Unemployment and underemployment has remained a severe problem in India.The latest CMIE data suggests that the unemployment rate stood over 9 percent in the month of June.
The share of agriculture went as high as 45 percent from 42 percent in 2018. The share of manufacturing in total employment stagnated. The share of manufacturing remained in the range of 11-12 percent between 2018 to 2022 as per PLFS data.
Moreover there has been an overall rise in the proportion of self employed workers in the total working population with the share of regular wage earners declining. As per the PLFS data published by the Government of India the share of self employed increased from 52 percent to 57 percent while the same for regular wage earners dropped from 22 percent to 20 percent between 2017-18 to 2022-23.
This is alarming as the same PLFS data suggests that the monthly average wage earning of the self employed people is significantly less than that of the regular salaried people. In 2017-18 the average monthly earnings of regular salaried people was Rs 19450 while the same for self employed was Rs 12318. The same gap continued over the years.
Given this backdrop, it remained a very crucial aspect that needed to be addressed in the budget. The Finance minister in her budget speech announced the new employment generation scheme which has been one of the key highlights of the budget. This new employment generation scheme has five key features. Let us critically analyse these features and examine how these will address the issue of unemployment and underemployment in the country.
Scheme A: First Time employees Benifit
The first scheme focuses on first time employees. Under this scheme the first time employees who have got jobs and registered and have salaries up to 1 lacs are supposed to get Rs 15000 in 3 installments in terms of Direct Benefit Transfer.
Now from the description of the scheme itself it is clear that this is applicable only for people who have got jobs and hence this particular scheme is in no way an employment generation scheme. What it does is it adds as an encouragement for people who have already got jobs and also acts as a booster to consumer demand at least for one month with an additional money in their pocket.
Scheme B and C : EPFO based Job creation schemes
Let us now look at the second scheme. Under this scheme both employer and employee will be incentivised through EPFO for the first four years for new jobs in the manufacturing sector.
From the description of this scheme itself it is clear that this scheme will lead to creation of jobs in the manufacturing sector. The share of employment in the manufacturing sector has remained stagnant over the years and this scheme can revive the situation. This can ease the burden of employment from the agriculture sector. However the success of this scheme will hugely depend on the growth performance of the manufacturing sector in the ongoing financial year as a sluggish growth will hamper the employment generation in this sector.
Let us now look into the third scheme. As per this scheme the government will reimburse up to ₹3,000 per month for two years towards EPFO contributions made by employers for each additional employee hired within the salary of Rs 1 lac per month across all sectors.
Again as per description itself it is clear that this scheme will boost in generating newer employment opportunities across all private sectors in the economy.
Again one must keep in mind that like scheme 2, here also as we rely on the private sector to generate employment and they are incentivised for the same, a whole lot will depend on the growth scenario across sectors.
This will be a success in sectors where there is a good growth story and will fail in sectors where there is a sluggish growth irrespective of the incentives. There will be a break even point where in a scenario of sluggish growth even the incentives will not be beneficial for the employers.
Skill Generation Scheme
Let us now focus on scheme four. This is a centrally sponsored skilling scheme. Under this scheme 20 lakh youth will be skilled over five years and 1,000 ITIs will be upgraded in a hub-and-spoke arrangement to improve infrastructure and training facilities.
This is not a direct employment generation scheme but this creates a group of individuals who are skilled and employable. They create the supply pool in the labour market for the future.
Internship Program
Under this scheme 1 crore youth will be provided internship in 500 top companies over a period of 5 years.
While there is no job guarantee under this scheme, this creates an opportunity for these interns to get absorbed into these companies and even if all of them don’t get absorbed, the experience they gather will boost their chances to get further job opportunities. Also there remains to be seen how this is implemented. What will be the criteria for selection of the top 500 companies? Also will these companies be mandated to be enrolled in this scheme? These questions need to be addressed.
Conclusion
So among the 5 schemes that have been announced in the budget, while two are direct employment generation schemes, one of them is more of a demand generation scheme in the short run, the other two can boost future employment generation. However one needs to be cognizant of the fact that with reliance on the private sector on job creation the success of the employment generation schemes also will depend on growth situation. Another important factor to note is that allocation in rupee terms in terms of MGNREGA has remained the same in this budget as the revised estimates of the 2023-24.
Indian Political Debate 