Unorganised sector has large hidden potential for job creation

• Unorganised sector's large hidden potential for job creation is the best hope for India.
• Every politician and economist talks about 'development' and 'job creation' all the times but nothing much has happened during past 5 years.
• Unemployment rate is stable mainly due to falling labour participation rates among children and women. Also because of hidden unemployment due to unemployed getting engaged as casual workers or absorption in family enterprises and underemployment of many workers.
• Despite youth bulge in population there is no youth bulge in workforce and hence there is no demographic dividend.
• We have large number of poorly educated workers.
• Employment conditions will improve with an increase in the share of organised sector.
• Earnings per worker improved by 2.3% in organised sector and 4.2% in unorganised sector between 1999-2000 and 2011-12 but gender equality in the work declined.
• Recent trends show unemployment increase from 3.8% (2011-12) to 5% (2015-16) due 5 million 'employment loss'.

How large is the job gap? How soon can India reach a point where there is no hidden unemployment and all who want work can find it at a fair wage and decent work conditions?

• Current surplus labour at 117 million (52 million who can be withdrawn without loss of production, anther 52 million who are not at present in labour force but are able and willing to work and 13 million who are reported unemployed)
• Annual additions would be about 6-8 million.  
• Can we absorb about 16 million a year in decent work and reach full employment by 2030?
• China's model of export driven job creation looks less attractive due to global slow down, growing protectionism and growth of robotics and automation.
• Growth in manufacturing with matching skill development, infrastructure construction, urban development, housing, information technology, investment in energy will produce many jobs but far less than availability.
• The organised sector can't deliver jobs on the scale required. Job creation requires skill development for productivity enhancement.
• Powerful trade unions are able to take care of very limited proportion of workers.
• Labour reforms are required to ensure fair wages, competition and decent work conditions.
• Wages of production workers declined from 15.4% of GVA (2000-01) to 8.5% (2011-12) in unorganised sector.
• Vast majority of workers in unorganised sector lack security and suffer wage differentiation by caste, community, gender, geography for identical tasks.
• Some reforms for protection and wage determination of workers in unorganised sector are necessary. Labour policy must address inequity and exploitation issues. 
• For India to meet its job creation obligations, unorganised sector, with growth, reform and modernisation, is big hope with tremendous hidden potential. 

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Unorganised sector, as its name suggests, doesn't follow many rules & processes and are outside income tax department lens. But its ability to provide vast number jobs fuels economic growth and contributes a lot in the form of indirect taxes. The recent demonetisation & GST proclaims formalisation of informal sector but in reality it has destroyed unorganised sector and that is evident from loss of 5 million livelihoods and GDP growth drooping from 9.1% to 5.7% and government(s) going penniless. But as they grow over time they themselves will migrate into formal sector with increased revenues, profits and benefits of formal sector. It makes sense for government(s) to allow this sector to function without fear or reverence, who will eventually become good tax payers too.

Agriculture sector with land reforms, land aggregation & cooperative farming, farm mechanisation, efficient & assured irrigation, rain water harvesting & ground water table increasing, remunerative pricing, crop insurance, efficient markets, quality inputs, warehousing & cold storages, food processing units etc will enhance rural development and reduce rural urban migration etc.

Modi govt abandons Skill Development

 

Modi government flipflopped  and abandons its promise of training 500 million people to get jobs by 2022. The announcement came at a press conference on Tue 6/6/2017, when Union Minister Rajiv Pratap Rudy stated that skill development "will be demand driven than supply driven." Analysts point out that without any numbers to pursue, the overall mission of providing skill development and vocational training would lack structure. 

• It was in 2009, Congress Party-led United Progressive Alliance (UPA) government had set the target of providing skill development and vocational training to 500 million people by 2022. 
• In Nov 2014, The Modi government had said that its National Policy for Skill Development and Entrepreneurship 2015 "supersedes" the 2009 policy. 

India is one of the youngest nations in the world, with more than 54% of the total population below 25 years of age and over 62% of the population in the working age group (15-59 years). The country's population pyramid is expected to bulge across the 15-59 age group over the next decade. This demographic advantage is predicted to last only until 2040. India therefore has a very narrow time frame to harness its demographic dividend and to overcome its skill shortages. -- National Policy on Skill Development and Entrepreneurship 2015

• In January 2015, Rudy had said that the government was committed to creating a resource pool of 500 million skilled workers by 2022 and that 450 million workers would be trained between 2017 and 2022.
• In the 2017-2018 budget, the government has set aside over Rs. 17,000 crore for skill training, employment generation and providing livelihood to millions of youth who enter the workforce. The Ministry of Skill Development and Entrepreneurship received its highest ever allocation of Rs. 3,016 crore.
• Only 2% of India's workforce is skilled.
• There has been considerable talk over the years around the need to provide jobs, both the former UPA government and the current NDA government have missed the skill training targets since 2011. 
• In 2014-15, the NDA government trained 7.5 million people, and in the succeeding two years, 11.7 million people were trained.
• Rudy did not say how many of 11.7 million trained in the past two years had been employed.

Ever since liberalization started in 1992, successive governments focused on 'cash cows' and neglected agriculture and rural economy. The revenues generated was spent on trophy projects siphoning money by politicians, businessmen, industrialists and bureaucrats resulting in distress among lower classes and destruction of agriculture. Modi just doubled the speed without deep thinking. Almost all his schemes stands miserable failures. His failures are Make in India, Start up India, Skill India, Digital India, Swachh Bharat,  Demonetization, GST Roll out, black money & corruption, One crore jobs a year, No Lok Pal yet, Kashmir burning, Chinese troops remained at Doklam, Agriculture distress, Jan Dhan Yojana burdening Banks, Smart cities development, Minorities & Dalits alienated and so on with resultant side effects. Mind boggling amounts were spent on publicizing these senseless schemes. In discriminate imports from China resulted in closure of 250,000 SMEs. Agriculture and Rural economy, which provides livelihood to 70% of India, needed investment of about Rs.2-3 lakh crores every year for a period of 6-7 years to make it dependable, viable and remunerative and would have done wonders in terms of consumption growth resulting in vibrant economy. But that would be unspectacular and won't please demagogues like Modi, Chandrababu Naidu etc. In the process healthcare, education and welfare took a big hit. In 2019, worst performing rulers will be dumped without any doubt. Such is the collective wisdom of people of India.