Agnipath has stirred the nation. However, the elephant in the room is in the plains: the hundreds of millions of underemployed Indian citizens. The worst affected are youth who need good jobs to fulfill their aspirations for a good life. With the Agnipath Scheme, the government says, “a window of opportunity has been opened for the youths to serve their nation for a period of 4 years. On completion of the four-year period, Agniveers will go to the society as a disciplined, dynamic, motivated, and skilled workforce for employment in other sectors to pursue their career in the job of their choice.”
Unfortunately, the problem of the Indian economy is not a lack of sufficient numbers of educated and trained youth. The most under employed presently are the country’s most educated youth. The massive skilling program over the last ten years, with private sector participation and sectoral skills councils to ensure that youth learn skills the privates sector needs, has produced hundreds of millions of skilled persons. Most of them could not find good jobs. The problem is the private sector is not generating enough “good jobs”.
“Good jobs” provide decent wages and dignified work, and they free workers from exploitation. They provide continuous income, and sufficient social security for decent living even when a worker cannot earn any more due to old age or other exigencies. Jobs in the public sector and defense services provide these needs; the private sector does not. Moreover, the private sector demands it be freed from such obligations to make it easier to do business. So, it is not surprising that young people covet the reducing numbers of ‘permanent’ jobs with pensions in the public sector and defense services. It also explains the violent protests against Agnipath.
Some economists insist that the formal sector of the economy must be enlarged to generate more good jobs. However, the legal registration of an enterprise and a bank account are not sufficient conditions for an enterprise to create good jobs. It must provide all the other requirements mentioned before. The “formal” employment sector—large private enterprises and the public sector—has been “unformalizing”, and diminishing, in India and around the world. Unformal and insecure employment has been increasing everywhere. It is one of the principal reasons for the rise of populist governments on all continents.
Economists say more women should join the Indian workforce for the economy to grow. For centuries, Indian women have been a large part of the workforce: as farm workers, domestic workers, sanitation workers, caregivers, etc. They are not counted because their work is classified as “informal”. Formalization of good jobs for them requires raising their wages, securing their employment, providing them with social security; and providing them legal means to secure their rights (through unions, associations, etc.). They are the very things being undone for workers in the formal economy with the increase of contract employment and reduction of secure jobs in all sectors, and growth of the ‘gig’ economy.
An economy’s shape must suit the needs of a harmonious society. The principal beneficiaries of a good economy must be its citizens, especially the poorest. An enterprise’s worth should be judged not by its valuation in the market, but the values its leaders practice not merely preach. A paradigm shift is necessary in the thrust of economic policies, from increasing the size of the pie to improving its wholesomeness. Ease of doing business must be accompanied with ease of living of citizens.
A large growing economy which does not generate good jobs is not a good economy for a nation’s citizens. The Indian economy has amongst the lowest employment elasticities of all large economies—i.e., the numbers of jobs it generates per unit of GDP growth. Whereas, to meet the needs of its youthful population, and realize its demographic dividend too, it should have the highest. What we measure, we manage. Measurement of economic progress must shift from the size of the economy to creation of “good jobs”. Good jobs will not be created by forcing onto the economy and its enterprises the forms of formalization that have created its problems.
The shape of globalization must change to bring more harmony. Sizes of economies may grow with more trade, whereas good societies are built with fairer trade. While efficient economies may be built with legally enforceable contracts, good societies are made by equitable relationships amongst their citizens.
(This was published in the Economic Times on July 1 2022)