Image Credit: AP
Context
To fix unemployment, we must focus on boosting the overall economy, shifting policy focus from just the ease of doing business to the ease of living and earning, which centers on job quality, household income security, and inclusive growth.
Context and Background
- Traditional reforms focused on capital, deregulation and ease of doing business (Ease of Doing Business).
- However, the Growth Experience has been characterized by high growth rates and low employment rates (Jobless Growth).
- Economic policies have to now focus on the citizen’s right to earn a livelihood and provide a minimum standard of living (Ease of Living and Earning).
Limitations of “Ease of Doing Business”
- Corporate Centric: Highly reactive to the reduction in compliance burden, rationalization of taxes and fast-track approvals for corporations.
- Trickle Down Failure: Believes that when a business is profitable, jobs simply trickle down.
- Informal Sector Neglect: Small businesses, MSMEs, and informal workers—who generate the bulk of India’s jobs—often face credit starvation and regulatory harassment despite top-tier ease of doing business rankings.
What is “Ease of Living and Earning”?
- Welfare-Plus-Work: Provides social welfare benefits, low-cost health insurance, housing, and access to education and training, in addition to a stable job at a decent wage.
- Demand-Driven Growth: As the common man becomes more and more affluent, the demand for products increases, and so do the number of workers that businesses hire.
- Decentralized Livelihoods: Promotes local economies, rural non-farm sectors and regional hubs rather than focusing on wealth creation in major industrial corridors.
Structural problems in the Indian job market
- Informalisation: More than 90% of the workforce is still employed in informal jobs without written contracts or social security measures.
- Skill Mismatch: Inappropriate skills of graduates from rigid education system vs changing industry needs.
- Premature Deindustrialization: The economy has jumped straight from agriculture to services without going through the manufacturing stage which is labour intensive.
- Female Labour Force Participation: Social norms, security issues and lack of paid care are responsible for the structurally lower participation rates in the labour force among women.
Key Policy Recommendations
- Support the MSMEs and Micro-Enterprises: Give Direct credit facilities, technology upgradation and market linkages to small units which take maximum semi skilled labour.
- Human Capital Investment: Expand good quality education, green jobs and AI vocational training, and affordable health care to create an employable workforce.
- Support Rural Economy: Improve rural infrastructure, agro-processing clusters and non-farm jobs to curb distress migration.
- Social Safety Nets: Provide universal basic services (housing, clean water, power) so that low-income households have reduced cost of living.
Way Forward
- A balance in which the dynamism of the market is not used as a tool for citizen welfare, but is instead a tool for citizen welfare.
- To shift macroeconomic goals to include measures of job quality, median wages and financial resilience of households along with GDP growth rates.
Source: The Hindu
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