India is one of the fastest-growing developing economies in the world. However, the Managing Director and CEO of Centre for Monitoring India’s Economy (CMIE), Mahesh Vyas, said that based on the survey conducted by his organisation it can be concluded that the unemployment rate in the country has been increasing. In the month of February, the unemployment rate was 7.2%. This is said to increase by 7% soon. This condition is known as “jobless growth”. Jobless growth is the phenomenon that occurs when a growing economy is unable to create new jobs. Creating adequate jobs for the people has been a stable and constant problem in the country. In fact, economic reforms for over a decade have not been able to address this issue. There have been various reforms initiated by the government to address the problem of unemployment; however, they have not been able to generate the desired result.
It cannot be denied that over the past decade the Indian economy grew at a very fast pace, but the impact of this growth does not seem to have benefited the citizens. Usually, economic theory suggests that when there is growth in an economy, it will have a positive impact on the other macroeconomic variables as well. That is, when an economy grows, there is an increase in the economic activities, which means variables like production, income and investment see an uptrend. This will indirectly lead to a growth in the employment rate as well. This is because producers employ more labour to meet the increasing demand and this scenario is understood as the boom period. As per this understanding, unless the economy is in recession, any growth during the boom would lead to a simultaneous increase in the employment rate. However, this does not seem to happen in the case of the Indian economy. These economic theories are not validated when studied from the context of the Indian economy.
The jobless growth in India is not a recent phenomenon. The issue was discussed for the first time after the completion of the 66th round of National Sample Survey Office (NSSO), when they released data regarding employment rate. It was seen that from 2004 to 2010 only one million jobs were created in the country although the average growth rate during this period was 8.4% per year. Looking at the statistics, it can be established that 55 million people joined the labour force but only one million of them were able to find jobs, meaning 50 million of them were left unemployed. This shows that we are not able to create jobs in the same rate at which people are joining the labour force. Increasing rate of unemployment is a serious economic threat that needs to be addressed immediately.
More often than not, we tend to see the growth rates and assume that the economy is improving. However, this would mean that we are seeing only half the picture. Increasing unemployment rate is a serious issue. One more thing to remember is that we should not only look at creating more jobs, but focus on creating quality jobs. According to Vyas, right kind of jobs is not available now. However, at present, the lack of employment opportunities is the more serious concern. He further said that if only bad kind of jobs (underemployment) where sufficient wages are not paid are created, then that would lead to a reduction in the willingness of the people to work.
Jobless growth is an issue that affects people directly. A way to overcome this issue is to train people in different skill based labour instead of directing the entire workforce into the unorganised sector. Skill based training will be more productive to the country’s economy and the individual. Hence, jobless growth is an issue that must be addressed right away because it affects people from all classes and categories.
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