Development Delusion

How to Create Employment for Many

Sunil Ray

The next wave of resistance movement against unemployment is no longer in its embryonic stage. The violent opposition against “Agnipath” is pointer to a massive upheaval of the unemployed youths of the country. However, it may be wrong, if such uprising, though short–lived, against the central government is being brushed aside as it lasted only for a few days. Although agitation against it goes on as splinter force here and there, but then the nation must be waiting for its fusion into a long-drawn battle.

This battle, as is not directed against the current ruling dispensation alone. It is against the system— the economic system, that all ruling dispensations nurture irrespective of which political party rules the nation. While ‘Jobless Growth’ of the previous political regime haunts everyone even today, it is never considered as a serious development issue by government sponsored economists and of course mainstream market economists (the neo-liberals) in general to debate on. To them, it is pain that lasts for some time and the society has to bear with it only to have a permanent solution. This is what was also told by the protagonists of neo-liberalism during the onset of liberalisation and globalisation of the economy. 30 years later results are there for all to see. Today the same protagonists continue to echo the same voice with no regard to what all scientific studies observe. The studies observe, to express it simply, economic growth creates employment opportunities less than proportionately and, many a time it is too less to count. For instance, impact on total employment over the last decade for every one percentage point increase in GDP has been just 0.1% (Azim Premji University).

What does it imply? Accumulation of stock of unemployed people over time. If CMIE’s April 2022 report is to be believed, its data on job showed 50% unemployment for male in the 15-19 age group, and 38.7% for the 20-24 cohorts. Unemployment was as high as 76% for 15-19 cohorts in Bihar, the epicentre of protest against the introduction of ‘Agnipath’ in the recent past. There may be several other estimates that show much worse than what CMIE shows. Even if methodological differences between different sources are admitted no source has ever underestimated magnitude of the unemployment problem which is rising at a frightening scale. And, on the top of all, if there is a disguised unemployed person in agriculture which is dominated by the small and marginal farmers in terms of land holdings, it is simply impossible for one to imagine how precarious unemployment problem that the country is grappling with is.

It is simply excess supply of labour over demand that exerts downward pressure on wage/ gross receipt of the labour. As the latter declines, more labour is absorbed. It means more employment of the unemployed. Hence, labour market finally clears the stock of unemployed persons by employing more in response to the declining wage rate. Even if one assumes employment increases at low wage rate in practice, the irony is that it is not sufficient enough to pull up the labour from the subsistence/ need-based economy to demand-based economy. This includes all categories of low paid wage earners in India such as those working in the unorganised sector, workers under government sponsored (non-market) wage employment programme such as NEREGA, etc. Besides, no one knows about the duration of jobs at such low wages and the extent to which other privileges that have monetary implications are compromised. Whatever be the gross payment received by the employed person under such condition, ability to increase command over goods and services fails to rise above survival level.In other words, it fails to raise the effective demand that leads to expand the home market that, in turn, creates potential for employment opportunities. The worst is when the gross receipt in real terms declines as a result of inflation.

Hence, the therapeutic cure of Keynesian benevolence to raise effective demand of those working under state-sponsored wage employment programme is an illusion. Not to talk about those who are working in the unorganised sector earning too less to count in this regard. Is there any other solution from the neo-liberals than this one that can extricate around 70 percent of Indians from the trap of subsistence living? If yes, is it deliverable within the fiscal limit? And for how long? Besides, one is curious to know how many of the unemployed could be employed even at low payment against the backdrop of continuous stockpiling of educated unemployed, leave alone uneducated unemployed. It is an employment crisis to be understood as the crisis of neo-liberalism itself.

Firstly, no solution is in sight within the same box. Secondly, if at all it exists, it is mystical market solution about which nobody knows how and where to dig it up in practice. But its greatest virtue is its enormous ability to create smoke-screen to hide the truth.

What is this bitter truth? It is the economic system which is structurally constrained to meet employment needs of the millions for a decent wage, a system that works primarily to the advantage of the corporate capital, a system that has been creating income inequality since economic reforms in 1991. For instance, capital’s profit share in the net value addition in the organised manufacturing sector increased during the last 30 years or so while that of labour’s wage share declined. And, a system that works to the disadvantage of the unorganised sector but survives on it as the largest employer of low paid workers. Notwithstanding its enormous contribution to generation of livelihood to millions, its vulnerability to disaster is shocking. Covid-19 crisis was a case in point in that it exposed how deeply flawed the economic structure is.In other words, the structural bias against the low paid workers was so outrageous and inhuman that it defied systemic resilience to any acceptable degree when one-third of the Indians (around 45 crore of labour working in the unorganised sector) were forced to go back to their homes at the cost of their job and livelihood after the outbreak of the pandemic.

The irony is that in many academic debates and discussions that took place after the outbreak of the pandemic attempts were made consistently by the neo-liberals to attribute unemployment crisis in India to pandemic. The latter, as it were, was solely responsible for this crisis to occur. Otherwise, everything was hunky-dory with the economy before the onset of the pandemic and its economy was performing quite well to turn itself to one of the fastest growing economies of the world. It is a great cover-up of a ‘failed state’ given by the neo-liberals who leave everything to the market as a clearing agent to determine.

The failure can be traced in the government’s approach towards macro management of the economy rooted in the monstrous derivative market. Since the government approach is more pro-business to fulfil the corporate interest than being pro-market social outcomes are different. The stockpiling of unemployed is one such glaring examples of this social outcome. It is needless to mention that entire management exercise for the economy, for example annual budget preparation etc, undertaken by the government is primarily aimed at stabilising the macroeconomic parameters. Employment creation (barring a few state-sponsored employment programme namely NAREGA) is assumed to be the natural outcome of the logic of ‘derivative’ of macro- economic stabilisation efforts. No matter where the derivatives finally lead to and why millions lose.

The moment of truth is that the local economy that has a strategic significance for employment creation in a country like India is deprecated. No compensatory principle works against the forces that continuously push the same to development limbo.The local economy needs structural transformation at the decentra-lised level in order to harness its potential for employment creation.

The same market will now be shared by goods and services produced by the enterprises with small capital base. Its obvious implication is that such a pattern of growth at the micro-level around agriculture will restrain big/corporate capital to monopolise and concentrate wealth at their hands. The distributional implication is considerably large particularly when development potential is harnessed to generate activities by small capital as is conceived here and create new employment opportunities. In addition to job creation, local economy will have environmental benefits since the small projects are energy efficient, non-polluting and community oriented. Besides, investment in green technologies that decouples growth from material needs will open up new avenues hitherto untapped for employment creation at the local level.

Land reforms and the lost development agenda at the decentralised level must be brought back. One must not ignore the telling experience of some south Asian countries a few decades ago that shows how they created massive employment opportunities through structural transformation at the decentralised level being brought about by land reforms. The logic of expansion of the home market with the rise of wage employment above subsistence level is built into the construction of niche structure and land reforms. Once both are in place, they will tend to maximise both forward and backward linkages with the agriculture. Reforming market structure with the introduction of minimum support price for all agricultural goods and elimination of exploitative intermediary system may reinforce the process of reconstruction.

The only way to stop losing potential for employment creation is to lift the veils of development delusion. No alternative seems to exist than to overhaul the economic structure at the local level. The most desirable social outcome of economic management that the country is looking forward is income distribution. The movement steered by the unemployed youths against ‘Agni path’ epitomises their violent reaction against the state for not being able to fulfil the objective. While one may have reservation against violence in any form, a massive democratic movement is likely to unfold sooner or later as an expression of their solidarity and turn it into a solidarity movement. It is this movement, as the recent history of the movements around the world teaches, that can demystify development delusion and script an alternative development trajectory.

 [Prof Sunil Ray is Former Director, A N Sinha Institute of Social Studies, Patna and adviser to Centre for Development Communication and Studies, Jaipur and Impact and Policy Research Institute, New Delhi. Email:]

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Vol 55, No. 18, Oct 30 - Nov 5, 2022