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Lack of jobs to be one of the key issues in upcoming general elections

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Lack of jobs is going to be a key issue in the upcoming general elections in India like never before.

The biggest criticism of the National Democratic Alliance (NDA) government has been a poor pace of job creation in the country - despite flagship programmes like Make in India (aimed at boosting domestic manufacturing) and Mudra scheme (which provides financing to small entrepreneurs).

Prime Minister Narendra Modi was right when he said that a lack of data on jobs is a bigger problem than job creation itself. Click here to read the story.

Two non-government members of the National Statistical Commission (NSC) resigned on Monday, with the latest trigger being the withholding of the National Sample Survey Office's jobs report by the government. The NSSO was supposed to come up with one of the most robust household surveys on employment and unemployment (known as periodic labour force survey), beginning 2017-18 - a year after demonetisation of high-value currency notes was announced by the Prime Minister.

If observers are to be believed, the NSSO has buried the report as it shows adverse trends of rising unemployment in the country, coupled with a declining labour force participation rate. This essentially means more people left the workforce, even as those who were willing and able to work didn't find a job after demonetisation, in 2017-18. 

Creating job opportunities, particularly for the youth, is at the heart of all the electoral promises made by all political parties in India but as is now evident, job creation still remains a key challenge in recent years.

The unreleased household survey of the Labour Bureau, reviewed by Business Standard, showed the unemployment rate stood at a four-year high of 3.9 per cent in 2016-17 – in the months preceding demonetisation.

While more people were joining the workforce – with the Labour Force Participation Rate (LFPR) going up from 75.5 per cent in 2015-16 to 76.8 per cent in 2016-17 – there were less jobs in the market, especially for women (unemployment rate was at a six-year high of 6.1 per cent in 2016-17), the survey showed.

The National Sample Survey Office (NSSO)’s household survey of employment-unemployment is also likely to throw up adverse trends for 2017-18 – a year after the ripple effects of demonetisation were seen in the economy with the GDP growth slowing down to 6.7 per cent – the lowest under the present regime.

However, what could be worse news for policy watchers, the NSSO may not release its annual household survey – supposed to be the most robust data set on jobs in recent years – before the general elections slated to be held in the first half of this year. The government also hasn’t released the Labour Bureau’s household survey report, despite the necessary approvals in place.

There is no official survey conducted by the government after 2017-18, but according to the latest report by private think-tank Centre for Monitoring Indian Economy (CMIE), the country's unemployment rate shot up to a 15-month high of 7.4 per cent in December 2018. In 2018, 11 million people lost their jobs, as per the report.

The Employees’ Provident Fund Organisation (EPFO)’s monthly payroll data fails to offer any conclusive trend on job creation, largely due to its volatility and a government-appointed technical panel has recently suggested aligning data in line with National Industrial Classification (NIC) standards. Besides, most of the job creation in the formal sector may be attributed to employers’ taking benefit of a subsidy scheme announced by the government.

The employment outlook doesn’t look encouraging, going by empirical evidence. More households feel the employment situation will worsen in the upcoming year, as per the Reserve Bank of India (RBI)’s Consumer Confidence Survey of November 2018 done in 13 major cities.

The unemployment rate in India will stand at 3.5 per cent in 2018 and 2019 – the same level of unemployment seen in 2017 and 2016, according to projections made by the International Labour Organisation (ILO). The ILO had earlier projected unemployment rate at a notch lower level of 3.4 per cent for 2017 and 2018.

A problem that no political party seems to be addressing is the declining participation of females in India's workforce. As the Labour Bureau's data shows, females are dropping out of the workforce. And there may be reasons beyond access to education and rising household incomes. The NSSO's unpublished report, which apparently shows a shrinking size of India's workforce at an overall level, is certainly a sign of distress. 

Another trend that needs immediate attention of the political forces is the rising unemployment in urban areas pre- and post-demonetisation.

But for finding solutions, we need the data. Can the government walk the talk and release the missing jobs data to make a beginning?


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