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Economists unhappy over weak reforms-employment equation

Neena Haridas in New Delhi

If the figures released by the National Sample Survey Organisation are anything to go by, Finance Minister Yashwant Sinha might get the employment programmes on track in the coming budget, say economists and industry leaders.

Even as the government gets ready to roll into what is called the second phase of reforms, the fact is that liberalisation has NOT made a significant change in the employment scene in India -- the rozgar yojnas and Prime Minister Vajpayee's 'Berozgari Hatao' vow notwithstanding.

The 54th round of National Sample Survey Organisation, in comparison with 47th round conducted at the beginning of the reforms era in 1991, shows the overall employment scenario in the country has remained more or less unchanged since the reforms began in 1991.

If at all, there has been a marginal decline in the proportion of employed population in the total available workforce in both rural and urban areas.

Consider this: The proportion of employed workforce was estimated at 53.9 per cent for rural males and 50.9 per cent for urban males in this round of NSS. These figures are marginally lower than the 1991 round comparitive numbers of 54.6 per cent and 51.6 per cent, respectively.

On the one hand, there are social activists such as Mudit Mathur blaming the short-sighted policies of the government for the lack of employment opportunities in the country; on the other, there are others who believe that the government policies are not being implemented properly at the grassroots level.

Says Mathur, "On the one hand, the employment programmes are not properly implemented, and on the other privatisation is being carried out without getting the social security in place. Liberalisation without proper safety nets will obviously lead to more unemployment."

Contends Pravin Visaria, chairman of the governing council of the National Sample Survey Organisation, the most important source of primary data in the country, "Our surveys show that unemployment has not grown because of liberalisation. Employment growth may have been stagnant in some sectors and there might have been some reduction in employment in some industries, but people have found new jobs, which has been possible because of liberalisation."

However, this stagnation goes against Vajpayee's vision. He had maintained that his government's prime economic agenda was to eradicate poverty by increasing employment. In fact, he had confidently stated, at the conference of state rural development and Panchayati Raj ministers, that "unemployment and poverty will be tackled".

Vajpayee had said the national agenda of the government envisaged a human face to the development efforts with poverty eradication as the ultimate goal and the removal of unemployment as the means to achieve this. He had called for empowerment of the Panchayati Raj institutions to improve their financial position. "Unless we make them strong and capable of self-financing their basic activities, we cannot strengthen democracy at the grassroots. The institutions of Gram Sabha (village assembly) needed to be made an effective instrument of local self-government," he had stated.

Be that as it may, the reforms and the sundry rozgar yojnas that successive governments have been churning out over the last ten years, seem to have missed the target. Says economist Jay Dubashi, "Ever since liberalisation, budgets have brought nothing but inflation and unemployment and unless there is going to be a real shift in thinking, there will not be a much difference."

According to the NSS, the proportion of unemployed population as also unemployment rate, has been higher in urban areas and among females than males. Interestingly, the number of employed women is higher in the rural areas as compared to urban areas, the reason for which, according to economists, is increased role of women in casual labour.

In the case of female workers, the employment ratio declined from 29.4 per cent in 1991 to 26.3 per cent in 1998 in rural areas and from 13.2 per cent to 11.4 per cent in urban areas.

The share of the primary (agriculture and allied fields) and secondary (manufacturing) sectors in employment has tended to decline while that of the tertiary sector (services) has increased in both rural and urban areas.

The NSS also shows that in terms of self-employment, regular employment and casual labour, more than half (55.3 per cent) of the working population in the rural areas was self-employed. The percentage of regular employees among the employed was 7 per cent and 37.7 per cent for casual employees.

Among rural women, 53.4 per cent were self-employed, 2.5 per cent regular employees and 44.2 per cent casual labourers. In urban areas, 42.5 per cent of the male labour force in 1998 was self-employed. The percentage of regular employees was 39.5 per cent and that of casual labour 18.1 percent.

Among urban female workers, 38.4 per cent were self-employed, 32.7 per cent were regular employees and 28.8 per cent casual workers.

Taking a dig at the BJP government, leading economist and columnist Kewal Verma says, "Instead of improving matters, we have reconciled to stagnation and deterioration. There is increased borrowing by the government which will harden interest rates and we will head for stagflation (persistent inflation combined with stagnant consumer demand and relatively high unemployment). The social impact of stagflation will be tremendous. The stagflation will increase unemployment. The curse of unemployment will hurt both the poor and the middle class. The poor are not the core of the BJP's support base but it will find the latter also under threat. The middle class will suffer because of inflation and unemployment. The small scale sector will stagnate."

Arguing that liberlisation and privatisation should be made more humane, Amit Mitra, secretary-general, Ficci, says, "Unlike in the developed world, India has no safety net for people who lose their source of income. In plush sitting rooms, we can talk of the need for an exit policy -- euphemism for the right of employers to dismiss employees -- but such a policy without a social security net will only cause widespread social unrest. The government earmarks something like Rs 10 billion for the National Renewal Fund, which aims to retrain and provide opportunities for retrenched workers."

Even as the impact of reforms on employment is being argued, the government aims full employment by 2007. Says a Planning Commission member, "The Ninth Plan draft document sees a steep fall in the poverty rate in the rural areas from its present level of 30.55 per cent to 18.61 per cent by 2001-02 with the urban areas registering a level of 16.46 per cent. To achieve a poverty rate of 4.37 per cent by the year 2011-12, new job opportunities should be created by developing the agriculture sector."

It may be recalled that under the Ninth Plan the government has envisaged an increase in labour force of upto 450 million. It also plans to provide employment to 443.6 million workforce during the same period.

"Labour force growth is estimated to be at its peak during the Ninth Plan period and if further acceleration in the growth rate cannot materialise, every effort should be made to attain full employment in the post-plan period," the official said.

Quoting the Ninth Plan, he added, "The attainment of near full-employment by the year 2007 may not be an unreasonable target provided the economy grows by 7.4 per cent per annum in the Ninth Plan period. Acceleration in growth, with special emphasis on the agriculture sector, in the Ninth Plan is a prerequisite for avoiding an increase in the incidence of unemployment in the Ninth Plan period."

Although there would be a potential reduction in open unemployment at the national level, he said states like Bihar, Rajasthan, Uttar Pradesh, Kerala and Punjab face the prospect of an increased unemployment in post Ninth Plan period. Bihar, Rajasthan and UP are the states where the labour force and employment growth difference would widen more in the Ninth Plan resulting in an incidence of unemployment in 2007 which is higher than in 2002.

He added, most states where unemployment is likely to decrease during the plan period are the states where the growth of labour force will be decelerating in the post Ninth Plan period.

Admitting that it is impossible to reduce disparities in growth, he said, it will be prudent that the planning process, with the consensus of concerned states, either facilitate migration of labour or reorient its employment and anti-poverty programmes.

He said, "The major programmes of casual wage employment programmes like the Jawahar Rozgar Yojana should be given regional focus and the available resources should be endemic in the coming years. Financial implications of such an added focus in the three states are about Rs 120 billion over the five-year period to prevent increase in unemployment and Rs 330 billion eliminate open unemployment by 2002."

The Planning Commission says if the economy could grow at 8 per cent in the Ninth Plan instead of the 7 per cent target, incidence of open unemployment by the end of Ninth Plan would reduce from 7 million persons to 2 million, attaining near full employment situation by the end of the plan period.

This requires a substantial step up in the growth of manufacturing and related service sectors, the commission said, predicting that unemployment would be negligible by the year 2007.

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