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4 May 2016 Editorial


4 MAY, 2016

A job for every Indian

The Labour Bureau has compiled statistics for job creation in labour-intensive sectors in the country each quarter since the 2008 global financial crisis. The latest figures show that 1.35 lakh jobs were created in 2015, the lowest figure by far of any year since then — lower than the 4.9 lakh new jobs in 2014 and 12.5 lakh in 2009. In fact, the last quarter of 2015 recorded job losses. Private surveys suggest that the services sector will hire more than manufacturing this year, but there is little to suggest that this will be sharp enough to gainfully employ the one crore Indians who enter the workforce annually. The latest job creation figures come as a sobering reality check for the NDA government, as increasing employment opportunities has been at the heart of Prime Minister Narendra Modi’s economic plan. In the 2014 Lok Sabha campaign, he had repeatedly attacked the UPA government for failing to create enough jobs during its decade in office. In fact, the spectre of ‘jobless growth’ had been put in sharp relief since 2011, when official employment data (captured every five years) showed a deceleration in new salaried jobs, a dip in self-employment and a surge in casual work between 2004-05 and 2009-10. These were the boom years for the Indian economy. Annual economic growth has dipped somewhat since then, but the challenge for the country remains as stark: how to better its job creation for every percentage point of GDP growth, a ratio on which it significantly lags behind most other emerging economies.

A report outlining the NDA’s vision, Transforming India, released by the Department of Administrative Reforms last month, says 175 million new jobs could be created by 2032 if the economy grows by 10 per cent annually; the figure is 115 million if it grows by 7 per cent. To create jobs on such a scale, it proposes tax incentives and interest subsidies for firms creating jobs and some blue-sky interventions to invigorate sectors. For instance, negotiate free trade pacts with major markets such as the European Union and the U.S. to boost textiles, improve regional air connectivity for tourism, and so on. This year’s Budget offers to pay 8.33 per cent of the salary (as contribution for a pension scheme) for new employees getting formal sector jobs. But according to the Economic Survey, high statutory dues deducted from salaries in formal jobs force employers and employees to enter into informal contracts. Tinkering will not do; neither will piecemeal interventions in the form of incremental reforms in labour laws. The median age in the country is well short of 30, and along with the young entrants to the workforce there will be those seeking a shift from low-paying farm jobs. India need a holistic action plan that covers every base — one that includes a skilling and re-skilling programme to increase employability and productivity, incentives for smaller enterprises that absorb a greater number of workers, and the embedding of job generation in the massive infrastructure upgrade that India requires. Jobs must be the pivot for social and economic policy.

Iraq’s growing political paralysis

Saturday’s unprecedented mass protest inside the highly fortified Green Zone in Baghdad is a harsh reminder of the deepening political crisis that has virtually paralysed the government of Prime Minister Haider al-Abadi. The protesters had also ransacked Parliament and assaulted some lawmakers. Mr. Abadi seems caught between two dominant blocs. The protesters, directed by the firebrand Shia cleric Muqtada al-Sadr, are demanding political reforms, including the formation of a non-sectarian technocratic Cabinet. The established political parties are resisting any such reform, fearing that their clout will be diminished. Earlier attempts by Mr. Abadi to put non-partisan experts in charge of finance, utilities and the oil ministry have been blocked by those who support his rivals, including his predecessor Nouri al-Maliki. Meanwhile, Mr. Sadr has issued an ultimatum to implement reforms immediately or dissolve the government and face fresh elections.

The political crisis couldn’t have come at a worse time for Iraq. Low oil prices have weakened the economy, eroding even further the government’s capacity to deliver public services. Endemic corruption has resulted in great public anger against the government. Parliament has been dysfunctional over the last few months. The government has completely failed in providing even basic security to Iraqis as extremist violence continues to target civilians. Above all, almost one-fourth of Iraqi territory is controlled by the Islamic State. And the crisis has unfolded at a time when Iraqi forces are preparing a major offensive to take back Mosul, Iraq’s second largest city, with enhanced support from the U.S. Yes, Mr. Abadi’s job was never easy. He inherited a divided Iraq torn by wars and sectarian and ethnic tensions when he was made Prime Minister in 2014. His predecessor’s divisive policies had turned a large chunk of the Sunni population hostile towards his government, which the IS exploited to strengthen its network in the Sunni-dominated regions. At that time, Mr. Abadi sounded more conciliatory than Mr. Maliki. He had the backing of both Iran and the U.S. and the general expectation was that he could build a national consensus among the country’s warring sects while leading a more aggressive and efficient campaign against the IS. Iraqi forces under his leadership did achieve some results on the battlefield, including the recapture of Ramadi in December 2015.Prime minister Mr.Abadi's failures, at least on two fronts, are glaring. First, he did not succeed in forging national unity, unable to win the trust of the Sunnis and finding the Kurds, emboldened by a weak government, upping their demand from autonomy to an independent state. Second, he delayed confronting the IS in Mosul, allowing the group to tighten its grip over the city. Mr. Abadi’s big challenge now is to find a way to set his house in order and win over his rivals. This is a tall ask, but without a stable government in Baghdad, a successful operation in Mosul against the IS is well-nigh impossible.


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