How to bring the focus back on jobs?

Whichever way you look at it, we have a jobs problem on hand. The unemployment rate at over 6% in FY 18 was the highest in a long time. The slowdown in the economy since wouldn’t have helped. The labour force participation rate is about 46% meaning less than half the working age population was working or seeking employment. The unemployment among urban youth (under the age of 30) is over 22%. We have over 5-6 million people joining the workforce every year while the new jobs being created are estimated to be about 1.2-1.5 million annually. Two of the top 4 sectors that contribute to non-farm jobs, namely, Construction and Transportation have slowed down considerably in the last 2 years based on the sectoral data available.

Our demographic dividend will help us only if the working age population is productive. A quick run through of world history will tell you about the perils of unemployed youth with thwarted aspirations in a society. If that doesn’t satisfy you, look around and ask yourself why the youth seem to be at the van of most protests of late in India? You will have your answers.

But where is our focus on jobs? Open any newspaper today or tune into any news channel every evening. What are we spending our time on? What’s consuming our legislative agenda, administrative capacity and public opinion these days? Surely, not jobs. We seem to have enormous appetite for issues that should ideally not animate us if we believe growth is the panacea to our problems. The dominant narratives in India at this moment are about redressing historical grievances, resolving the none too urgent issues of identity and defining Indian nationalism. These might have their own merits and it is a tad futile to argue over them. The problem is our attempts at finding solutions to these issues are doomed to fail.

There is a meta narrative overlaying them all on how sorting these unresolved issues once and for all will free our polity to realise our ambitions of being a superpower. This goes against the wight of historical evidence from around the world. There is an irresistible appeal of solving social issues through a top-down deterministic approach of policy making. This idea of defining predetermined social objectives and identifying specific steps that direct you towards them has seen spectacular failures in 20th century itself. Hayek called this flawed notion – constructivistic rationalism. But it has great currency among political leaders since it gives them the halo of being transformers. We seem to be squarely in one of these periods in our history. It is a familiar trap to fall into regardless of good intentions.

Social engineering truly happens through individual actions, attitudes and their interplay with others. The incentives that drive millions of these interactions aren’t divined by an all-knowing state. They happen by themselves and an aggregate of many such interactions lead to a pattern or order. This ‘spontaneous order’ is the only sustainable way of effecting social change and the ‘law’ or policy to support it is more likely to be discovered by society than designed by “well meaning” legislature. We will do well letting the society find its order or solution for what we think are historical ‘unresolved’ issues that allegedly have stymied our progress; instead of looking for centrally driven policies. The protests and turmoil that we have witnessed over the last few months are a reaction to the preference of the state to use statute over spontaneous order. These aren’t anti-national; they are merely pro order in the classical conservative sense.

The huge state capacity that has been or will be deployed to design and implement these policies need to be withdrawn and redeployed in areas of economic growth and job creation. There is a role for the state in improving ease of doing business in real sense (not merely in rankings), fewer regulations to foster entrepreneurship and human capital development by focusing on secondary and higher education and skill development. That the job situation we have at this moment is partly on account of slow economic growth is a no-brainer. We will, hopefully, revive the growth engine. But there are other contributory factors too including an illiquid job market for resources with higher qualifications, demand-supply mismatch across states and a temporary information mismatch between what jobs are being created and what kind of resources are being trained by our education system. These are market failures where state could and should help.

We don’t seem to be spending our political and intellectual capital on creating the right incentives and a strong enabling environment that will help sort these issues. The problem of jobs will get attention only when multiple narratives sprout that demonstrate the futility of state interventionism in resolving the many social issues that seem to have a ‘majority’ support. Unfortunately, most current counter narratives question the relevance of these social issues itself that lends further ammunition to those who believe in them. We should instead leave the merit of these issues for the moment and focus only on how the current policy cures to these won’t ever resolve them to their satisfaction. This vacating of state priority and capacity will then enable us to focus on issues where it can act as an enabler. That will be a start.          

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