The Big Reverse by Meera Sanyal

Author:Meera Sanyal
Language: eng
Format: epub
Tags: null
Publisher: HarperCollins Publishers India
Published: 2018-04-15T00:00:00+00:00

As is typical for a poor and developing economy, most workers in India cannot afford to be unemployed, hence the level of open unemployment is quite low at 2.7 per cent.

This point is particularly important. The National Sample Survey (NSS), on which much of our employment data is based, defines ‘labour force’ as ‘those either working or actively seeking work’. However, in India, many people in the working age group (15–59 years) do not seek work, knowing there are no employment opportunities. As they do not seek work they are excluded from the official definition of ‘labour force’ and hence are not counted as unemployed! In the NSS 2011–12 survey, 339 million people in the 15–59 age group were not counted in the labour force and therefore, not among the unemployed either.

The desperate quest for jobs is reflected in the vast number of people who apply when job positions are declared ‘open’. For instance, in March 2018, 28 million people applied for 90,000 positions with the Indian Railways. In February 2018, 1.9 million people applied for a total of 9,500 positions of village administrative officers, typists and stenographers, in the state of Tamil Nadu. Amongst the job applicants were 992 PhDs and 23,000 MPhils!

In addition to the large numbers who are not counted in the labour force, studies – based on the NSS 2007–08 – estimate that there are 67–80 million migrant workers making up approximately one-sixth of the labour force.18 Many of these migrant workers pursue multiple occupations, for example, working as agricultural labour for part of the year and as construction workers for some months. One study notes that the same workers counted by the NSS as construction workers are counted by the Census 2011 as agricultural workers. As a result, the Census shows a rising workforce in agriculture while the NSS shows a declining one.19

It is clear, therefore, that arriving at an accurate estimate of jobs created or destroyed by demonetization is both difficult and complicated.

However, two reports have been widely quoted on the impact of demonetization on jobs, and seem to have been accepted by economists as providing a reasonably accurate picture.

The first, published by the AIMO in January 2017, was based on a survey of 10,000 respondents across India, including large, medium, small and micro enterprises engaged in manufacturing, trading and exports. As over 3,00,000 micro, small, medium and large-scale industries are represented by AIMO, this report is reasonably indicative and its findings are summarized in Table 5 below:

Table 5: Jobs Lost Due to Demonetization

Nature of Enterprise Job Losses

October–December 2016 Revenue Loss October–December 2016

Trading Organizations 45 % 55 %

Exporters 25 % 25 %

Medium and Small co.s 35 % 35 %

Large co.s 15 % 20 %

Source: AIMO report, January 2017

As is clear from Table 5 above, there is a direct correlation between the loss of revenues experienced and job losses, which is not surprising given that most of the workforce is contractual or informal. As the catastrophic effects of the cash crunch hit businesses, they took the logical, but harsh, action of swiftly laying off their workforce.

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