Will PM Modi's 'one million job' drive help ease the employment crisis?

And amid these hopeful and gloomy numbers, Prime Minister Narendra Modi on Tuesday announced to give central government jobs to 1 million people in the next year and a half.

But in February this year, the government had told Rajya Sabha that there were over 872,000  vacant posts in central government departments as on 1st March 2020. As many as 910,153 vacancies existed as on 1st March 2019 and 683,823 as on 1st March 2018.  

The government had also said that the Staff Selection Commission, the Union Public Service Commission, and the Railway Recruitment Boards had recruited 265,468 people during 2018-19 and 2020-21.

India is still far behind the US, China and others in public sector employment. In 2015, there were nearly 39 million public-sector employees in China. This would mean 5 per cent of China’s workforce had public sector employment. The corresponding figures for the UK in 2021 were 17 per cent, and for the EU, it was 18 per cent. In the US, 6.9 per cent of the total workforce was employed in the government in 2020. This does not include state government employment. If we were to assume that state employment is four times that of central government and armed forces employees, India’s total public sector employment would be in the vicinity of 20 million. Even after an addition of 1 million, India will still have only 2.2 per cent of its total workforce employed in the public sector.  

In August of 2020, a McKinsey Global Institute report had said that India needed to generate 90 million non-farm jobs between 2023 and 2030 in order to absorb new workers and an additional 30 million workers who could shift from farm work to non-farm sectors. The report had said that to absorb this influx, India would need close to 12 million additional gainful non-farm jobs every year starting in financial year 2023. This would be triple of the four million non-farm jobs created annually between 2012 and 2018.  

The government on Tuesday also announced a major reform in how soldiers will be recruited for the army, navy and airforce by way of the new Agnipath scheme. Under the model, soldiers will be recruited from those between the ages of 17.5 to 21 years. These 'Agniveers' will serve for four years. Defence Minister Rajnath Singh has said that this scheme will increase employment opportunities with new skills in different sectors. Under this scheme, most soldiers will exit the service in four years. Out of the 45,000 recruited annually, only 25 per cent will be allowed to continue under permanent commission. According to one report, the model will make the permanent force levels of the country's armed forces much leaner. So, its net impact on employment generation remains to be seen.    

As reported by Business Standard, an urban job scheme along the lines of MNREGA is back in debate after a report commissioned by the Prime Minister's advisors recommended it. The report, commissioned by the Economic Advisory Council to the Prime Minister, has recommended such a scheme based on its assessment that a gap between the labour force participation rate in rural and urban areas is widening.  

The government also has an ambitious target of generating over 6 million jobs in five years from the production-linked incentive schemes.

Meanwhile, in private sector, employers are reporting the most optimistic hiring outlook in eight years. Job creation is likely to see a boost in the September quarter.

Even though offering a MNREGA kind of scheme in urban areas could have a significant impact on the central exchequer and the states, given the immensity of India's job creation challenges, is it time to bite the bullet?