Opinion The jobs push

That India has a jobs problem is beyond debate. In large measure, it is worsened by the underlying structure of the Indian economy. The rapidly growing services sector tends not only to be less employment intensive, but is also more geared towards absorbing the skilled sections of the labour force. And the gig economy, which does employ the unskilled, simply doesn’t create enough jobs for the millions entering the labour force each year. The challenge has been, and continues to be, the inability to facilitate the creation of a labour intensive manufacturing sector that is able to absorb the low and semi-skilled sections of the labour force. With the next general election less than two years away, and given that unemployment and inflation are the two biggest economic issues today, the government appears to be now moving to tackle them with some urgency.

On Tuesday, the Centre announced plans to recruit 10 lakh people in ministries and departments over the next one-and-a-half years. The recruitment drive will ostensibly be directed towards the youth. However, this ambitious drive could be circumscribed by some fundamental constraints — the size of government, for one. According to the report of the 7th Pay Commission, the total sanctioned strength of the central government fell from 41.76 lakh in 1994 to 38.9 lakh in 2014. In 2021, the strength of the central government stood at 34.5 lakh as per the Union budget. Moreover, between 2006 and 2014, the average recruitment in the central government was a little over one lakh each year. Between 2017-18 and 2021-22, the staff selection commission and the union public service commission recruited only 1.74 lakh and 24,836 candidates, as reported in this paper. These numbers not only raise questions over the absorptive capacity of the state, but also imply that government employment actually forms a small proportion of the formal labour force, and an even smaller part of the total labour force. In fact, the Pay Commission report had noted that “the central government is at best a marginal source for employment generation.” Thus, considering the scale of the challenge, this recruitment drive will not be enough.

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Further, not only does this expansion in public sector jobs pose a challenge to the promise and goal of minimum government, implicit in this move is also the acknowledgment that not enough jobs are being created by the private sector, which should be the principal driver of employment generation. With roughly 12 million individuals entering the working age population each year, around 6 million jobs need to be created each year, assuming a labour force participation rate of 0.5. But this is just to absorb the new entrants to the labour force. Employment opportunities for those wanting to shift out of agriculture also need to be factored in. This requires creating jobs at a scale which only the private sector can do efficiently.