A unique jobs conundrum

The mega-recruitment drive poses many challenges

The Union government’s plan to hire a staggering 1 million people in its departments and ministries in 18 months, which amount to about 15 per cent of the jobs created in a year, is ambitious. But the move also reverses a key objective of India’s economic reforms, which was to shrink the government’s footprint and create a conducive environment for private initiative to create jobs. Over nearly three decades of steady liberalisation, this had indeed become the case, with the private sector overtaking the public sector in terms of employment. Since 2017, however, the dual impact of demonetisation and the rushed introduction of goods and services tax has caused many small and medium businesses — collectively India’s biggest employer—to close and resulted in unemployment hitting a four-decade high in 2017-18, according to a National Sample Survey Office report that was initially withheld in 2018 but was later released in the public domain. The Covid-19-induced lockdowns of 2020 and the subsequent restrictions in 2021 weakened the feeble pre-pandemic economic impulses further and have kept the unemployment rate at 7.12 per cent, according to the May 2022 report of the Centre for Monitoring Indian Economy.

Against this background, it is difficult to visualise how a plan to recruit 1 million people will work. For one, the size of the government has been shrinking steadily in the past few years, from 3.3 million in 2014-15 to 3.1 million in 2019-20. This workforce reduction is also true of central public sector undertakings. Second, it is unclear what the government will do with so many people. Current vacancies amount to 8,42,000 at all levels. For another, the government does not have the wherewithal to recruit on this scale. Taken together, the various recruiting agencies, such as the Union Public Service Commission and the Railway Recruitment Board, hire just about 100,000 people a year. A National Recruitment Agency set up in 2020 was expected to subsume the role of multiple government recruiting agencies but is not yet functional.

The third concern is the government’s budgetary constraints just as it plans to splurge on building and augmenting infrastructure, moves that would have created jobs in any case. The real danger of this mega-recruitment drive is that capital expenditure may be curtailed to make way for higher salary budgets. The only way this move, which will expand the size of the government by a third, can be justified is as a means of feel-good signalling that can be exploited in the run-up to elections. But making the government the employer of first resort and the move towards Big Government marks another significant step back in terms of economic policymaking and indirectly reflects the government’s failure to meaningfully tackle the employment crisis. Taken together with rising protectionism in trade policy and the great leap back to semi-autarky in industrial policy, India faces the danger of losing the gains of the past three decades just as the challenges in the world economy make globalisation a greater imperative.