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'The government should come back as a job creator as it did in the 1960s and the 1970s.'
According to the Centre for Monitoring Indian Economy (CMIE), India's unemployment rate in June 2024 was 9.2%, an eight-month high. It was 7% in May 2024.
CMIE data also says that India's unemployment rate rose from 5.41% in 2008 to 9.2% in June 2024. It has almost doubled!
If we look at the India Employment Report 2024 report published jointly by the International Labour Organization and the Institute of Human Development, it says 83% of the unemployed people in India are young people.
And the percentage of unemployed people with secondary or higher education has nearly doubled since 2000.
No wonder K R Shyam Sundar, Adjunct Professor at the Management Development Institute, Gurgaon calls unemployment a 'ticking time bomb'.
"If the government leads the way by creating jobs in the formal sector, the private sector also will be forced to create jobs," Professor Shyam Sundar tells Rediff.com's Shobha Warrier.
Recently you described unemployment as a time bomb. Has the bomb exploded, or is it about to explode?
It is about to explode.
According to CMIE data, rural unemployment rate rose to 9.3 per cent in June from 6.3 per cent in May 2024. Urban unemployment rate climbed from 8.6 per cent to 8.9 per cent.
The IHD-ILO study clearly says that a large number of youth remained unemployed though the PLFS (Periodic Labour Force Survey) data claimed that youth unemployment had declined from over 17% to 10% over the years.
One tends to go by the CMIE data because they give a 30-day moving average. So, it takes care of the fluctuations in the market, and also highly contemporary. They look into the 20-25 age group also.
It is believed that as educational level increases, skill level increases, and then there should be less unemployment among the youth. But the CMIE data also shows something different.
The reality is that as educational level increases, prospects of unemployment also increases.
Some experts say that educated youth prefer to remain unemployed rather than under employed...
It is true. In India, you should talk more about under employment than unemployment.
Taking up any jobs depends on the compelling necessities they face.
The very fact that thousands and thousands of youngsters, many of them postgraduates, apply for a very few vacancies shows youth are desperate for any job.
So, the desperation shown by the educated youth to get any job makes the situation a ticking bomb.
It may explode, it may not explode. But it is a huge cause for concern.
The Budget speaks of an internship programme, depositing money in the EPFO account, etc to address the issue of unemployment. Economists I interviewed described these as just quick fixes. What is your opinion?
I would say, these are not even quick fixes.
The government is in denial mode as far as unemployment is concerned.
In December 2023, when there was a question in Parliament, the government reproduced the PLFS data that showed a decline in unemployment to less than 5%.
The government even questioned the methodology used by CMIE which showed there was unemployment.
The government has to either produce data that is contemporary in nature or rely on the data published by CMIE.
I am of the opinion that the CMIE data indicates the extent of the problem the country is facing.
The numbers may vary but it brings out the broad picture very clearly.
You need not quarrel about the specific number, it doesn't matter whether it is 30% or 25% or 20%.
There is no denying the fact that it shows the broad direction in which unemployment situation is going.
What you need to do is acknowledge the problem and then address it.
The Budget has given three ways to tackle unemployment, all of them linked to EPFO.
Actually, the registration of EPFO is not in the hands of the employee. Many times, a sacked employee won't even ask for his PF contribution.
Will the internship programme in 500 companies announced in the Budget happen?
I don't know how many will fall for it.
The UPA had created a Skill Development Corporation which can actually play an active role in this.
There has to be synergy between public ITIs (Industrial Training Institutes) and private ITIs.
Skill mapping has to be done so that the problem can be addressed properly.
The government has to understand that more than anything, it is the skill that matters.
Engineers are produced not in thousands but in lakhs. Why are they under employed? Because they lack skills.
Industry says they are unemployable...
Industry says they are not employment ready.
If they are not employment ready, they should make them ready instead of complaining.
Since the industry has a stake in the future work force, why can't they participate in the ITIs and provide employment training according to their needs? Why do they want the government to do that? Do they have to piggy ride on the government?
I would rather blame industry for the problem of educated unemployment.
But the sufferers are the unemployed youth...
That's why there has to be some kind of social engineering that has to take place.
The government should tell industry, 'Since you are going to absorb these youngsters, you have to participate in the making them employable'.
Industry knows very well what skills are relevant, and what skills are in demand.
I suggest that there has to be a tripartite skill mapping board consisting of representatives of the skill ministry and education, industry bodies and trade unions.
They should establish such bodies in all the districts so that micro level mapping can take place.
Whatever they come out with should go to the curriculum of the ITIs.
India is the founding member of the ILO. And the ILO provides technical consultation for problems like this as they have the experience of fixing such problems in various countries.
ILO may be willing, but the government should be interested in using their services.
What happens is, someone sits somewhere and write programmes to solve the problem of unemployment and crores of rupees are mis-spent. This is the actual problem.
Is the real unemployment not in the unorganised sector?
I wouldn't say, unemployment. It is a curious case of under employment.
The unorganised sector has not come out of the shocks of demonetisation, GST and the pandemic.
And 82% of the workforce are in the unorganised sector.
Most of the measures taken to help the sector are half baked measures, not well thought out ones.
NITI Aayog has not succeeded so far. The Planning Commission was far more representative than NITI Aayog.
So, what the government needs to do is to have counsel from a group of diverse working group of economists and plan accordingly. After all, it is the taxpayers' money.
If the government is in denial mode, where will this lead to?
We do not know, and we are all very concerned as it may have some undesirable social outcomes.
I hope it doesn't become a time bomb. I am just expressing my social concern because of the way things are going.
The neo-liberal idea that it is not the government's job to create jobs must go away.
The government should come back as a job creator as it did in the 1960s and the 1970s.
If the government leads the way by creating jobs in the formal sector, the private sector also will be forced to create jobs.
Feature Presentation: Rajesh Alva/Rediff.com