give them dole seems to be the logic. Based on the National Sample Survey (NSS) data, the only official source for any kind of employment data for the country as a whole, it turns out the NDA created just under 61 million new jobs between FY00 to FY05—the NSS dates aren’t a complete overlap, but they are close enough. In comparison, between FY05 and FY10, when the NSS conducted its next big sample, the UPA was in power and created under 3 million jobs. Since FY10 was a drought year, many said it was the wrong comparator, so another large sample was done in FY12. That showed better numbers—a total of 14 million new jobs were created between FY10 and FY12. Add that and the UPA’s record gets a bit better, but not much—about 2.4 million jobs a year versus the NDA’s 12 million. What is worse is where the jobs were created or, more importantly, where they were lost. While nearly 12 million manufacturing jobs were created in the NDA period, a little over 5 million such jobs were lost in the UPA’s first 5 years. To the extent there was positive jobs creation in this period, it was because of the surge in construction jobs—while jobs are jobs, these are the most temporary since, after one building has been constructed, the job site changes, and often the worker also loses the job if s/he is unable to travel to the next construction site, often in another city.

What is more worrying from a macro point of view is the fall in elasticity of employment, literally the growth in employment per unit of growth in GDP. From 0.15 in the FY94 to FY00 period, this rose to 0.48 in the FY00 to FY05 period but then collapsed with the jobs collapse in the next 5 years. For the next 5 years, till FY17, the Planning Commission has assumed an overall elasticity of 0.19. While this is around 40% of that in the FY05 to FY10 period—this means the jobs creation will be lower per unit of GDP—it’s important to examine the implications of even this in the current context. An elasticity of 0.19—it is much lower in the important manufacturing sector—means that around 8.7 lakh jobs will be created for every extra percentage of GDP growth. So, if GDP slips from the 9% that was being generated a few years ago to under 5% today, that means around 3.5 million less jobs generated each year. Juxtapose with the dole under the food Bill, no matter how generous it is, and it is obvious voters have got a raw deal. Amazingly, even the BJP chose to go along with the UPA on the food Bill instead of highlighting this.


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