Educated unemployed of India - the looming multitude

A recent article by CNBC's Neerja Jetley ('India's lost generation: A systemic risk?') laments that "Nearly 47 percent of Indian graduates are unemployable in any sector, irrespective of their academic degrees".  It goes on to lay the blame on the fact that "As little as 10- 12 percent of the 15-29 year-old age group in India receives any formal or informal training compared with to 28 percent in Mexico or 96 percent in South Korea".

I think the piece misses a couple of aspects.  First off, the problem doesn't start with lack of training in later-school years.  It starts with elementary education itself.  A World Bank report says that "44 percent of students in grades 2–5 in government schools cannot read short paragraphs with short ...language... Many ninth graders tested in two states using mathematics questions from an international survey had problems with basic arithmetic skills".  And this is no surprise.  With teacher skills & training (and qualifications! - talk of political interference there...) being what they are, that's the kind of student literacy rates which can be exptected.

Secondly, the article says "Theoretically, a nation with young demographic has lower dependency ratio..." and then goes on to describe how 'demographic dividend' doesn't work in India.  However, one additional aspect is that the premise itself may not hold.  Even if it's true that "In 2020, the average Indian will be only 29 years old, compared to 37 in China and the U.S., 45 in West Europe and 48 in Japan, according to India's Ministry of Labor and Employment", many such 29-year-olds do have a full family to support, with both ageing/aged parents and (courtesy early marriages, especially in rural areas) spouses & children.

The article concludes by saying that "The poor education standards are recipes for social problems as incidents of crime escalate".  But the escalating crime is not only caused by the poor educational standards.  It's also a symptom of the haves-have nots divide, caused by the same unemployability that plauges the system.

Unless urgent steps are taken to stem the rot in an integrated fashion, by attacking each and every factor in the entire chain of causes and effects, social tensions are only slated to increase, with predictable consequences for both law & order and institutionalized corruption, notwithstanding efforts to address one or the other symptom in an isolated manner.

Unemployment dole vs. 'Minimum Wages'

There was a news item in the Economic Times page 11 today that the Central Govt. is trying to deal with the fallout of the Karnataka High Court order last year (for equalization of MNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) wages with those mandated under Minimum Wages Act) by revising the wages, while simultaneously going in for an appeal to the Supreme Court.

My take: Decide first whether it's a dole (which is support for the poor) or proper 'employment' (which should lead to creation or value addition of certain economic goods)?  Has there been any sort of evaluation of the 'projects' undertaken under MNREGS to understand whether they're really useful to the rural economy or society - that is, those projects which are actually carried out, not the ones which remain only on paper and become a tool for rural/intermediate level functionaries to loot money.  If not, let's treat this purely as a dole, and not talk about parity with Minimum Wages which are paid for proper employment.

 

It seems some state governments, in the garb of supporting a socially progressive scheme, are going overboard raising MNREGS 'wages' to those mandated under Minimum Wages Act.  Treating it as another one to hand out largesse, on the same lines as the 'Rice at Two Rupees' and such other schemes, which have in the past led to virtual bankruptcy of the concerned state treasuries.  

Already, in the past few years, there have been huge demographic shifts in the rural workforce earlier coming to work in the farms of Punjab etc. and on construction projects.  Now many of them prefer to stay in their villages and take advantage of MNREGS.  This has led to huge rises in wages in these sectors due to severe shortage of manpower.  

Now, it may be said that the rise in wages, coupled with more leverage in the hands of workers, may not be a bad thing in itself – at least it’s paid for proper hard work (though there probably needs to be better management of rising industrial tensions, ref. the recurring cases of industrial unrest in Gurgaon-Manesar belt).  Bottomline: it's still payment for legitimate economic 'work'.

 

This Budget, they announced the intention to bring in an 'urban' employment guarantee scheme.  Before expanding the scope of such schemes, can we have a national consensus to treat wages as wages (with all associated privileges) and dole as dole.  Else there may be long term effects on the labour market which the politicians may not visualise now (or, even if they do, choose to turn a blind eye to, for political gains).

There’s always a danger that we may create whole generations of young people (a la US or even partly like Germany) dependent on dole, and on a much more massive scale than in other countries.