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VIEWPOINT: KAUTILYA
Ahluwalia's Labour Lost?
The Employment Task Force's report demands urgent attention
and action
By Jairam Ramesh
The
report of the Planning Commission's Task Force on Employment Opportunities,
chaired by the distinguished economist Montek Singh Ahluwalia, is now out.
This report, intensive in data analysis and extensive in policy recommendations,
was prepared by a team that included the late Pravin Visaria and K. Sundaram,
two of India's authoritative scholars on employment. Its main message is
that employment strategy can no longer be dissociated from the process of
accelerating economic growth and bringing about structural changes in the
economy.
Based on the five-yearly surveys conducted by
the National Sample Survey Organisation, the report concludes that the
growth of employment has dropped sharply from 2 per cent per year between
1983 and 1993-94 to less than 1 per cent between 1993-94 and 1999-2000.
Does this mean we are having "jobless" growth? Not necessarily,
for three important reasons.
 First,
the growth of the labour force has reduced from 2.3 per cent annually
between 1983 and 1993-94 to a little over 1 per cent between 1993-94 and
1999-2000. Unemployment being defined as the proportion of the labour
force unemployed, the lower the labour force, higher the unemployment.
A smaller labour force particularly in the younger age groups means that
more young men and women are in schools and colleges. Second, the growth
of total employment has declined mainly because for the first time, farm
employment has come down in absolute terms from about 243 million in 1993-94
to about 238 million in 1999-2000. This, too, should not be entirely unwelcome
since the essence of growth is to get people out of low-productivity primary-
sector occupations to high-productivity industrial and service-sector
employment. Third, public-sector employment has also fallen from 19.44
million to 19.41 million between 1993-94 and 1999-2000. But there has
been a sharp rise in private-sector employment growth from just 0.45 per
cent per year between 1983 and 1993-94 to 1.87 per cent annually between
1993-94 and 1999-2000. These trends, again, are not undesirable in themselves.
Annually, about nine million new jobs have to
be created over the next decade. This means that the present rate of productive
employment growth has to virtually treble. In addition, the quality of
existing employment has to improve significantly. For achieving both these
objectives, the report suggests a fivefold strategy:
Accelerating the GDP growth rate to at least
8 per cent annually, particularly in the populous but poor states, through
higher rates of investment and its efficient use, privatisation, infrastructure
expansion, financial sector reforms and enhanced credit for the informal
sector;
Pursuing sectoral policies in agriculture, industry
and services (that alone will account for 70 per cent of the new jobs),
with emphasis on increasing public investment in irrigation, removal of
controls on agricultural trade, development of food processing, revamp
of small-scale industry and a boost to tourism, it, construction, housing
and real estate, road transport and retail trade;
Improving the efficiency-with focus on building
durable community assets-of special employment-generation schemes for
the rural and urban poor on which the Centre spends close to Rs 9,000
crore annually;
Upgrading the quality of the workforce through
a completely revamped and vastly expanded network of technical education,
vocational training and skill development;
Ensuring that the policy and legal environment
encourages creation of new jobs specially in the organised sector which
today accounts for barely 7 per cent of total employment.
Vindicating the early fears of no less a person
than the guru of Indian planning P.C. Mahalanobis himself, labour laws
have become the biggest impediment to the creation of new jobs. Is it
any surprise that Kerala and West Bengal have the highest unemployment
rates? The lack of an effective and timely exit policy has only protected
industrialists. Reservations for small-scale industry have prevented India
from becoming a global power in labour-intensive mass manufacturing that
would, in turn, create millions of factory jobs at home, as it has in
China. Special employment programmes do have a crucial role to play but
require restructuring so as to be able to fulfil their objectives. However,
when the educated constitute about 60 per cent of the unemployed, the
impact of such schemes is limited.
Predictably, the report has drawn flak from
leftists and the RSS. The Planning Commission itself finds it too radical.
But we ignore the report at our own peril. The prime minister should simply
push ahead by building a coalition of chief ministers who have to deliver
on jobs, not peddle obsolete ideologies and cling to shibboleths.
(The author is with the Congress party. These
are his personal views.)
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