In urban India, joblessness was at 18.7% amongst males and a huge 27.2% amongst females. The Union Government’s decision to discontinue NSSO’s five year surveys, failure to regularly release Labour Bureau data and delay in releasing NSSO’s PLFS report has led to an atmosphere of uncertainty and confusion amongst the working force in India. In contrast, NITI Aayog and Union Government has objected to these figures on unemployment and cited the job data based on EPFO’s payroll data and the MUDRA loans beneficiaries. Amidst the controversies surrounding the job data, nobody can deny the fact that the employment scenario in India is very grim and needs an earliest solution.

Unemployment scenario in Manufacturing Sector-   The NSSO 2017-18 data highlighted the increase in open unemployment rates in India i.e. more and more people are thrown out of the labour force. The result is that the Labour Force Participation Rates (LFPR, i.e. those looking for work) for all ages, fell sharply from 43% in 2004-5 to 36.9% in 2017-18.This resulted into an increase in the number of youth who are neither in education or employment nor getting any training for job. India’s inability to create productive jobs for its rapidly rising young workforce stems largely from the failure of its manufacturing sector to become an engine of job creation. Unlike other countries at similar levels of development, India has achieved spectacular growth rates without witnessing growth of its manufacturing sector.

The share of manufacturing sector in GDP and employment has remained virtually stagnant at 15% and 12% respectively over the past three decades. The rapid service-led growth experience over the last decade has lent credence to the belief that not only has India leapfrogged the phase of manufacturing-led development and set out its own idiosyncratic path of structural transformation, but also that the idea of manufacturing-led growth is obsolete .The jobs in both the private and public sectors in India are shrinking continuously. Corporate India is hiring less because of their slower than expected recovery. The growth of employee count of India Inc. has been the lowest in year 2017-18 in the last three years. The Non-Banking Finance Companies and retail banks that were top job creators in the last three years are now faced with the rising NPAs issue which has forced them to hire lesser employees. According to World Bank report, the use of automation in India would lead to the loss of 69 per cent of the jobs in future. Automation is responsible to a large extent to the jobless growth in India.

 Rural Unemployment and MSME sector-  In the agricultural sector, young people who are willing to leave farming and work in towns – are getting more and more disappointed. Around 16 percent of the educated youth are unemployed today. This is particularly severe in the northern States. They lack the skills to be employed in jobs that would provide them a decent living wage. Women on the other hand have been unemployed in large numbers in rural areas because of the mechanisation of farming operations like sowing, weeding, etc. Additionally, stagnation of real wages and the government’s inability to ensure timely and reliable wage payments is discouraging and forcing rural women to stay away from MGNREGA scheme benefits.

It is the informal sector that includes many MSMEs which finally absorbs people seeking jobs. 94 percent of job seekers in India are forced to work in the informal sector. The challenge, therefore, is to create an economy dominated by the self-employed and small scale enterprises to a modern vibrant one so that more and more people can be employed in them. The decisions of Central Government on demonetisation and teething problems of GST implementation has affected the MSMEs and informal sector jobs adversely in recent times.

There are many who argue that India has missed the manufacturing bus and that automation and robotics would spell the end of manufacturing jobs. While it is true that workers are likely to be displaced by the technological changes, it is also true that several new tasks and occupations would emerge, thereby creating a reinstatement effect. Importantly, in developing countries such as India, where labour costs are still relatively low and there are significant financial costs associated with adopting and implementing new technologies, the pace of automation is likely to be slower than in the advanced world. Therefore, even though it might be technically feasible to automate, it may not be economically feasible. This gives India a longer window of opportunity to adapt and prepare for technological changes and build a strong robust manufacturing sector. Ignoring the potential of this sector in addressing India’s employment and macroeconomic challenges would be a monumental mistake for Indian economy.

(The author of this article ,Lt Col (Dr) Satish Dhage, is an ex Army officer and has been qualified for IPS (Indian Police Services) through IPS LCE 2012. Presently, he is Director, MGM Institute of Competitive Exams Aurangabad. For any queries or feedback, he can be contacted on email id : drsatishdhage@gmail.com)