India’s Jobs Crisis And The Role Of The Government

Let's not just rethink the role of government in direct job creation, but also how hiring for public sector jobs could be revised.

<div class="paragraphs"><p>Labourers push  loaded goods across the Howrah Bridge in Kolkata on April 5,2022. (Photo: Debajyoti Chakraborty/Reuters)</p></div>
Labourers push loaded goods across the Howrah Bridge in Kolkata on April 5,2022. (Photo: Debajyoti Chakraborty/Reuters)

That India faces a significant jobs crisis is a well-established fact. Last week, the government announced two hiring programs to push job creation. The first was to provide employment to 10 lakh people in a ‘mission mode’ over the next 18 months in central government ministries and departments. The second was the Agnipath scheme in which 46,000 youngsters (aged 17.5-23 years) would be hired in 2022 for a four-year stint in the armed forces, after which 25% will be re-selected for a longer tenure and regular benefits while the remaining 75% will retire without pensions but will receive a lump sum amount of Rs 11.7 lakh at the end of their tenure. The announcement of these two schemes and the protests in response to the Agnipath scheme, in particular, raise important questions about the role of the government as an employment generator.

Why Government Jobs Remain Highly Sought-After

Evidence from employment-unemployment surveys over the years shows that good jobs, i.e. those which offer security of tenure, earning stability and access to social protection schemes are few and far between.

Pre-pandemic data from the Periodic Labour Force Survey 2018-19 shows that a mere 2.2% of the workforce was in regular salaried employment arrangements that offered security of tenure (written contract of more than 3 years duration) and access to social security benefits (such as provident fund or pension, gratuity, health care & maternity benefits).

This statistic has fluctuated between 2% and 3% of total employment over the last few employment-unemployment surveys (2004-05, 2011-12, 2017-18).

In a labour market where job security has been a privilege for a limited few, the huge clamour for government jobs which provide security and stability is unsurprising. With the increasing contractualisation of the workforce in the private sector, a government job is seen as the last bastion of job security. Any changes in the recruitment exercises by the government are met with much resistance as witnessed even earlier this year when angry job aspirants protested against alleged irregularities in the examination conducted by the Railway Recruitment Board.

This begs the question, is it the government’s responsibility to create jobs?

The onus of providing employment to everyone does not rest with the government. The role of the government in the matter of job creation is that of building an ecosystem suitable for the private sector to grow and create jobs. In fact, at the heart of India's job challenge lies its inability to provide for the rapid growth of labour-intensive manufacturing which can absorb large masses of its low-skilled and semi-skilled labour force. However, in the current scenario where the private sector has been unable to create adequate employment opportunities in the modern manufacturing or services sector, which is reflected in a rise in the share of agriculture in total employment from 42.5% in 2018-19 to 46.5% in 2020-21, the role of the government in creating jobs directly assumes significance.

Can Government Jobs Move The Needle For India's Weak Job Market?

Public Services Are Actually Understaffed

Estimates suggest that there are 870,000 vacancies in ministries across the central government alone, amounting to approximately 20% of all sanctioned positions. The absolute number would be expected to rise significantly if we add vacancies across various state governments and departments. Significantly, apart from the vacancies, it is worth noting that public employees per thousand are much lower in India compared to G-20 countries (16 per thousand in India compared to 111 per 1,000 in Brazil and 77 per 1,000, in the United States).

Under-staffing across essential public services such as water and sanitation, public health, education, infrastructure and security not only impacts the quality of life of citizens but also the investment climate, which is critical to fostering a vibrant industrial sector.

Of course, simply filling in vacancies and possibly creating new ones will not improve the delivery of basic public services across a wide variety of core functions.

The existing literature attributes the inability of the Indian state to effectively deliver services to multiple factors such as weak governance, fiscal constraints and lack of accountability and training of service providers.

Bring In Agniveers With A Five-Year Agnipath Transition Plan

Relook At The Public Sector Recruitment Model

Over and above these factors, University of California economist Karthik Muralidharan has argued that it is the current structure of hiring in the public sector which creates several inefficiencies in the productivity and effectiveness of publicly provided services. In the paper, he proposes an interesting alternative approach to hiring in the public sector with the objective of delivering public services more effectively within the same fiscal envelope. While his proposal does not pertain to the defence sector, it merits close examination in times when the government is attempting to play an important role in job creation.

Some key features of his framework are as follows:

  • Create untenured apprenticeship positions lasting three to five years in major frontline service delivery departments ( police, teaching, community health, and early-childhood care) at lower entry-level pay scales than the status quo.

  • Create modular training courses alongside the apprenticeship, allow the interspersing of theory and practice and provide certificates of levels of skilling that are compatible with the new National Skills Qualification Framework.

  • Retain the current pay scales and process for hiring regular full-time staff (including age limits for entry), but provide extra performance-based credit for each year of successful service as an apprentice.

  • Provide one-time payments to apprentices who do not get hired into regular full-time positions at the end of their eligibility age.

Apart from increasing hiring in entry-level jobs which will help to deal with the grave but the oft-ignored challenge of a high inactivity rate amongst the youth (over 30% of India’s youth are not reported to be in education, employment or training), Muralidharan argues that such a program will improve the effectiveness of training and the match quality of front-line service jobs by allowing candidates to experience the actual job for a few years before getting absorbed into permanent positions. For those not getting selected for regular positions, the credentials accumulated during the apprenticeship will improve their skills and employability in the private sector.

Altering the model of public sector recruitment is by no means an easily accomplishable task in India. However, as the jobs challenge mounts, it is important to not just rethink the role of the government in creating jobs directly, but also how the hiring method for public sector jobs could be revised to improve labour market outcomes for the youth. Key features of the Agnipath scheme and Muralidharan’s proposal outlined above offer innovative takeaways for recruitment processes outside the defence sector and deserve careful consideration.

Radhicka Kapoor is a Fellow at the Indian Council for Research on International Economic Relations (ICRIER).

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.