The country is facing its worst economic and unemployment crisis since independence. The Modi Government’s incompetent and apathetic handling of the corona pandemic has resulted in the country having the second largest number of cases in the world—total cases at the end of December 2020 were more than 10 million—and the third largest number of deaths in the world (official reports put the total fatalities at nearly 1.49 lakh as on 31 December 2020; the actual figure may be double this). It has also sent the economy into a tailspin. The GDP figures for April–June 2020 showed the economy to have declined by 23.9 percent over the same quarter last fiscal—one of the largest falls among the major economies of the world. Even though this figure of 23.9 percent is shocking, it does not capture the actual decline in the Indian economy; that is because the Government itself has admitted that its estimate is based only on very inadequate data, and the data is likely to undergo revision. From the way the government has estimated the GDP data, it appears that the figure of 23.9 percent represents only the decline in the organised sector. Most significantly, it does not include data for the decline in the unorganised sector—and the unorganised sector had completely shut down during the lockdown. Taking into account the collapse of the unorganised sector, which accounts for 45 percent of the output, the actual decline in GDP may be as much as 50 percent and possibly even more.[1]

The unprecedented economic crisis has resulted in skyrocketing unemployment. We do not have official figures—the government stopped collecting these figures a long time ago. But that unemployment in the country must be at staggering levels during these pandemic months becomes obvious from the number of tweets posted by youth on PM Narendra Modi’s 70th birthday on 17 September 2020, to remind him of the growing joblessness the country is facing. On that day, the hashtag #NationalUnemployment Day had over 4.18 million tweets, while, #राष्ट्रीय_बेरोजगारी_दिवस had over 1.68 million tweets;  and the day was soon being called as National Unemployment Day on social media.[2]

However, this terrible unemployment crisis being faced by the youth of the country during the corona pandemic is not because of the pandemic; it is a consequence of the economic development model being implemented in the country—whose basic orientation is corporate profits, and not the creation of decent, satisfying jobs for the people. Consequently, unemployment in the country was already very high before the pandemic struck; the economic collapse during the pandemic has only worsened the unemployment crisis.

In this article, we attempt to make an estimate of the extent of unemployment in the country before the pandemic struck—since then, because of the economic collapse, the unemployment crisis must have worsened considerably.

i) Official Unemployment Statistics as of 2019

The Modi Government’s neoliberal policies had gradually led to a worsening of the country’s unemployment crisis during Modi’s first term itself. This was evident from employment data released during the  the second year of the first term of the Modi Government. In September 2016, data from the fifth round of the Annual Employment–Unemployment Survey (EUS) conducted by the Ministry of Labour and Employment was released. This report showed that unemployment rate in India had gone up to a five-year high of 5 percent in 2015–16.[3]

The Modi Government has been keen to suppress all uncomfortable data right from the time it first came to power in 2014. And so, it promptly scrapped not only all subsequent Annual EU Surveys, but also the quinquennial Employment–Unemployment Survey conducted by the National Sample Survey Organisation (NSSO)—whose next round was due in 2016–17.[4] This survey on employment and unemployment had been conducted regularly every five years since 1972–73 in rural and urban areas, and provided extensive information about the volume and structure of employment and unemployment in the country.

For the next three years, the government released no employment-unemployment data. It came in for extensive criticism for this, and so belatedly instituted another employment survey, the Periodic Labour Force Survey (PLFS), to be done by the NSSO. This survey was conducted between July 2017 and June 2018. But with Lok Sabha elections coming, the Modi Government decided to withhold the release of this data too.

Finally, after the 2019 Lok Sabha elections were done and dusted with, the Government released the suppressed PLFS data. The data showed that joblessness was at a 45-year high of 6.1 percent in 2017–18.[5] Worse, they showed that instead of the creation of more jobs, the total number of jobs in the economy had actually fallen during the period 2011–18 (see Table 1). This is the first time this has happened since independence.

Since 2018, the economy has been slowing down. Figures released by the Central Statistical Office show that India’s GDP growth rate declined from 6.1 percent in 2018–19 to 4.2 percent in the year ending 31 March 2020, and 3.1 percent in January–March 2020. Obviously, the unemployment situation must also have considerably worsened. And so, the government has not released any more unemployment data.

ii) A Preliminary Estimate of Unemployment Rate in India

There is an important problem with the data collection methodology of official surveys, which artificially reduces unemployment figures. The number of unemployed is the difference between the labour force (total number of people employed and unemployed) and the work force (the number of people employed). Therefore, even if the work force does not increase, if the labour force reduces, unemployment will show a decline. This is precisely what is happening with India’s official employment statistics. According to official figures, over the period 1983 to 1993–94, India’s labour force grew at 2.05 percent per annum, but during the period 1993–94 to 2010–11, this growth rate fell to 1.40 percent, and then during the period 2010–11 to 2017–18, fell further to just 0.33 percent (Table 1).

Let us estimate the labour force in 2017–18 if it had continued to grow at the same rate as during 1983 to 1993–94, that is, at 2.05 percent per annum. In that case, the labour force in 2017–18 would have been 620.8 million instead of 495.1 million. This means that as many as 125.7 million people are missing from the labour force.

Table 1: Labour Force, Work Force & Unemployment Rate[6]  (in million)

Year	Labour force	Work force	Unemployment Rate	Period	Growth Rate of Labour Force
1983	308.6	302.8	1.88%
1993–94	381.9	374.5	1.94%	1983 to 1993–94	2.05%
2010–11	483.7	472.9	2.23%	1993–94 to 2010–11	1.40%
2017–18	495.1	465.1	6.06%	2010–11 to 2017–18	0.33%

What can account for the sharp drop in the labour force?

One argument given by mainstream economists is higher enrolment in colleges. This would no doubt reduce the size of the labour force, and enrolment in higher education has indeed increased during the last three decades. The question is, by how much? The All India Survey of Higher Education (AISHE) gives the figures for total enrolment at all levels of higher education, including diploma courses. This survey was first conducted in 2010–11. The AISHE reports for 2010–11 and 2017–18 show that total student enrolment in higher education (enrolment in the regular mode) has gone up from 24.1 million in 2010–11 to 32.6 million in 2017–18, an increase of 8.5 million over 7 years. This works out to a compound annual growth rate (CAGR) of 4.36 percent.[7] Assuming that enrolment in higher education had grown at the same CAGR during the previous period of 1993–94 to 2010–11 too (the actual growth rate must have been lower), the enrolment in higher education for 1993–94 works out to 11.7 million. This means that total enrolment in higher education has, at the most, increased by (32.6 – 11.7 =) 20.9 million over the period 1993–94 to 2017–18. So, of the 125.7 million people missing from the labour force, not more than 16.6 percent are because of increase in enrolment in higher education. Even this figure is actually an overestimate, as a significant number of students in higher education are actually in the labour force even though they are enrolled in colleges—they are either doing part-time or full time jobs, or are in search of jobs. This is especially so for students enrolled in Arts and Commerce courses; and students enrolled in these courses at the undergraduate level account for 39 percent of total student enrolment in higher education.[8]

With higher enrolment in colleges accounting for only a small part of the sharp drop in labour force, the only other reason that can plausibly explain this drop is that many workers have simply given up looking for jobs out of frustration—because they have not been able to find a job for a long time. In official parlance, they are known as ‘discouraged workers’; such workers are not included in the official figures of the unemployed, nor are they included in the labour force.

But actually they should be included in both, as they have not dropped out of the labour force willingly, but due to frustration! Any pro-people system oriented towards providing decent jobs to all its people would seek to bring these workers back into the labour force.

Let us calculate the unemployment rate in 2017–18, including all the discouraged workers:

• Total number of missing workers in the labour force over the period 1993–94 to 2017–18 (A) =125.7 million;
• Increase in student enrolment in higher education over the period 1993–94 to 2017–18 (B) = 20.9 million;
• Total number of discouraged workers = (A – B) = 104.8 million;
• Official labour force in 2017–18 = 495.1 million;
• Actual labour force in 2017–18 (C) = 495.1 + 104.8 = 599.9 million;
• Official number of unemployed = 30 million;
• Actual number of unemployed (D) = 30 + 104.8 = 134.8 million;
• Actual unemployment rate, 2017–18 = (D/C) = 22.5 percent.

That’s almost 4 times the official unemployment rate of 6.1 percent as estimated by PLFS 2017–18.

Since then, as we have discussed above, the unemployment situation has further worsened.

Estimating Youth Unemployment

NSSO / PLFS surveys also show that youth unemployment levels in the country are far worse than overall unemployment figures. The figures are absolutely mind-boggling. Youth unemployment rate in the country has leapt from 5.4 percent in 2004–05 and 6.1 percent in 2011–12 to 17.8 percent in 2017–18 (Table 2). This figure is three times the official overall unemployment rate of 6.1 percent in 2017–18.

Table 2: Youth (15–29 years): Labour Force & Unemployment Trends, 2005–18 [9]

(in million)

Year	Labour force	Work force	Unemployment Rate	LFPR (%)
2004–05	163.1	154.2	5.46%	56.4
2011–12	147.0	138.0	6.12%	44.6
2017–18	140.7	115.7	17.77%	38.3

Even this high figure is an underestimate. That is obvious from the sharp fall in Labour Force Participation Rate (LFPR) [LFPR = Total number of people in labour force /total population of that age group]. It has fallen from 56.4 percent in 2004–05 to 38.3 percent in 2017–18. Increase in student enrolment can only account for a part of this fall, as the fall is very steep. This means that a large number of youth are falling out of the labour force due to frustration at not being able to get a job. If we include the discouraged youth in the labour force and unemployment figures, the youth unemployment rate zooms to 40.2 percent for 2017–18![10]  (Since then, the economy has slowed down, which must have further worsened youth unemployment.)

iii) Estimating Real Unemployment Levels in India

Even these shocking unemployment figures for overall unemployment and youth unemployment are a huge underestimate. Let us see why.

Of India’s total official workforce, the overwhelming majority, nearly 93%, work in the informal sector (Table 3).

Table 3: Formal and Informal Employment in India, 2009–10[11] (in million)

Total Work Force	460.2
Total Formal Employment	33.0 (7.2%)
Total Informal Employment	427.2 (92.8%)

These informal workers either work in insecure, dangerous, low paid jobs, with no social security, like in the construction sector or in roadside eateries, or are self-employed—selling idlis or pani-puris by the roadside or buying some vegetables from the wholesale market and selling them on a cart or collecting scrap from houses. Why do all these people work in such low-earning jobs? Because: there is no unemployment allowance in India. Therefore, people are forced to take up whatever jobs are available, or do any kind of work, to somehow earn something and stay alive.

All the unemployment surveys in India, be it the Labour Bureau survey or the NSSO survey, consider all these workers in the informal sector to be ‘gainfully employed’, even if they are earning below-subsistence wages. Calling these people employed is actually an absurdity; they are all victims of an economy that is not being able to create decent jobs. Any humane society would consider them to be unemployed, or at least under-employed.

This is also recognised by modern human rights declarations adopted by international bodies. The historic ‘Universal Declaration of Human Rights’ adopted by the United Nations General Assembly way back in 1948 explicitly says:[12]

“Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.”

Subsequently, the United Nations General Assembly also adopted ‘The International Covenant on Economic, Social and Cultural Rights’ in 1966, which commits all countries to recognising the “right of everyone to the enjoyment of just and favourable conditions of work”, and ensuring that all workers get “fair wages” that allow a “decent living for themselves and their families”.

It is in recognition of these international conventions that the developed countries, at least in their supplementary data, consider all people working part-time and desirous of full-time jobs as underemployed, and include them in the number of unemployed. By recognising them as “underemployed”, they at least acknowledge that they have failed to provide them decent employment.

It was at the very time that the world was drafting the Universal Declaration of Human Rights that our nation’s founding fathers were drafting the Indian Constitution. Part IV of the Constitution, known as the Directive Principles of State Policy, calls upon the State to endeavour to secure for all workers a living wage that ensures a decent standard of life and full enjoyment of leisure and social and cultural opportunities (Article 43). While it is true that the Directive Principles are not legally enforceable, it does not mean they are not important. Elucidating the importance of these ‘Directive Principles’, Dr Ambedkar stated in a speech to the Constituent Assembly on 19 November 1948:[13]

“It is the intention of this Assembly that in future both the legislature and the executive should not merely pay lip service to these principles enacted in this part, but that they should be made the basis of all executive and legislative action that may be taken hereafter in the matter of the governance of the country.”

It becomes clear from the above discussion that all workers not able to earn even subsistence wages should be recognised as ‘under-employed’ and included in the unemployed.

What is the extent of un- and under-employment in the country? One way of getting an idea of this is by estimating how many working people in the country earn below subsistence wages.

Such an estimate can be made from a study based on the Labour Bureau’s Fifth Annual Employment–Unemployment Survey released in September 2016 (Table 4). The study found that of the total workforce in the country:

• 43.4 percent people earned less than Rs 5,000 per month; and
• 84.1 percent people earned less than Rs 10,000 per month.
  

Table 4: Types of Employment and Monthly Earnings, 2015–16[14]

	Self-employed	Wage/Salary Earners	Contract Workers	Casual Labourers	Total
% of Workforce	46.6%	17.0%	3.7%	32.8%	100%
Monthly Earnings					As % of total employment
Less than Rs 5,000	41.3%	18.7%	38.5%	59.3%	43.4%
Less than Rs 10,000	84.9%	57.2%	86.7%	96.3%	84.1%

These are jaw-dropping figures.

From the arguments given above and the data given in Table 4, it follows that at the very least, all those earning less than Rs 5,000 per month, who total 43 percent of the working people, should be considered as underemployed and included in the unemployed.

Adding this figure to the preliminary estimate we have made earlier of the unemployment rate in India for 2017-18—where we had estimated the unemployment rate to be 22.5 percent—the real un- + under-employment rate in the country goes up to a stunning 65 percent.

With the economy crashing due to the government’s inept handling of the pandemic, the unemployment rate in the country must have further gone up and reached stratospheric levels.

Notes

1. Arun Kumar, “What the 23.9% Drop in Q1 GDP Tells – and Doesn’t Tell – Us About the Economy”, 2 September 2020, https://thewire.in; “Economic Contraction is 40% Not 24% – Prof. Arun Kumar”, Newsclick, 9 September 2020, https://www.newsclick.in.

2. “’National Unemployment Day’ Trends on Twitter on PM Modi’s Birthday”, 17 September 2020, https://thelogicalindian.com.

3. “Survey Discontinued, Centre Clueless about Unemployment”, 6 March 2018, https://www.dnaindia.com

4. “Survey Discontinued, Centre Clueless about Unemployment”, 6 March 2018, https://www.dnaindia.com; Sona Mitra, “The Indian Employment–Unemployment Surveys: Why Should it Continue?” 13 August 2018, http://www.cbgaindia.org; Rosa Abraham et al., “A (Failed) Quest to Obtain India’s Missing Jobs Data”, 1 February 2019, https://thewire.in.

5. “Cat Finally Out of the Bag: Unemployment at 45-Year High, Government Defends Data”, 31 May 2019, https://www.indiatoday.in.

6. Data for 1983 and 1993–04 from: Economic Survey, 2001–02, Labour and Employment, Tables 10.6 and 10.7, http://indiabudget.nic.in; Data for 2010–11 from: Economic Survey, 2014–15, Human Development, Table 9.1, p. 135, http://indiabudget.nic.in; Data for 2017–18 from: Santosh Mehrotra, Jajati K. Parida, India’s Employment Crisis: Rising Education Levels and Falling Non-agricultural Job Growth, October 2019, CSE Working Paper, https://cse.azimpremjiuniversity.edu.in. Note that the data for 2017–18 given by Mehrotra et al. is not strictly comparable with the data for the previous years, as their calculations for labour force and workforce for the previous years do not match with the data given in the Economic Surveys.

7. All India Survey on Higher Education, 2017–18 and 2010–11, Department of Higher Education, MHRD, Government of India, https://mhrd.gov.in.

8. Ibid.

9. Santosh Mehrotra et al., India’s Employment Crisis, 2019, op. cit.

10. Calculated by us. Assuming the LFPR had remained the same as in 2004–05, the youth labour force for 2017–18 works out to 207.19 million. Of the total missing youth workers (207.19 – 140.7 = 66.49 mn), at most 13.87 million can be accounted for by increase in student enrolment over the period 2004–05 to 2017–18. So, youth labour force for 2017–18, including the discouraged workers, is 207.19 – 13.87 = 193.32 million, and youth unemployment is 193.32 – 115.7 = 77.62 million.

11. Twelfth Five Year Plan: Volume 3 – Social Sectors, p. 131, http://planningcommission.gov.in

12. International Covenant on Economic, Social and Cultural Rights, https://www.ohchr.org

13. Friday, 19th November, 1948 – Parliament of India, Constituent Assembly of India – Volume VII, http://parliamentofindia.nic.in.

14. Vivek Kaul, “Book Excerpt: The Real Story Behind India’s Low Unemployment”, 19 April 2017, https://www.firstpost.com.