National Employment Policy: Towards Creating an Atma Nirbhar Bharat

A comprehensive National Employment Policy (NEP)is needed, which is based on responsive real-time data analysis integrating sectors that will help emerge sectoral employment policies and programmes amid the COVID-19 pandemic.

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According to the International Labour Organisation (ILO), about 63 countries across the globe have prepared the National Development Framework or National Employment Policy(NEP) to decide the roadmap for employment generation mainly after the global financial crisis, 2008.There are evidences that other countries are also moving away from tackling employment issues solely through the use of active labour market policies such as direct job creation and providing subsidies to generate employment. They are moving towards developing and adopting comprehensive national employment policies bringing together various sectoral measures, programmes and institutions that influence the dynamic demand and supply of labour and the functioning of labour market responding to the short, medium- and long-term prospects and priorities.

As the Indian economy grows, the standard of living of its labour force, estimated to be around 500 million, would increase. This labour force is part of the global supply value chain and acquires a greater role because there is a phenomenon of ‘race to the bottom’ in terms of costs. China’s experiences show that their wages have been increasing in recent years which are giving India an edge. When we talk of India, these dynamics and international benchmarks, we need to come out with a White Paper, vis-à-vis other competitive countries. For deeper analysis, of why India and the promises of New India having unparalleled, effective and decisive leadership, which is one of the best in the world at present.

Indian Experience of Formulating NEP

The proposal to bring the NEP was introduced in 2008. During the tenure of the United Progressive Alliance (UPA1), an inter-ministerial group had examined the proposal, but nothing concrete had emerged from it. In UPA–II, the then minister of Labour and Employment Shri Mallikarjun Kharge informed in reply to a question in the Rajya Sabha (8 December 2010) that the formulation of NEP is under consideration of the government. Moreover, the then minister also informed about the process of the formulation of NEP in his address at the 99th Session of the International Labour Conference at Geneva (ILO General Assembly was attended by 170 countries of the world, June 2010).


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In 2016, the idea of NEP took shape at the first meeting of BRICS employment working group, after which the National Democratic Alliance (NDA) government started to work on it.

 Since then, the government, policy makers, industry bodies, media and other stakeholders are continuously debating and suggesting about the need of a comprehensive NEP document, especially on the occasion of subsequent union budget announcements. The national level think tank and industry bodies such as NITI Aayog, CII, ILO, and institutions releasing working on employment situation in India are also advocating about this need.

Employment Planning

Employment generation has been one of the important priorities and principal concerns of planning in India since the beginning. During the Fourth Five Year Plan (1969–74) and early years of the Fifth Five Year Plan (1974–79) alone, as many as fourteen employment-oriented schemes were initiated. In every plan document, clearly employment has been overriding priorities throughout plan periods.

One of the main objectives of recent five-year plan i.e. twelfth five-year plan (2012–17) was generation of decent and productive employment in the non-agricultural sector. The primary interest is transition from informal employment in the unorganised sector towards formal employment in the non-agricultural organised sector. Over the period of time in India, nature of employment generation has changed and is creating new challenges as well as opportunities.

Need for NEP

The questions on why India needs a NEP has many explanations as there are serious concerns on employment in country today, which are different than the earlier decades with many new emerging developments. National policies such as National Youth Policy, National Education Policy, National Health Policies, which are dynamic, are already in place and institutionalised to guide for short, medium- and long-term vision for education and health. However, the Independent India in its over 70 years of existence is yet to have its National Employment Policy.

The country is currently undergoing a dual challenge of employment creation, one set of people are unemployed labour force (i.e., highest in last 45 years, 6.1 per cent in 2017–18) and, another set are around 10 million of new entrants in the labour force every year. Other important issues are jobless growth, structural transformation, under-employment, informal employment, skilled workforce, high levels of educational enrolment and aspiration of youth, sectoral issues, decent jobs and so on. In addition, the female participation in the employment is not only low, but also declining since 2000s. The emerging new technologies such as high-end information and communication technology (ICT), internet, industry 4.0 technologies, automation and task-based jobs such as gig jobs are adding new dimensions to the future of work.

The adoption of these technologies will increase in future. In the process many people will also lose their jobs in traditional sectors who are involved in routine task and at the same time many new sectoral and technology-based jobs will also be created with newer skills. Hence, this is a great opportunity for Indian youth to tap the new emerging opportunities by learning new skill-sets like in the past we have taken the skill advantage in information technology sector worldwide.

The achievement of government using ICT for development is immense, such as JAM trinity, direct benefit transfers, unemployment exchange & allowance, GSTN, EPFO, ESIC, etc., which is leading to more formalisation of the labour market.

India’s labour market scenario is facing multi-faceted, multi-sectoral challenges and at risk of social exclusion. For Ease of Doing Business and Ease of Living, NEP is important. This is important to capture the sector-wise and region-wise labour market dynamics, and facilitate registries for manufacturing sector, MCA, informal sector, unemployment exchange, unemployment allowances, appropriation of jobs, etc.


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In addition to online MIS and Dashboard for regular monitoring and evaluation of employment outcome, every department should provide the annual target and achievement every year. Continuous feedback through M&E exercise is important. Usage of Information from multiple dynamic sources, sectoral and administrative data and harnessing from insights and similar for survey data for demand side information and periodic reporting of various important facets.

Coordination is crucial and needs to be detailed out. There is a need for inter-ministerial and inter-departmental coordination and cooperation for providing a strong decision support system for various sectors and industries and for proper channelization of resources. The NEP would layout such platforms and processes for matters related to labour and employment in an integrated and harmonious manner. In this context, a policy document ‘NEP’ with practical vision and comprehensive macroeconomic and sectoral policy roadmap for achieving a country’s employment goal is urgently required.

Critical Issues

Huge informal employment: A majority of India’s workforce (460 million) engaged in informal work that is not covered by any social security benefits and, more likely not even earning the minimum wage. Roughly nine out of 10 workers are informally employed and lack any social protection. This create huge transformation problem from a largely informal to formal economy.

Rising open unemployment: India’s open unemployment has increased many folds and reached at its highest level of 6.1 per cent in 2017-18, followed by a marginal decline, 5.8 per cent in 2018–19. In particular, the unemployment among educated and women is very high. This will likely go up substantially further after the COVID-19 pandemic. As estimated by centre for monitoring Indian economy (CMIE) the unemployment rate touched as high as 24 per cent in May, 2020. In particular, the youth unemployment is substantially higher than other age-group.

Low female work participation rate: The female work participation rate is just 18.6 per cent in 2018–19 compared to 55.6 per cent of their male counterparts. There are many arguments put fourth such as social norms, larger involvement in household responsibilities, increase in households’ income, more participation in higher education and unavailability of suitable jobs. Given the relative absence of job opportunities, women, especially the urban educated, have been discouraged from entering the labour market.

Lack of structural transformation and underemployment: Around half of the India’s workforce still employed in agriculture for their livelihood, which contribute just less than a fifth of the national income. Due to unavailability of enough jobs in non-agriculture sectors, most of the people in rural areas are still engaged in farm activities. In addition, the most of the workers in informal sector work at low wages. Underemployment that is too few hours of work per week available for an average employed person along with low wages with full time job is a huge problem.

Low productive and low-quality job: Only around 24 per cent workers are engaged in regular job, which is considered better quality jobs compared to self-employed and casual labour. Further, the disproportionately high informal sector employment is a major problem in India. The decent new employment created in the country has not been high. Almost half of all new non-agricultural jobs added in India during the second half of the 2000s was in one sector, construction, which is characterized by relatively low wages and poor working conditions. Since quality formal employment is rare in India, access to regular jobs is highly unequal among social groups, and across regions.

Shortage of high educated and skilled workforce: Most workers lack adequate education or skills- less than 30 per cent of the workforce has completed secondary education, and less than a tenth has had any vocational training despite existence of several skill and vocational training programmes. It is important to bear in mind that the jobs crisis is intricately interlinked with the learning crisis in education. This shows the low education and skill level among the workforce in India.

Job growth has slowed dramatically: The number of people entering into labour force or looking for jobs is increasing over the years. However, the growth of additional employment number is less than half as fast as the labour force. Given the rate, at which demographic structures are changing, the largest additions to the population of the young. Therefore, the last decade some time also referred as jobless growth period. This problem of economy is not generating enough jobs for growing labour force is serious. Further, the vast majority of the jobs that are being created are of extremely low quality. Hence, the employment problem is not only about the quantity of jobs, but also about the quality of jobs.

Creation of adequate, high quality employment is one of the most formidable challenges for economic policy in India today.

Stagnant growth of manufacturing and missing middle: Manufacturing—the sector that transformed the labour markets in East Asia and China the most—has contributed only marginally to employment creation in India in recent times. The contribution of manufacturing to GDP is only about 16 per cent, stagnating since the economic reforms began in 1991. As argued no major country managed to reduce poverty or sustain growth without manufacturing India’s manufacturing sector has been characterised by the missing middle- -a concentration of small/micro firms at one end of the spectrum, and some large firms in each sector at the other. Small firms (those with 20 or fewer workers) together employ nearly three quarters of all workers within manufacturing but produce a little more than a tenth of the total manufacturing output. Furthermore, the largest services sector firms, while together producing almost 40 percent of the sector’s output, employ only 2 per cent of its workers.

Exclusion of vulnerable sections: The vulnerable section of the society such as minorities, dalits, tribal and differently-abled are still largely engaged in informal employment or low paid jobs. Many studies suggest that they faced discrimination in the labour market in terms of access, earning and status of jobs etc.

Multiple labour laws and regulations: There are over 200 state laws and close to 50 central laws. And yet there is no set definition of “labour laws” in the country. India is in the midst of reforming its labour regulations and some states have relaxed the decades-long labour laws in recent times to woo investments in their respective regions as they fight economic downturn due to the COVID-19.

Threat of automation: The technological advancement is posing a threat of automation or robotisation substituting human workers with robots. As research studies shows that one industrial robot can replace six workers, in the case of India up to 52 per cent of the activities can be automated having the greatest impact on low-skilled jobs and simple assembly tasks.

New emerging jobs: The new emerging gig economy or freelance jobs, which are temporary and flexible and considered as independent contractor. The people involved in such jobs are not considered as an employee or workers, and also not covered by any national labour laws. In addition, these emerging jobs are also not counted in the national statistical system.

 

(This is the first part of the article in the series by the authors. The second part will be available on Delhi Post tomorrow.)