Why unemployment may decide India’s next election

Asia’s third largest economy has a growing population, graduates with inadequate skillsets and a dearth of jobs

An Indian roadside tea vendor sells tea to Indian students participating in a protest rally in New Delhi, India, Thursday, Feb. 7, 2019. The march called the "Young India Adhikaar March," or Young India Rights March, was held to demand the government address the problem of unemployment. (AP Photo/Altaf Qadri)
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Ritika Dabhi from Mumbai has been unable to find a job since graduating with a business degree from university almost a year ago.

She’s faced a series of rejections from companies in India. Now, she plans to try to secure a job at a call centre to make ends meet.

“In Mumbai, getting a job is a big thing and it's very difficult to find one,” says Ms Dabhi.

There is a lot of competition for employment. One million Indians are entering the workforce every month, and half the population is under the age of 25, which means that job creation is critical for the country.

But leaked official data from the ministry of statistics, published by India's Business Standard newspaper, revealed unemployment in Asia's third-largest economy hit a 45-year high of 6.1 per cent in the year to June 2018. The most recent official data made publicly available was from the country's labour bureau for the period between 2015 to 2016, which pegged India's unemployment rate at 5 per cent.

We have the world's fastest growing major economy globally, but a huge part of the population is neglected when it comes to finding job.

The issue has become highly politicised ahead of a general election in May.

In response to the data and what some are describing as a “jobs crisis”, Indian Prime Minister Narendra Modi, on Thursday told parliament tens of millions of jobs have been created since he came to power in 2014. One of Mr Modi's key pledges in his election campaign that year which helped win over voters was promising to boost jobs.

Politics aside, industry experts say India is clearly faced with challenges when it comes to job creation.

“We have the world's fastest growing major economy globally, but a huge part of the population is neglected when it comes to finding jobs,” says Nicolas Dumoulin, the managing director at Michael Page India, a recruitment agency. “It's a huge issue.”

He explains that the problem lies in a combination of not enough jobs being generated and that many Indian citizens lack the right skillset to make them employable from basic communication to high level specific capabilities that many companies look for.

“While different viewpoints are being debated across the political spectrum, we need to accept that [the jobs problem] is an alarming situation,” says Ajay Trehan, the founder and chief executive of AuthBridge Research Services, headquartered in Gurgaon in north India. He points to the education system as a major part of the problem.

“Experts from the private sector don’t find many fresh graduates employable due to lack of basic skill sets expected from them,” he says. “On the other hand, limited government jobs opportunities are under pressure with applications of many overqualified candidates. So, the two facets to the job crisis, if we can yet call it that, are unemployability and underemployment.”

Highlighting the extent of the challenge, a number of highly educated people end up applying for unskilled jobs. About 4,000 people – some of whom had MBAs or were engineering graduates - applied for 14 positions as sweepers and sanitary workers at the state assembly secretariat in Chennai, the Hindustan Times newspaper reported last week. The roles offered salaries of between just 15,700 rupees (Dh810) and 50,000 rupees a month.

Last year, state-owned Indian Railways conducted a national recruitment drive and received 19 million applications for 63,000 menial roles, including cleaner and porter positions.

Jobs with government entities are attractive in India because they’re perceived as secure positions, which come with good benefits, and are generally considered to be easier than roles in the private sector.

“There's a wage issue in India and wages often do not cover people's basic needs,” says Ajay Shah, the head of recruitment, Teamlease Services, an Indian human resources firm. “And at this point India isn't completely ready for the size of workforce that will be coming in for jobs.”

Pressure is brewing and there have been sporadic protest flare ups. Hundreds of students took to the streets of New Delhi on Thursday protesting their dissatisfaction at the government for the lack of employment opportunities in the country.

A potential solution to addressing the skillset shortage is a closer alignment between academia and the private sector, says Sudhir Sosale, the head of innovations, product development and commercialisation of ideas at the National Institute of Engineering in Mysore.

“Joblessness creates a continuous drain on resources. A mismatch of academics and skills will exacerbate unemployment,” he says. “There is a need to have industry advisory boards to advise institutions on improvements that need to be brought into the curriculum.”

A lack of reliable and current data on employment in India is another issue that needs to be addressed in order to ascertain the size of the problem and prescribe applicable solutions.

“The lack of reliable estimates on employment in recent years has impeded its measurement and thereby the government faces challenges in adopting appropriate policy interventions,” India's then chief economic advisor, Arvind Subramanian, wrote in the 2017 Economic Survey, a government document containing data and analysis of the country's economy.

Data issued by private organisations is bleak. Figures released last month by the Centre for Monitoring Indian Economy, show that 10.9 million Indians lost their jobs in 2018. Meanwhile, a report published by the Centre for Sustainable Employment at the Azim Premji University in September, states employment growth is not keeping pace with the economy's expansion.

“A 10 per cent increase in GDP now results in less than a 1 per cent increase in employment,” according to the report. India's GDP growth is forecast to be 7.3 per cent in the financial year to the end of this March, according to the International Monetary Fund.

As it grapples with what appears to be a behemoth problem, the government has come up with an initiative called Skill India, that aims to train more than 400 million citizens in sectors ranging from healthcare to textiles.

“I got feedback from the market that the people going through this re-skilling and getting a job afterwards is a little bit disappointing,” says Mr Dumoulin. “I think where the real change will come is when companies start to invest and I've seen companies already taking initiatives across different industries where they re-skill people to use them in specific roles.”

Boosting the manufacturing sector – another element the government is focusing on – is one way to generate a lot more blue collar jobs in India, he adds.

What’s clear is that whether Mr Modi’s government wins the upcoming election in May or a new administration is ushered in, India has a major challenge on its hands as competition in an increasingly global economy becomes stiffer.

“If we really don't train people to meet the high-skilled current requirements of sectors from IT to agriculture to hospitality,” says Bhupesh Daheria, the chief executive of the Aegis School of Data Science, then “this is really going to impact the economy.”