Why do employed youth hanker after government jobs?

Last week, BJP president JP Nadda made a statement while talking about high unemployment in Uttar Pradesh. It attracted less attention than it deserves and hence, needs to be recalled: "Even if one is earning ₹50,000, one considers oneself unemployed as people want a government job… They get registered at the employment exchange. So, the number (of unemployed) goes up, but the person is earning."

This is unlike that of Rajiv Kumar, Niti Aayog vice chairman, who said about the job crisis in March 2021: "The government's approach has been to focus on the drivers of employment rather than generating some part-time employment in the public sector, except the MGNREGA."

Or that of central minister Piyush Goyal who, in response to businessman Sunil Mittal's comment at a conclave in 2017 that India's top 200 companies had made "significant" reduction in their workforce: "What Sunil just spoke about companies bringing down their employment is a very good sign, in fact. The fact (is) that today, the youth of tomorrow is not looking to be a job seeker alone. He wants to be a job creator. The country today is seeing more and more young people wanting to be entrepreneurs."

Or even that of Prime Minister Narendra Modi who answered job crisis during a TV interview in 2018 thus: "If a person selling pakodas earns ₹200 at the end of the day, will it be considered employment or not?"

Why are youth hankering after government job?

On the face of it Nadda's answer may seem hyperbolic but actually it isn't. He is closer to truth. Consider what CMIE's Mahesh Vyas, who alone tracks the state of employment on monthly basis, wrote in a column on March 1, 2022. Talking about the state of unemployment in the quarter ended December 2021: "Interestingly, about 1 per cent of the unemployed said that their nature of occupation was that of a salaried employee. More interestingly, in the critical lockdown quarter of April-June 2020, nearly 8 per cent of the unemployed said that their nature of occupation was salaried employees."

Vyas didn't explain why the unemployed were saying they were "salaried employees". He didn't have to; it is known and it is what Nadda was pointing to.

For the record, salaried or regular wage jobs are the best kind of jobs available in India. They are the best paying, regular and some (though not most) get social security too. All the rest kinds of jobs are precarious: self-employed and casual labour. When the pandemic hit, the worst hit were the self-employed and casual workers, not the salaried or regular wage workers. But salaried/regular wage workers are very few. They constituted only 23-24% of all workers between 2017-18 and 2019-20, as per the PLFS reports.

So, why should a salaried employee report as unemployed?

Nadda gave the answer: They are looking for government jobs.

Why should they look for government job when they are earning good money (as Nadda said)? Until and unless this question is understood and addressed the hankering after government jobs will continue. Here is why.

High precarity of private sector jobs

Private sector jobs pay better than government jobs, although the gap has reduced after several Pay Commission awards were implemented in recent decades, and provides social security too (though not assured pension like government jobs did until 2004). And private sector jobs can be highly satisfying too. So, what has gone wrong?

The answers are known for a long too but not admitted in public or addressed through policy interventions: no job security; falling jobs and salaries/wages and in most cases, missing social security cover. The delivery and logistics unicorns are the new toasts of the town but how much do gig workers (delivery boys and girls) they employ earn? Even the multinational ones pay as little as ₹10,000 a month, sparking multiple protests in recent time. This is less than the minimum wages (per day rate multiplied with 30 since casual workers don't get paid weekly non-working day) in the states of Kerala (₹410), Haryana (₹377) and Punjab (₹369). Fortune India reported how the income of gig workers is on a long-term decline due to decrease in rate cards and incentives.

High priority to flexibility in hiring people on contracts and liberal use of hire-and-fire have also turned private sector jobs highly precarious. The best kind of contract jobs are for a period of three years but a contract employee can be fired at any time within this period with one to three months of notice and the job ends, if the contract is not renewed, at the end of the contract period.

Besides, the pandemic crisis has seen corporate India record historic profits while cutting jobs and wages, as CMIE reported last year. That private sector has been shedding jobs for long is clear from Mittal's 2017 assertion mentioned earlier. Even before that, the UPA era of 2004-2014 was infamous for job-less growth while India witnessed all-time high growth – annual average GDP growth of 6.8% (2011-12 series, constant prices). It turned into job-loss growth between 2011-12 and 2017-18, as the PLFS of 2017-18 had shown (net loss of 9 million jobs) 9 million jobs. This massive job loss, the study said, "happened for the first time in India's history".

Liberalised contract jobs and hire-and-fire laws

At ₹176, the national minimum wage remains unchanged for years and is less than half of Kerala (₹410), Haryana (₹377) and Punjab (₹369). Instead of addressing the precarity of private sector workers, the new labour codes worsened it.

To facilitate contract work, the Industrial Relation Code of 2020 (IR Code) introduced Fixed Term Employment (FTE), ostensibly to ensure social security for such employees, but it (a) took away the possibility of such employment turning permanent after three months – which the Industrial Employment (Standing Orders) Act of 1946 had provided and (b) undid the gazette notification of March 2018, which introduced the FTE in India for the first time and ruled out the possibility of permanent jobs being converted to contract jobs.

India borrowed the idea of FTE from Europe, which used it as a stepping stone for young and raw hands to establish their suitability for permanent employment but has already found that the transition to permanent job has fallen, a duality has been created in labour market with high wage difference and the duration of contract has dramatically shortened, in some cases like Spain to less than a week.

The new IR Code also makes arbitrary hire-and-fire easier by increasing the threshold for protections. This has been done by increasing the threshold of applicability of Standing Orders from industrial establishments with 100 workers or more to 300 workers or more. Standing Orders provide for employer to "define" the conditions of employment, explain every transgression and grievance redressal mechanism in cases of violation of the defined conditions.

The expansion of threshold means more workers become vulnerable to arbitrary hire and fire because Indian labour laws don't have "written contract" as legal requirement, which could provide some protection or possibility of seeking redressal, except for the FTE introduced in the new IR Code. Contract work is widely prevalent, has existed for decades and forms a big chunk of job markets – both private and government sectors even without FTE. The PLFS of 2019-20 says, even among the best category of jobs, that is salaried/regular wage employment, 67.3% don't have written contracts. They have little legal protection.

All these factors have made private jobs highly precarious. No wonder, youth employed in salaried/regular wage employment in private sector desperately seek government jobs – which Nadda left unsaid.

'Temporisation' of government jobs

What should dishearten those youth (employed but hankering after government jobs) more is that the Centre is not only cutting down the sanctioned posts, it is also increasingly relying on contract and temporary jobs (not permanent, regular or secure jobs). For this, it is emphasising on rehiring retired employees, for a period of 1-5 years.

The Centre stopped publishing data on organised sector workers after 2012. The only study that provides some idea of the hiring trends in the government sector is of 2014 and by Indian Staffing Federation (ISF), apex body representing the staffing industry.

It listed three key devastating findings:

(i) 43% government sector jobs (Central, state, PSUs and local bodies) were temporary by the end of 2013.

(ii) 2/3rd of the incremental formal workforce was temporary, with 80% of them in casual jobs.

(iii) Professionals and high-skilled workers form a substantial chunk of casual and short-term contract employment.

It concluded: "Overall hiring is in the decline in the government sector, along with increasing temporisation."

All the above three developments would have worsened by now, going by the increasing tilt towards temporary hiring and growing vacancies.

Coming back to Nadda's statement, it should be taken more seriously by the governments at the Centre and states and prepare appropriate policy responses, rather than use it to mask the obvious failures of successive governments.