Nos. 36 & 37, March 2004

Nos. 36 & 37
(March 2004):

Introduction: Growth Suppressed, Parasitism to the Fore

Appendix I: The Real Scale of Unemployment

Appendix II: Starving and Stunting the People

The Real State of India's Economy
VII. Sea of Unemployment

The growth of organised sector employment has slowed, then turned negative by the end of the decade. While figures are available upto March 2001, it appears that a Planning Commission member mentioned in January 2004 that "the corporate sector had shed around one million jobs in the previous year". (Business Standard, 20/1/04)

Table 14: Annual Addition to Organised Sector Employment
(hundred thousand jobs)

Not only organised sector employment, but employment as a whole, has suffered during the period of liberalisation. According to the Government's own calculations employment growth has plummeted from 2.7 per cent a year in the pre-'liberalisation' period to just over one per cent a year in the 'liberalisation' period. The number of new jobs fell from 7.6 million per year in the earlier period to 3.5 million in the later period. This is a devastating change. The pattern of growth has been such that far fewer jobs are created for each increase in the GDP.

In another piece in this issue, we have shown how, even according to the Government's own calculations, GDP growth every year would have to be over eight per cent just in order to absorb the new workers in search of work. We have further shown how the Government grossly underestimates the number of persons requiring work, merely by excluding those who, seeing no prospect of employment, have given up looking for a job (the 'discouraged workers'). Instead, if we assume, quite reasonably, that the flow of fresh entrants into the labour market would continue at the same rate as in the 1980s, then, because of the present pattern of growth, GDP growth would have to be over 15 per cent a year just to absorb the new entrants — an impossible task. So, as things are, the pool of unemployed will continue to grow rapidly.

How should we estimate the number of unemployed? The Government, by excluding the 'discouraged workers', puts unemployment at just 7.3 per cent of the labour force (those employed and those seeking employment) in 1999-2000. However, it makes more sense to treat the entire population in the working age group (15 to 59 years of age) as potentially part of the workforce. We find that by March 2004, the working age population would have risen to 662 million, out of which 313 million people, or almost half the population in the working age group, would be unable to find any employment because of the existing economic order and the policies that order has adopted. Out of these, about 100 million males of working age too would be without any sort of work. Moreover, the number of people of working age grows every year by about 18 million, whereas the annual addition to employment is less than 4 million.

That 'employment', we should remember, includes all sorts of work at less than subsistence levels. Merely engaging in "gainful activities" qualifies one as employed, no matter that one may not be earning a basic minimum. In India, where there is no unemployment benefit, and where poverty is widespread, people cannot afford to remain unemployed; they do whatever work they can get or create, including various types of self-employment, in an attempt to stay afloat.


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