Loss of livelihoods

IN a country where unemployment and underemployment are pervasive, it is to be expected that the creation of new jobs and provision of decent livelihoods would be an important election issue. In India, around 8 per cent or less of the workforce has formal and decent wage and salaried employment, and an overwhelming majority of workers are self-employed because many among them are unable to find gainful wage employment.

Not surprisingly, employment generation was a dominant issue in the previous election, so much so that generating gainful employment and offering a floor level of employment (100 days) for each household constituted two of the seven goals spelt out by the Common Minimum Programme (CMP) of the United Progressive Alliance (UPA), when voted to power.

Five years later, the problem has not gone away. The Interim Budget speech of the Finance Minister, drafted to read like a record of achievements of the UPA and a promise of what is to come if it is voted once more to power, speaks of the need to make growth inclusive by creating about 12 million new work opportunities per annum.

Why only 12 million jobs are needed every year is not too clear. But even this is an admission that growth that has been running at between 8 and 9 per cent per annum, starting from the last year of the National Democratic Alliances (NDA) rule (2003-04) and going through four years of the UPAs rule to 2007-08, has not helped create employment fast enough.

Any objective assessment of the last five years in India must recognise that though the employment objective was included in the CMP, the UPA government that came to power initially sought to put it in cold storage. It dragged its feet and sought to scuttle efforts at implementing an employment guarantee programme, arguing that the money allocated to such schemes would find its way to undeserving recipients. It was only pressure from political forces outside the UPA and from a clutch of civil society organisations (supported by influential sections within the UPA) that ensured that these goals were not consigned to the dustbin.

However, issues on which consensus should have been immediate were transformed into contested policies, which meant that these programmes, especially those aimed at generating employment and improving livelihoods, were initiated late, provided little or inadequate funding (at least till very recently) and fell well short of what could have been achieved.

As a result, in February this year, when the completion of three years of the National Rural Employment Guarantee Scheme (NREGS) was being celebrated, the government declared that over 360 crore person-days of employment had been generated and over 32 lakh works had been taken up. Out of a total Budget outlay of Rs.53,300 crore in the three years, the expenditure had been Rs.41,756 crore of which Rs.28,227 crore (68 per cent) had been disbursed as wages.

The slow pace at which the programme has evolved should be clear from the fact that in 2008-09 alone, according to the NREGA website, 175.13 crore person-days of employment, covering 4.07 crore households, had been generated. And the Interim Budget has provided for Rs.30,100 crore for this scheme for the year 2009-10 alone.

These figures need to be put in context. If we assume that a regular job offers 260 person-days of employment in a year, the equivalent number of full job opportunities that the scheme has created in 2008-09 is about 6.7 million and during the first three years of its operation, 13.9 million.

This compares with the conservatively estimated 12 million new work opportunities that are seen as required every year by the Interim Budget or a total of 36 million over three years. Thus, while it is true that marginalised sections such as the Scheduled Castes, Scheduled Tribes and poor women have benefited from the NREGS, the programme has only gone part of the way in meeting job creation requirements during the UPA rule.

This is of significance because the evidence appears to be that the number of jobs created by the normal process of growth in the economy is small, and that these jobs are substantially of a kind that does not qualify as decent employment. Unfortunately, data on employment and unemployment in the economy as a whole are available only once in five years when the National Sample Survey Organisation (NSSO) conducts its five-yearly survey of the employment situation in the country.

The last two quinquennial surveys of the employment situation relate to 1999-2000 and 2004-05. It is only for the registered manufacturing sector that information is available on a more regular basis through the Annual Survey of Industries. But even that is currently available only until 2005-06. This makes it difficult to assess overall employment trends in the country under the UPA.

However, the gravity of the employment and livelihoods problem can be assessed by looking at the trends that had become visible by 2004-05. Though there were signs of an acceleration of employment growth between 1999-2000 and 2004-05, the nature of employment being generated left much to be desired.

To start with, as the National Commission on Enterprises in the Unorganised Sector made clear, if organised employment is taken to consist of all employment in units that fall under the formal sector definition, then such employment rose at an average rate of 3 per cent per annum from 54.1 million in 1999-2000 to 62.6 million in 2004-05.

However, if the definition is restricted to organised workers in the organised sector, then formal employment in the organised sector had fallen marginally from 33.7 million in 1999-2000 to 33.4 million in 2004-05. This compares with an average annual increase in total employment from 361.7 million to 422.6 million between those two dates.

Secondly, there has been a shift in the type of employment being generated, with a significant decline in wage employment in general. While regular employment had been declining as a share of total usual status employment for some time now (except for urban women workers), wage employment had continued to grow in share because employment on casual contracts had been on the increase. But the 2004-05 survey revealed a fall in casual employment as a proportion of total employment.

For urban male workers, total wage employment was at the lowest that it has been in at least two decades, driven by declines in both regular and casual paid work.

For women, in both rural and urban areas, the share of regular work had increased but that of casual employment had fallen so sharply that the aggregate share of wage employment has fallen. So there is clearly a real and increasing difficulty among the working population of finding paid jobs, whether they are in the form of regular or casual contracts.

The fallout of this was a very significant increase in self-employment among all categories of workers in India. The increase had been sharpest among rural women, where self-employment now accounts for nearly two-thirds of all jobs. But it was also remarkable for urban workers, both men and women, among whom the self-employed constitute 45 and 48 per cent respectively, of all usual status workers.

All told, therefore, around half of the workforce in India did not work for a direct employer. This was true not only in agriculture, but increasingly in a wide range of non-agricultural activities, especially services. The acceleration in employment growth did not therefore reflect any increase in the ability of the commodity-producing sectors and the organised non-agricultural sectors in general to absorb workers.

Finally, the sharp increase in productivity implicit in the lack of correspondence between the rate of growth of output and the rate of growth of employment in the organised manufacturing sector was not accompanied by any increase in real wages of workers. The net result has been a sharp rise in the share of profits in value added and a corresponding decline in the share of wages in registered manufacturing.

Even though these trends relate to the period prior to 2004-05, there is reason to believe that they had been operational in the years that followed and remain true even today. Unfortunately for the UPA, while it did not exploit the opportunity it had when growth was high, it is overseeing a collapse of employment and livelihoods as a result of the crisis that has begun affecting India over the last year.

As has been discussed in Frontline before, even a woefully inadequate survey covering 2,581 units in eight sectors by the Labour Bureau, Shimla, estimated that total employment in the sectors covered declined from 16.2 million during September 2008 to 15.7 million during December 2008, implying a job loss of about half a million.

An update on that survey, which covered around 25 per cent of the original limited sample in six sectors, estimated that in January 2009 the rate of decline in employment was higher than the average monthly rate of decline during the previous quarter and that job losses in the non-export sectors were now more severe than before.

Even though these estimates are by no means reliable or definitive, they are indicative of the trends under way. While these trends could be attributed to the global crisis, the immediate political victim of these developments is likely to be the Congress.

The NDA, we should not forget, was rejected because its India Shining slogan whitewashed the failure of the government to reach the benefits of growth to the poor and concealed the increase in inequalities that had occurred under NDA rule. Growth under the UPA has been strong for a longer period of four full years. Yet, if employment growth and employment quality have not improved substantially, it too can be held responsible for not reaching the benefits of growth to the poor and of permitting inequalities to widen even further.

The NREGS, which it reticently and inadequately implemented, may come in handy as an achievement to tout, but may not be good enough to neutralise the fallout of the larger trends in employment and livelihoods. This electoral issue, therefore, may contribute to a weakening of the UPAs hold and even to its ouster.