Aspirations and reality of jobs in India
On September 6, The Times of India carried a futuristic article by Jayant Sinha, Union Minister of State for Civil Aviation. The minister rejected the farm-to-factory model of job creation in favour of a farm-to-frontier model where workers produce high outputs based on innovation-driven services. The emphasis is on mass services and not mass manufacturing. Ride-sharing taxis, airlines, IT are examples quoted by the minister.
On the same day, in an interview to The Indian Express, Infosys founder, Narayana Murthy said that sectors like IT cannot provide the jobs the country needs. Jobs will have to come from manufacturing and low-end services. In this connection, he appreciated the Make in India programme.
A couple of days earlier, a Mint leader lamented the poor quality of jobs in India and the apparently misleading rise in entrepreneurship which is nothing but a consequence of a lack of job options. An online survey across 180 cities conducted by You Gov in collaboration with Mint showed that 70 per cent of post-millennials and 65 per cent of younger millennials think it is extremely difficult or fairly difficult to find a job nowadays.
The survey shows an apparently unrealistic aspiration among young millennials. Those less than 21 years of age expect a minimum salary of ~30,000 per month. This expectation is higher than what the age group 22-28 years with similar qualification earn. Is this lack of realism or, is this higher expectation an expression of rejection with what the job market offers and therefore a desire to start one’s own business?
Profits are greater than wages for the successful entrepreneur. But, success in business comes wrapped in risk and a lot more hard work than what the average millennial is willing to invest.
The minister seems to be setting aspirations even higher than what the millennials seem to suggest — right at the frontier. He reports that the average Indian is not happy with the factory job. He expects better. This is not entirely new. We have seen engineers becoming anything but factory workers or even supervisors on the floor shop. The expectation is of an air-conditioned environment. And, Narayana Murthy tells us that such jobs are not coming all that fast anymore.
Most large placement agencies will tell you that the greatest demand today is of sales people. But, this is not what job seekers are looking for. A sales job entails the same grind as that of the factory worker. This is not what young India seems to aspire for.
How soon can reality catch up with aspirations that seem to be running ahead of opportunities? In fact, they could be running in opposite directions. The challenges are increasing. If the disruptions of demonetisation and GST are behind us then the jobs challenge before that are back with us as well.
The unemployment rate before demonetisation was 8-9 per cent and labour participation rate was 47-48 per cent. Both fell after demonetisation. Labour participation rate fell to reach a low of less-than 43 per cent and unemployment rate fell to 3.4 per cent by July 2017. By August 2018, labour participation rate was still less than 43 per cent, but unemployment had risen to 6.3 per cent.
The Mint survey highlighted the problems with urban workers. CMIE’s Consumer Pyramids Household Survey shows that the pain in urban India is higher than in rural India. Urban unemployment rate touched 6.8 per cent in August 2018 but labour participation rate was abysmally low at 40.75 per cent. The employment rate (which is the proportion of working age persons who are employed) was at its lowest at 37.97 per cent. This low employment rate is perhaps the biggest source of worry.
In rural India, the employment rate is slightly higher at 40.85 per cent, labour participation rate is better at 43.5 per cent and the unemployment rate is lower at 6.1 per cent.
Both regions face a similar problem of aspirations. Urban youngsters don’t find jobs that meet their expectations. And, rural folks don’t get prices they expect for their product. Possibly, the problem is not merely of a lack of jobs or prices. It is also a problem of unrealistic expectations.
Perhaps, it is wiser to not fuel aspirations way out of reality. We see a small pickup in investments. It is important that this gains momentum and reignites the animal spirits for aggressive expansion in the private sector. A labour force that is not only well trained but is also grounded in reality is important to ensure smooth and sustainable growth of jobs and earnings. India needs men and women to run shop floors as much as it needs them to manoeuvre the drones the minister proposes to launch and take us to the next frontier.
The author is managing director and CEO, Centre for Monitoring Indian Economy P Ltd