Context

The government has assured the creation of one million jobs over the next one-and-a-half years. This may be optimistic, but if it does materialise, the employment landscape will change dramatically.

Background

• What is the unemployment rate? Expressed in percentage, the unemployment rate is defined as the share of people who are without any job.
• Joblessness in the country essentially relates to educated young adults seeking jobs in the formal economy.
• The government recently announced it would recruit 10 lakh people in “mission mode” over the next one-and-a-half years.
• The announcement came at a time when the unemployment rate for youth (aged 15-29 years) in urban areas has been hovering at over 20 per cent for the last several quarters.

What is the employment situation in India today?

• If jobs are being created on a progressive basis, there will be an increase in income generation, which in turn, should spur consumption.
• Therefore, if consumption picks up – this can be indicated by the growth in the consumer goods segments — then one can be confident of jobs being created.
• What is the situation in India? Consumer durable goods have been registering negative or slightly positive growth for the last five years or so — this is a reflection of the purchasing power of the people that ultimately can be linked to job creation.
• There have been talks of start-up economy in the country and their achievements.
• Interestingly, it is a well-known fact that, globally, 80-85 per cent of start-ups fold up in the first couple of years mainly due to non-viable models that fail the scaling-up challenge.
• Therefore, while start-ups sound exciting, job creation at scale cannot be part of these experiments, unless there is an assured flow of funds.

Challenge in recruiting 10 lakh people

• It will be a really big task given that presently the central government offices house around 3.45 million personnel as per the budget for 2022-23.
• Short time frame: The first challenge is in recruiting such a large number in this short period of time considering that there are fairly lengthy processes involved in hiring people to government departments.
• Finding meaningful role: Hiring such a number is good for the country, but finding meaningful roles for them in various departments needs to be seriously examined.
• Quite clearly, plans need to be in place to provide work to this set of new employees.
• Increase in cost for the government: The third issue that would have to be kept in mind is the increase in cost for the government.
• As per the budget for 2022-23, the average outgo per employee was around Rs 12.20 lakh.
• Assuming the new set earns half of the existing average, the additional cost would be at least Rs 60,000 crore.
• The salary outlay for the year was Rs 4.22 lakh crore.
• These provisions would have to be made in subsequent budgets.

Conclusion

The overall unemployment picture looks complex today. While the government’s intent to add over a million jobs in the next 18 months is laudable, the task is audacious and challenging from both an administrative and financial point of view.

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