Modi government refuses to acknowledge India’s jobs crisis

Indian Railways, the country’s largest public-sector employer, recently received more than 28 million applications for 90,000 job posts it had advertised for. As of March 31, 2017, Indian Railways employed around 1.31 million individuals.

The ratio of the number of applicants to the number of jobs stood at a whopping 311:1.

The number of applicants was more than the population of Australia, which was a little over 24 million in 2016. It was around six times the population of New Zealand, which in 2016 was around 4.6 million.

Using data provided by the Central Statistics Office of the government of India, we can estimate that the number of Indians between the ages of 15 and 29, who are most likely to apply for these jobs on offer, is 360 million (189 million males and 171 million females).

This basically means that close to 7.8% of the population in that age group that can be categorized as India’s youth applied for the 90,000 jobs on offer at Indian Railways. What this calculation does not take into account is the fact that not everybody in the 15-29 age group is looking for a job.

Many individuals in this age group are studying. In the case of females, many get married at a young age and take care of the family. In some other cases, females have been pulled out of school or college and are waiting at home to get married.

We need to adjust for this – that is, take the labor-force participation rate of this age group  into account – and then recalculate the numbers.

The labor-force participation rate for males in the 15-29 age group was 63.1% as of June 2012, according to the National Sample Survey Office. That was the proportion of people who were actually looking for jobs. For women, the figure was only 18.3%.

There are two explanations for the low female labor-participation rate. One lies in the fact that many individuals in this age group are still studying. Further, the overall participation rate for females is also very low at 18.1%, and this is reflects in this age group as well. Taking the participation rates into account, the total number of people in India actively looking for jobs in the 15-29 age group works out to 150 million (119 million males and 31 million females).

This means close to 18.7% (28 million expressed as a percentage of 150 million) of the population in the 15-29 age group has applied for the 90,000 jobs on offer at Indian Railways. Or to put it a little simplistically, one in five individuals in the 15-29 age-group applied for those jobs.

This tells us the sad state of affairs for the 1 million youth who join the Indian workforce every month. Another factor at work here is that the government pays much better at lower levels than the private sector in India does, which obviously gets many people to apply.

The above figures clearly show the lack of formal jobs in India. This is a problem that the government is not willing to acknowledge. Recently, Jayant Sinha, a junior minister in the government of Prime Minister Narendra Modi, called India’s jobs crisis more of a data crisis, in a column he wrote for The Times of India, the country’s largest-selling English-language newspaper.

In his column he stated that 6.5 million new jobs were created in the retail sector between 2014 and 2017. While he didn’t state the source of these data, some digging suggests that he borrowed this number from “Human Resources and Skill Requirement in the Retail Sector,” a report authored by KPMG for the NITI Aayog, a government-run think-tank.

The 6.5 million jobs that Sinha talked about was basically a forecast, which he passed off as the actual number of jobs created. As far as the lack of data is concerned, the Labor Bureau carried out six household-based Annual Employment-Unemployment Surveys (EUS) between 2010 and 2016. Reports of five rounds have been released to date. (Makes us wonder why the report on the sixth round has been held back.)

The report of the fifth round was released in September 2016. One of the major findings of the report was that only 60% of Indians who were looking for a job all through the year found one. This figure showed very clearly the bad state of jobs in India. This was consistent with a similar finding in the report on the fourth round of the survey as well.

Recently, in an answer to a question raised in Parliament, the government said, “On the recommendations of the Task Force on Employment, however, this survey has been discontinued.” Basically, a survey that brought bad news has been discontinued, and then the government goes around talking about lack of data.

There are enough data that suggest that India is facing a huge unemployment problem. The so-called demographic dividend is collapsing. The Modi government refuses even to acknowledge this problem. The first step toward solving any problem is to acknowledge it. If you don’t acknowledge a problem, how do you solve it?