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Pandemic and urban unemployment in India and beyond
7/15/2020 12:13:15 AM

Dr. Rajkumar Singh

In general, unemployment in a situation when anyone wants to do a job but fails to find a work. It is an indication of country’s economic health and it’s rate or number by which many other things are also measured. A large number of unemployment in any country means that a vast group of people are ready to contribute to the productive outcome of the economy. In case the economy is unable to give employment to its citizens, a dynamic and sound economy must arrange for subsistence allowance during the period of unemployment. Not providing employment or need of basic consumption signals a red alert for the economy and the nation as well which can easily invite social tension and political upheaval on regular basis. In the context there are two broad categories of unemployment- voluntary and involuntary. Voluntary unemployment means that a person has left the job in search of better job or employment, while involuntary unemployment meant that the person is willing to take job but due to reasons more than one he is unable to get it. The word unemployment has various kinds such as, frictional, cyclical, structural and institutional and while measuring the number of unemployed is counted,mass of the labour class, who are not searching for a job, are not considered. Although it’s a global phenomenon, the developing and under developed countries are the worst sufferers.
Status at global level
In the 1930s, at the height of the Great Depression, US President Franklin D. Roosevelt’s Public Works Administration (PWA) paid private construction firms $7 billion to build airports, dams, bridges, roads, schools, zoos, tennis courts, theaters, dormitories, and hospitals. It was a desperate act of rebellion against the faltering economic engine. The hope was that this spending would rejuvenate demand — more jobs, more spending, more economic activity and a virtuous cycle of growth. But there was another angle here. Roosevelt wanted the PWA to provide local jobs directly to the unemployed. And although new jobs couldn’t outpace unemployment levels in the country, it put 8.5 million Americans to work, who went on to erect 600,000 miles of new roads, build 100,000 bridges and construct 35,000 buildings. It was proof of concept for a radical idea proposed by one of the greatest economists of the 20th Century — John Maynard Keynes. And these ideas are gaining ground once again. When COVID sneaked its way into cities like Mumbai and Delhi, we hit the speed breaker. Urban unemployment rates tripled and the informal sector was on its deathbed.
Background of urban unemployment
Urbanisation in India began with the Independence of the country and it adopted mixed economy as its basic policy for future India.
The new policy gave rise to public and private enterprises side by side and viewing the gap between rural and urban life the movement of rural people towards the cities commenced on a vast scale. According to the Census of the country in the year 1901 the total number of Urban people was only 11.4%. It raised to 28.53% in 2001 followed by the 34% in the year 2017. As per an estimate of the UN State of the World Population report 40.76% of the total population of the country will reside in urban areas. Although the region South Asia is a predominantly rural accounted for 69.9 of the rural population as of 2010, the country, India registered an unprecedented growth of urban population in the region. Rapid growth of urbanisation and industrial base made second to agricultural sector in Gross Domestic Product (GDP).
The nation’ s economy witnessed a significant growth due to industrial revolution and coming of new technologies that ultimately raised the standard of the urban people who came in cities in search of their livelihood. The rising tide of unemployment in urban areas has increased disparity among city dwellers. The wide gap of income and expenditure and primary civil facilities have created two worlds in the same city. On the other hand, the rural economy, including agriculture and small scale industries are on decline. If the widening gap between the rural and urban life remains like today, it would prove a self- suiciding for the Indian economic as a whole.
Pandemic and urban unemployment
The vast majority of people working in urban areas are employed informally. They have no written job contracts, no regular salaried work, and are often employed casually through job contractors, subcontractors and temp agencies. Several attempts to formalise informal work have been made and are underway. But the reality on the ground is that the majority of urban workers — 62–85% of them — have no access to benefits, which make up the flagship schemes for COVID-19 relief to workers in urban areas. Meaning we have a large portion of the urban population that has no work, no benefits, and little social protection. So there’s been growing consensus that the government could potentially stave off an unemployment crisis in the urban areas by taking a leaf out of Keynes’ playbook. After all, we have already implemented MGNREGA — a guaranteed-employment program where any rural adult is offered 100 days of unskilled manual work so long as he/she demands it. And it’s turning out to be a lifesaver. Migrant workers who made the treacherous journey back home have been lapping up MGNREGA like never before. The demand for the scheme has skyrocketed. However, despite the increase in demand, the gap between “those who wanted work and those who got it” is at an all time high. On average, the gap between the demand and supply of jobs in the month of May (over the past 5 years) has roughly tallied to about 16–18%. This year however, it’s at 29% —  that means only two out of three workers who applied to this scheme were entitled to any benefits under MGNREGA.
And if this exodus continues there will be a rural crisis unfolding soon enough. So some people have contested that there is an urgent need to stem the flow. Stop the migration and incentivize these people to stay back. Maybe we could replicate MGNREGA in urban centres — Offer the urban poor a chance to make a living and pay them a decent wage. It could have far reaching impact and it may help us kick-start economic growth as well. In fact, some states are already experimenting with this model in a limited capacity. In April, Odisha announced a Rs 100 crore scheme which would help the city’s urban poor earn an immediate wage by working on labour-intensive projects sponsored by the government. In May, Himachal Pradesh launched the Mukhya Mantri Shahri Ajeevika Guarantee Yojna to provide 120 days of assured unskilled employment to adult members of households in urban local bodies. The government is planning on spending around Rs 25 crores on the project. And other state governments will probably join in too. However, if this program gets a slight boost from the central government maybe we could have something really solid on our hands. It all depends on whether the government has the will and the financial muscle to pull this off.
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