The Task of Job Creation and the Test for Task Forces
A moot point is whether job creation is the objective, or should job creation be the by-product, the natural outcome of policies?
By Shankkar Aiyar | Published: 10th September 2017 04:00 AM |
Talk about quintessential Indian entrepreneurship. Go on e-retailer Amazon’s site and search for cow dung cakes. There are 15 different companies offering to sell different varieties of cow dung cakes for religious and other uses, organic cow dung cakes or regular cow dung cakes, gift-wrapped or plain packaged. Someone somewhere spotted an entrepreneurial opportunity between availability and need — to deploy capital and create unskilled and skilled jobs.
On the flip side of the digital bazaar is financial technology start-up called Credit Vidya. Founded by Abhishek Agarwal and Rajiv Raj, the platform uses credit insights using data points to help lenders assess risk and for Indians who do not have a traditional credit score to access credit. The downside of this is that technology will obviate some if not all human interface.
These two stories in a sense serve as data points for the discourse on job creation.
India is at the cusp of disruption fuelled by changing demography and technology.
By 2022, India is expected to overtake China with a population of over 1.4 billion. More immediately, India’s working age population will be over a billion persons by 2035. Every technological innovation is bound to take root in the Indian economy.
The need for efficiency will propel adoption of technology and rise of start-ups such as Credit Vidya. Indeed, Nachiket Shelgikar, CFO of Micro Housing Finance Corporation, who steers the use of machine learning to supplement credit appraisal for bottom of the pyramid borrowers, says the use of technology for disintermediation will only accelerate.
Platforms such as MyBank or Kabbage are assessing risks and delivering loans — often in as little as six minutes to borrowers. Technology, Artificial Intelligence particularly, is pushing humans off the pay rolls. A study by Carl Benedikt Frey and Michael A Osborne on the future of employment, estimates, “47 per cent of total US employment is in the high risk category.”
The need for equity and social stability calls for creation of opportunities to shift and absorb workforce in more productive sectors. The thesis of shifting labour from farm to factory has not quite played out. It is hardly surprising that the concept of universal basic income has found room in India’s discourse on the political economy.
Depending on who is telling the story the perception about job creation is — jobs are not being created or more jobs need to be created.
This week, the Niti Aayog, at the behest of the government, announced the creation of a task force for job creation. In a sense, the need to create the task force underlines the fact that job creation is an economic and political imperative. The challenge of job creation is located in complex circumstances — ranging from inadequacy to absence of data, on jobs created and of skills needed, of supply and demand of services/goods and skills.
At a strategic level, there is an embedded bias towards creating particular kind of jobs — in manufacturing, through exports.
The question that needs to be asked is, given the state of aging in the developed world, whether there is room for another China story — and can India match Chinese cost competitiveness that has contributed to global goods price disinflation.
More critically, discourse has been waylaid by approach — both conceptual and structural. The conceptual flaw is the confusion of objectives and outcomes. A moot point is whether job creation is the objective, or should job creation be the by-product, the natural outcome of policies?
The focus needs to be to resolve the many issues that confront the people. Take the state of urbanisation. Barely a third of waste in India’s towns is treated — creating solid waste systems would spur investment, boost jobs and growth. Over 3,800 habitats are called census towns, but lack municipal bodies and are listing on the edge of definition, dysfunction and dystopia. A cadre for urban bodies and for panchayats will address issues and generate employment.
Expansion of primary healthcare centres, improving healthcare would end the death parade. Building and furbishing schools will boost education outcomes and employment. Enabling advisory services on new seeds, irrigation, soil mapping for better farm yields and incomes by creating a cadre or through a PPP programme could deliver growth and jobs.
For sure these will cost money, but can be funded with minimal user charges. And indefensibly, nearly two million jobs — of health, education and police personnel — are vacant at the Centre and in the states.
At a structural level, for some strange reason, unemployment seems to be the baby of the government at the Centre. This stems from inexplicable centralisation and the continued subscription to the notion that Delhi knows best.
Dismantling a dozen of the ministries that deal with state subjects will create room for policy innovation, deliver results and put the onus of employment on state governments — as indeed it should be.
India has seen a parade of initiatives since the start of the new millennium — beginning with the special group led by S P Gupta Committee in 2002 during the Vajpayee era on ‘Targeting Ten Million Employment Opportunities per year in the Tenth Plan’. This was followed by commissions and committees in the UPA era through the tenth, eleventh and twelfth five-year plan years.
The Modi Sarkar, through three years, unveiled a number of programmes — Make in India, Skill India, Digital India, Smart Cities, and Start-Up India. In December 2015, a committee of 11 secretaries and two joint secretaries was tasked with formulating programmes for job creation. On Civil Services Day, Niti Aayog CEO Amitabh Kant made a presentation for change — 10 per cent growth, a $10 trillion economy and 175 million jobs.
Willy-nilly interventions have been long on promise and short on delivery.
Fact is, there is no economics without politics — all electoral conquests and political consolidation depend on the minimisation of this parallax of seemingly competing interests.
A wide swathe of everyday problems continues to haunt the people of India and create what politicians opaquely refer to as anti-incumbency. Viewed through the prism of economics, each of these initiatives calls for investment and has the potential to create employment.
The need is for rearranging the paradigm of objectives and outcomes.
Shankkar Aiyar is the author of