Volume 6, No. 8, August 2005

Despite five decades of planned economic development the unemployment problem has not only been persisting, but also getting more and more severe. The ever-swelling number of unemployed has shattered the myth and illusions, that along-with the growth of the economy, the problem will be solved in the long run. The parliamentary parties and their govts. aired so many promises for addressing the problem squarely. But those were vindicated as blatant falsehoods. Even-then the unabashed leaders of these political parties are still repeating those promises to lure the millions of jobless wretched people. While joblessness stalks the entire country the govts and their sycophants are trying their best to give an underestimated figure of the unemployed to cover the grim situation, guard the very economic system that generates it, and to serve the ruling classes.

Unemployment – the grim reality

To have an idea about the magnitude of unemployment it is necessary to ascertain the total number of the labour force. The NSSO survey report (1999-2000) estimated the figure as 376.4 million (37.6 crores) in 2000, when the total number of population was just over 1 billion. R. Nagraj in his article published in EPW July 24, 2004 stated that the number of total labour force was close to 400 million in ’99-2000. Whereas Pravin Visaria of the Institute of Economic Growth, University of Delhi, stated that total number of the labour force was 453 million by 2001. Generally, 50% of the total population constitutes the labour force. The NSSO report ’99-2000 estimated the total number of labour force far below this. Even the 9^th Plan projected the figure as 423.4 million. The worker-population ratio, as per the NSSO report ’99-2000, is 0.37. It is no doubt far from the reality. Some scholars argue that the ratio is so low mainly due to two factors – i.e. the low labour force participation of women and that of below 15 years of age, which alone constitutes 36% of the population. These arguments do not correspond to the reality. In India the vast majority of the people are living below the poverty level and are compelled to engage themselves in some economic activities irrespective of age and gender to earn whatever may be possible. In agriculture even most of the children of the poor households are working either as self-employed or as casual labourers. So it may be commented that the NSSO figure of the labour force does not reflect the reality.

The NSSO report of 1999-2000 says that the rate of unemployment (chronic, long-term and temporary) is 4.4%, while the figure comes to 7.2%, if it includes visible unemployment. This visible underemployment can well be considered as unemployment. It is due to lack of employment provisions that visible underemployment arises. But even this rate of unemployment cannot capture the reality as the rate of visible or otherwise underemployment placed in this survey report is implausibly low i.e. 2.8%. A different measure of underemployment suggested that the above rate would be 13.3% (EPW, Nov. 27, 04) i.e. 13.3 % of the available labour days remained unutilized in 2000.

Thus it can be stated even on the basis of this report that the rate of unemployment plus underemployment is (4.4 +13.3) 17.70 percent. Even this rate of unemployment if far below the reality. This survey did not take into account the following phenomena:

Agriculture, rural industry and trade constitute large part of the economic activity. This part of economic activity is based on family labour entailing more disguised and invisible unemployment than any visible or open one. This phenomenon depresses the unemployment rates in general and open unemployment in particular. It is a natural outcome of the predominantly subsistence agrarian economy.

A considerable part of employment consists of employment at a very low level of productivity and income, which is even below the minimum subsistence level. The employed persons belonging to this part of the ‘employment’ category are poor. As there are no such employment provisions they have to engage themselves even in such work, which cannot meet their bare minimum needs. Even then they engage themselves in such work, as unemployment is not an option for them. The govt. survey (NSSO) categorized them as “employed” and they were included under the classified head of either “self-employed” or “Casual Workers”. Just over 50% are self-employed which includes those working as unpaid family workers. Casual wage labourers are another 34% of the ‘employed’. These two groups – self-employed and casual labour – comprise 84% of total employed. The vast majority of self-employed and casual labourers work in agriculture.

It has been stated in this survey report that the agrarian sector provides 59% of total employment, while the industrial sector provides only 16%. Out of this 59% employment in agriculture, about 55% is self-employed and more than 43% (43.6%) is casual labourers. These two groups comprise 98.5% (i.e. 212.64 million) of total employment in agriculture of 215.88 million. In general, a good section of casual workers and self-employed are living in a poor condition due to the combination of a low return from work and underemployment and particularly in the agrarian sector the condition is far more deplorable. These sections of the people, having no other alternative to eke out means of livelihood, have to engage in any type of labour to earn some income however low it may be. These jobless people are considered as employed in the official versions.

Incidence of Poverty among employed persons

Note : Employed persons here refer to those employed according to the usual status. An employed person belonging to a household with a per capita expenditure below the poverty line (Rs. 335.46 for the rural area and Rs. 451.19 for the urban areas, both in the 1999-2000 period) is regarded as poor.

In general the magnitude of unemployment is deplorable and more so in rural India. The joblessness in rural India compelled a large number of poor people to leave their villages in search of employment. This distressed migration has swelled to an exodus. The National commission on Rural Labour found (1991) that there were “more than 10 million circular migrants in the rural areas alone. These include an estimated 4.5 million inter-state migrants and 6 million intra-state migrants.” At present the picture is far graver. Since the second half of the 1990s with the collapse of rural employment migration has been swelling. According to an article published in the Hindu dated March 15, 2004, in 2001 such migration was so high in different parts of the country that it even distorted the main Census head count. NSSO data is based on a strange definition of “last usual place of residence” of a migrant. It means “the village where the person has stayed continuously for at lease six months immediately prior to moving to the present village/town.” This excludes millions of jobseekers who are unable to stay anywhere for six months. These footloose migrants have always been moving from place to place for their survival.

From the above it can well be understood how grave the unemployment situation is! Since long this problem has been persisting and since the mid ‘90s it has been getting more and more acute. It is at present about 40 crores (The Hindu;  January 25,05)

Economic growth and employment

Amidst this dreadful scenario of joblessness, govt. officials, the planning commission and all the govts. have been continuing to repeat their promises. Since its inception the Planning Commission has been projecting that unemployment will be solved in the course of the development of the economy. Every time they fix a targeted growth rate of the GDP and link the growth of employment to that. Though time and again it has been vindicated that the growth of GDP itself cannot solve the problem of unemployment. In fact there is no such relation between the growth of GDP and that of employment provision. The reality is that it depends on the very character of the development policies, more particularly, on the prime force of the economy. The experience of this country’s economic development has also corroborated this fact.

Since the inception of planning it was viewed that employment could be generated in the course of economic development. The second Five Year Plan fixed a goal to attain full employment in the long run. Labour intensive techniques were advocated as it was considered that in “an economy with relative abundance of labour, a bias in favour of comparative labour-intensive techniques is both natural and desirable” (Second Five Year Plan, Govt. of India, 1956 p. 109). Accordingly the commission’s expectation was that even a 5% growth of the economy per year would help achieve the goal of full employment. Thus the problem of unemployment was not considered a serious one for which it was necessary to treat this problem specially.

This expectation of the Planning Commission has remained as an expectation only. It never transformed into a reality. During the ‘60s and ‘70s economic growth was around 3.5% per annum while the growth of employment was 2% per annum and that of the labour force was 2.5% per annum. This resulted in a further increase in the backlog of unemployment. In 1956 it was 5 million and in 1977-78 it went up to 11 million. This too is a most conservative and class-biased estimation. Even-then the trend is very clear. The backlog of unemployment has more than doubled. The policy makers and planners then realized that economic growth alone could not solve the problem. Consequently, many special programmes were introduced at the end of the ‘70s and particularly during the ‘80s. Those programmes aimed to provide self-employment and short-term wage employment e.g. – Food For Work Programme (1977), Self-Employment For Educated Unemployed Youths (1983), National Rural Employment Programme (1988) and the Integrated Rural Development Programme 1980). After the introduction of the New Economic Policy, the Prime Minister’s Rozgar Yojana Scheme was introduced on Oct. 2, 1993 and from 1994-95 it subsumed Self-Employment for the Educated Unemployed Youth Programme. In the late ‘90s the IRDP and allied programmes were merged into a single programme called the Swarna Jayanti Gram Swarojgar Yojana in 1999, Rural Employment Generation Programme and Pradhan Mantri Gram Sadak Yojana were introduced to generate incremental employment over the Tenth Plan. All these programmes are ad interim measures to placate the mounting dissatisfaction of the jobless wretched people. The very nature of economic development being the same, unemployment further increased despite growth of the economy. During the 1980s the average growth of GDP was 5.5% and that of employment further dwindled to 1.8%. While as per the NSSO survey of 2000 the aggregate employment growth declined from 2.26% in ’83-’93 to 1.01 in ’99-2000, the GDP growth as per the Planning Commission Report-2002, accelerated from 5.2 to 6.7% per annum during ’83-2000.

Governments, planners and their economists have long been assuring the people that the development and growth of the manufacturing sector would take a leading role to solve the problem of unemployment. But that has already turned into a fiasco. In 1951 the share of manufacturing output in the GDP was 10% and it has increased to 33% in 1991. During the same period the share of the manufacturing sector in employment has grown from 11% to 16% only (Bhalotra, ’98). The period from ’84-’85 to ’89-’90 value added in the organized manufacturing sector grew at 7.2% while growth of employment was 0.65%. In the unorganized manufacturing sector it was even negative (-0.95%). This period was termed as a period of ‘jobless’ growth. This has further deteriorated during ‘90s which has been marked as a celebrated decade of economic reforms, though the then finance Minister assured the parliament that, “reforms were aimed at encouraging a pattern of industrial production which is labour intensive.” The old story (falsehood) is being repeated once again! The progress report of that assurance once again shattered the story. During 1995-96 and 2001 more than 1.1 million workers i.e. 15% of workers in the organized manufacturing sector lost their jobs. Further, the Planning Commission report (May 2002) gave a disastrous picture of the employment generating capacity of the economy, the commission commented, that it was “declining fast”. The report also pointed out that in the late 1990s the organized sector reached a state of “almost near jobless growth.”

Employment elasticity, which is a ratio of employment growth to the growth of value added (output), continued to decrease from around 0.65 in the 1960s to 0.55% during 1970s and around 0.38% during the ‘80s (T. S. Popla – The Question of unemployment). According to the Sahara Times June 5, 2004, the employment elasticity further declined to 0.16% in the post reform period.

Employment Elasticity

Employment Structure and Relative Employment Elasticity of Growth during 1999-2000

Source : Tenth Five Year Plan and Economic Survey 2001-02

The experience of last five decades clearly proves that this very type of economic growth cannot eradicate the unemployment problem. Even-then, the Planning Commission, Govts. and their sycophants and economists are harping on the same story that economic growth, irrespective of its character, will generate employment and solve the problem in the long run!

Since 1983 the govt. stepped up investment in the industrial sector and after implementation of the economic reform programme, investment flooded the organized sector. According to the National Economic Survey, over the past five years, about 65% of govt. investment went to the organized sector. While due to the dearth of investment two-thirds of the country’s cultivable area, the vast production resources, faced a deplorable condition. The Planning Commission Special Group on employment generating growth has noted that even if the organized sector grew at 20% per annum, and the private organized sector at 30% per annum, their contribution to total employment would increase hardly by 1.5 to 2.0% of the total over the Tenth Plan (Planning Commission, 2002). This poor performance of the organized sector which has failed to generate employment in-spite of its growth, has compelled the Planning Commission to resolve that the unorganized sector has to be specially targeted for generating employment. It was earlier envisaged in the Second Plan, which “aimed at expanding employment opportunities of which the bulk was to be provided by the unorganized sector.”

National Employment Guarantee: Another Hoax

All the constituent parties of the United Progressive Alliance and Parliamentary ‘Left’ parties promised to provide employment to millions of unemployed poor. After assuming power the UPA govt., supported by so-called left parties, published their Common Minimum Programme (CMP). In this CMP it has been promised that – “the UPA govt. will immediately enact a National Employment Guarantee Act. This will provide a legal guarantee for at least 100 days of employment on asset creating public work programmes every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middle class household.”

An advisory committee prepared the draft which was diluted in the National Rural Employment Guarantee Bill 2004 introduced in the Lok Sabha. It is already cited in this article that earlier govts. introduced many schemes to provide ad interim employment provisions to the rural poor. This time a bill was introduced. After going through the text of the bill one can realize that it is not a guarantee scheme, rather a discretionary programme similar to previous ones. It has been stated in the Bill that the Act will commence when the Central Govt. may implement it in “different states and different areas.” An Act with such a clause indicates that even the courts cannot mandate to bring into it effect. According to the Bill if employment is not available, unemployment allowance may be given after 15 days (clause 7). This too depends on the economic capacities of the state. If the State is not in a position to provide such allowance, it will pay one-fourth of the minimum wage for 30 days and one-half for the rest of the year until the 100 days target is met. But this minimum wage is not linked to the Minimum Wages Act, 1948. Section 8(3) iii states: “Notwithstanding anything contained in the Minimum Wage Act, 1948, the Central Government may fix the rate at which the wage shall be paid to the labourers employed under the programme. Provided that, different rates may be notified for different areas. Provided further that, until the central govt. notifies wage rates for the purpose of this Act, labourers shall be paid the statutory minimum wage fixed by the respective state governments for agricultural labourers.” Again, if it is not paid, only a note will be made of such cases (clause 8). It means another falsehood – an enacted falsehood!

The definition of ‘household’ imports a grotesque concept. According to this concept household potentially consisting of several families, related by blood who shares a residence, ration card or kitchen (clause 2(7)). It means, as soon as any one member of such a household will have a job, the unemployment benefit for the other will stop (clause 7). But here it does not end. One word has been included before the “household” that is ‘poor’. Officially ‘poor’ indicates those who have the opportunity to include their names in the BPL list. Definitely this will be used to restrict the eligibility for the payment of unemployment allowances. Also there is no safeguard against the exclusion of women from the scheme. Is it not a grand mockery? Is it not an insult to a poor household? In case of absence, even if there is a good cause or the corrupt programme officer does not give permission for absence, the unemployment allowance for three months will be forfeited. Clause 29 empowers the Central Govt. to change the Statue after simply informing Parliament. It is proposed in the Bill that the Center will provide the wage, some of the administrative costs and three-fourth of the material cost. Then the State will have to pay the unemployment allowance. It has no guaranteed fund! This clearly expresses how sound the scheme is!

The Governments’ own estimations is that the scheme would cost at least Rs.25,000 crores per annum, as per another estimation it would be at least around Rs. 45,000 crores per annum. In the current Central Budget proposal Rs. 5,400 crores has been allocated to the National Food for Work Programme, and 50 lakh tones of food grains. It comes to Rs.11,000 crores comprising cash and food grains. It is far short of the amount necessary to implement the scheme. Even the other employment programmes, SGRY, has been downsized to Rs.3,600 crores. It is clear that the govt. is planning to allocate even this small amount as the cost of other employment programmes. It is a planned deception, thus, the National Employment Guarantee Bill 2004 which excluded not only the urban unemployed, but also introducing the word ‘poor’ before the ‘household’ further narrowed the target. Now the target is those who have managed to include their name in the BPL list. The definition of family further reduces the number of persons who can place their claim for employment. Number of days, will be only 100 days. The Govt. can fix the wage rate according to their whims – to follow a norm is not necessary. The duration of the work will depend on the whims of the government. The area of implementation will also be decided by the govt. The Bill guaranteed the govt. to implement the scheme according to its whims instead of guarantying employment even to the rural unemployed throughout the country. It is now restricted to 150 poor districts out of a total of 593. What more is necessary to make a farce and to insult the millions of rural unemployed?

This is the way they are trying to give a ‘human face’ to these inhuman brutal exploitative policies. Policies that serves the interest of the indigenous ruling-exploitating classes and imperialists. It is nothing but another cunning plot to lure the people and create illusions among them. The UPA govt. like all previous govts. ensure the continuity of the persisting economic system which breeds joblessness and deprives millions of people of their food and livelihood.

The Economic System that Breeds Unemployment

This severe unemployment problem is the outcome of the persisting exploitative economic system, which is abjectly dependent on world imperialist economic system. It operates to serve the interest of the imperialist forces as well as indigenous exploitating classes that act as agents of the imperialist forces to have a share of the imperialist booty. Consequently, despite some changes, low asset based subsistence cultivation still predominates the rural economy. Landless and poor peasants with great tenacity continue cultivation even if that is uneconomic and non-viable. A small plot of owned or rented land they have, and that is the only means of livlihood. Had there been secured employment opportunities, many of them abandon cultivation. Due to this low-asset based subsistence cultivation the big landlords/landowners, usurers, hoarders, agri-input sellers (most of the cases same person) persist in their inhuman exploitation. Following the dictates of imperialist’s capital intensive cultivation has been introduced keeping the land relations intact, rendering more and more joblessness throughout rural India. The MNCs controlled agro-industries and various forms of contract farming have been operating with the promise of a rosy future. This will further increase joblessness. Moreover, complete exposure of the agri-market to the world agri-market, controlled by few MNCs, has devastated the rural economy. The industrial sector, particularly, manufacturing, has developed such a way as to cater to the needs of the imperialist forces. The indigenous big bourgeoisie is completely dependent on the imperialist economy. They depend on imperialist forces even for their existence and growth. During the last five decades the industrial sector has well been articulated at the dictates and guidance of the IMF and World Bank controlled by imperialists. In the name of collaboration, cooperation and assistance, aid, grant for development of the economy the imperialist forces shifted the burden of their crisis onto the shoulders of this country’s people. The industrial sector has developed absorbing obsolete know-how, technology, machinery with the restriction of production of spare-parts necessary for machinery, processed raw materials etc. etc. Through this process, on the one hand, the imperialists have tightened their grip on the economy, on the other a top heavy lopsided industrial sector has developed, which is a capital intensive labour-saving one. Consequently, it cannot generate much needed employment.

Along with the deepening crisis of the world imperialist economy, the imperialist forces have introduced crises management measures (known as globalization). These entail the curtailment of all social securities and hard earned democratic rights of workers, expansion of the market, breaking all sort of barriers and ever-increasing control over the wealth and cheap labour resources of backward countries. The indigenous ruling classes and their govt., in response to the globalization programme, adopted an ‘economic reform’ programme. This programme has been initiated to restructure the economy at the dictates of the imperialist controlled IMF, World Bank, WTO. Consequently all sectors of the economy opened up for reckless plunder of the imperialist forces, i.e. MNCs. This programme has intensified the persisting crisis in the economic system. The perennial employment problem too has further intensified along with the implementation of this programme. While millions of jobless people are moving to different parts of the country in search of work the employers are enjoying the right of retrenchment in various forms, lockouts, layoff, flexibility of labour deployment i.e. hire and fire, close-up even without paying dues, curtailment of social securities, downsizing the units, deployment of unskilled contract labour, curtailment of all democratic rights of the employees/workers etc. etc. As an inevitable outcome of these policies a large number of workers and employees have been ousted further swelling the number of jobless people.

This is a natural outcome of the existing economic system. Throughout the last five decades the ruling classes and their govts. have been following such economic policies as to serve their interests and that of imperialism. This economic system opposes the very interest of the people and the country. This system engenders joblessness, impoverishment and hunger, it cannot solve its own created problems and crisis. At best it can provide ad interim reliefs to keep the people’s dissatisfaction within a manageable limits. People need such economic development which can solve their problems. This economic system cannot do that.

The unemployment problem can only be solved with the establishment of an alternative economic system. An economic system that can unleash vast economic potentialities of the country for the well being of the people. The first step towards this goal is the equal distribution of the social assets in rural India. This will provide jobs to the unemployed and underemployed to a considerable extent and help increase the purchasing power, which boosts demands for basic goods. The market for basic goods, to start with, will expand, and in response to such market, small industries with labour intensive techniques of production will develop. While these sort of industries will meet the market demand, it will also offer employment. As the basis of this development is an indigenous grass-root market, it will be a stable one. And the employment provisions it offers will be the most guaranteed form of employment over the long term. The unsatisfied need of the vast rural poor, having employment so the purchasing power thereof, will further develop the market of necessary commodities. Based on the home market growth of the economy, employment will continue to develop. This will ensure free and independent growth of the economy. The country will have a self-reliant economy and will be able to fight back joblessness.

The ruling-exploiting classes – big landlord/landowners and the monopoly bourgeoisie are not only opposed to this alternative economic system but also put their state machinery to come down on any such struggle/movement with the aim of establishing a self-reliant economy. The principal task of the state, an embodiment of ruling class violence, is to save the existing system and ensure its smooth running. When the political parties of the ruling classes fail to distract the people who are advancing towards that goal, the state machinery begins to suppress those movement/struggles resorting to violence.

What should the millions of jobless people do? Do they continue to be duped by the ruling parties, and slowly advance towards death? Or do they go ahead with the demand of a self-reliant economy, unite to develop a massive mighty struggles to achieve the goal despite state violence? This is one of the burning issues of the day. Of-course, it is a political issue. Right to job, Right to food, Right to live – are fundamental democratic rights. People must mobilize under the party which can lead them to achieve the goal.

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