STORIES, ANALYSES, EXPERT VIEWS
While estimates on the growth rate of GDP showed the economy shrunk by 24 per cent in the April-June quarter of 2020, the extent of the loss of lives and livelihoods is becoming clear only now, with detailed data from the Periodic Labour Force Surveys (PLFS) — the latest round of which is for the April-June quarter of 2020. While one in five persons above the age of 15 was unemployed during April-June 2020, the unemployment rate among the 15-29-year-olds was 34.7 per cent — every third person in the 15-29 age group was unemployed during the same period.
These are staggering numbers, writes Himanshu (teaches economics at JNU) “but not surprising.” It is a fact that even in pre-covid times, the “economy has not been creating jobs.”
Unemployment, a result of policy decisions
This “worsening situation is partly a result of the long-term neglect of the employment issue in policy circles. It is also a result of policy decisions such as demonetisation and GST (General Sales Tax) implementation, which affected the informal/unorganised sector adversely. It is these enterprises in the unorganised sector that are the drivers of employment creation. Since 2016-17, most of these sectors have suffered as a result of policy choices. The decline in the number of workers by 15 million between 2011-12 and 2017-18 is only a partial reflection of the jobs crisis. The decline in jobs was accompanied by a decline in the quality of employment, with an increase in precarious jobs and a decline in access to social security for a majority of workers. The deceleration in the growth rate of economic activities also meant that real wages of casual workers in rural areas by January 2021 have declined compared to two years ago. Regular salaried workers were already suffering from a decline in real wages at 1.7 per cent per annum between 2011-12 and 2017-18………
Pandemic has ‘highlighted the fragile situation of the labour market’
“More recent data from the PLFS is awaited, but estimates from the CMIE data suggest that the unemployment rate has fallen 7 per cent for the 15 and above age population in recent months. While this may suggest that the economy is returning to the pre-pandemic levels, the rate is still very high. This level of unemployment is not just a symptom of the ‘jobless’ model of economic growth that has been followed in the last two decades, but is also a recipe for political and social instability. The pandemic and the subsequent crisis in the employment-unemployment situation has only highlighted the fragile situation of the labour market. The real crisis of unemployment and jobless growth is a bigger pandemic that is unlikely to be resolved with the current model of economic growth which prioritises capital over labour.”