DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE
ECONOMIC AND LEGAL ANALYSIS OF UNEMPLOYEMENT

SUBJECT
LEGAL ECONOMICS-I

NAME OF THE FACULTY

PROF.ABHISHEK SINHA SIR

NAME OF THE CANDIDATE

ROLL NO.
SEMESTER
ROHAN GUPTA
2016081
SEMESTER II

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ACKNOWLEDGEMENT:-

I express my sincere gratitude to my faculty Prof. Abhishek Sinha Sir for his guidance and
motivating me for doing this project. Economic and Legal Analysis of Unemployment has really
helped me to understand the present scenario of corporate sector companies as well as Public
Sector offices in employment scenario. At last I want to thank my Friends, seniors for extending
their kind cooperation to bring this project in such a nice form.

I again would like to thank everybody whose contribution in any form is useful for me to make a
difference.

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TABLE OF CONTENTS:-

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ECONOMIC AND LEGAL ANALYSIS OF
UNEMPLOYEMENT:-
Introduction:
Unemployment is the most dangerous problem of India now a day. Several speakers at a seminar
on ‘The government’s policies to downsize employees’ on Sunday blamed the central and state
governments for growing number of unemployed youth in the country . Speaking at the seminar
organised by the Democratic Youth Federation of India (DYFI), noted educationist C Reddy said
that it was the duty of the government to generate employment opportunities. The government
should not bank much on the proportionality between the rises in the gross. As we all know India
is an agricultural country and its economy depends upon agriculture in old time but now its
economy depends upon other professions also.

DEFINITION
The unemployed are people able, available and willing to work at the going wage rate but cannot
find a job despite an active search for work · Unemployment means that scarce human resources
are not being used to produce goods and services to meet people’s needs and wants · Persistently
high levels of joblessness have damaging consequences for an economy causing both economic
and social costs · Problems caused by unemployment occur across a country but are often very
bad and deep-rooted in local and regional communities and within particular groups of society –
for example in the UK, more than one in six young people are out of work. The figure is much
higher in Greece and Spain.

REASONS OF UNEMPLOYEMENT IN INDIA

1. Rapid Population Growth:

It is the leading cause of unemployment in Rural India. In India, particularly in rural

areas, the population is increasing rapidly. It has adversely affected the unemployment
situation largely in two ways. In the first place, the growth of population directly
encouraged the unemployment by making large addition to labour force. It is because the
rate of job expansion could never have been as high as population growth would have
required. It is true that the increasing labour force requires the creation of new job
opportunities at an increasing rate. But in actual practice employment expansion has not
been sufficient to match the growth of the labor force, and to reduce the back leg of
unemployment. This leads to unemployment situation secondly; the rapid population
growth indirectly affected the unemployment situation by reducing the resources for
capital formation. Any rise in population, over a large absolute base as in India, implies a
large absolute number.

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2. Seasonal Agriculture:

In Rural Society agriculture is the only means of employment. However, most of the rural
people are engaged directly as well as indirectly in agricultural operation. But, agriculture
in India is basically a seasonal affair. It provides employment facilities to the rural people
only in a particular season of the year. For example, during the sowing and harvesting
period, people are fully employed and the period between the post harvest and before the
next sowing they remain unemployed. It has adversely affected their standard of living.

3. Economic Condition:

Economic conditions are the main factor in unemployment. India is a developing country
and its GDP growth is under developing condition. Once a company fails to pay its
employees then there is no choice for them they have to leave job. With no reason to
continue paying them, they lose their jobs as the job simply disappears. Due to weak
economic conditions company become unable to pay its employees. Unemployment is a
situation of not getting the work and wages with eligible conditions. People are getting
education but not getting the jobs.

4. New Technologies:

As new technologies are increasing more and more people are facing unemployment
problem. A single computer is doing the work of a team. This is the form of
unemployment which happens during prosperous times when companies can afford to
invest in new technologies. A single J.C.B. Machine is doing the work of a whole Labor
in construction areas. So people have to face the unemployment problems .In old time
there were fewer machines only people have to do work. But after the discovery of new
machines Labor is being replaced by the machines. So, more people are getting out of
work. Now company only wants an operator for its machine.

5. Poor English:

In modern time English has become most important for the job. In many causes a good
student having good technical knowledge didn’t get job because of his/her weak English.
We are only getting education. We are not taking interest in realization of the facts.
That’s by after education we didn’t get job. Personality development is also mostly
required. Now a day’s most of the company has become global, they can transfer its
employ to anywhere in India or in other countries also and English is general language

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 which speaks everywhere that’s by it is must for getting the job. If a perfect individual
will apply for that job he will get selection certainly.

6. CORRUPTION:-

Corruption is another most Looks like a few more people will soon be out of work for a
bit. This happens due to the investigation of the team leader. If he fined some mistake
there then he makes quit for that particular employ. Any time you are out of work for any
length of time you can qualify for unemployment benefits regardless of what you are
told. Some people can’t get hired because they don’t have enough money and they are not
qualified to do the work requirements . Most companies call a person’s references and if
they don’t have a good work record they are not likely to get hired, case of
unemployment. An eligible candidate could not get job while ineligible candidate get job
by bribe. Hence government is also responsible for unemployment .Lack of knowledge
about the vacancy is also the great case of unemployment. And it is due to lack of
motivation.Fired for being or becoming disabled and unable to perform your regular
work.

7. THE LUDDITE FALLACY:-

The term "Luddite fallacy" is sometimes used to express the view that those concerned
about long term technological unemployment are committing a fallacy, as they fail to
account for compensation effects. People who use the term typically expect that
technological progress will have no long term impact on employment levels, and
eventually will raise wages for all workers, because progress helps to increase the overall
wealth of society. The term is based on the early 19th century example of the Luddites.
During the 20th century and the first decade of the 21st century, the dominant view
among economists has been that belief in long term technological unemployment was
indeed a fallacy. More recently, there has been increased support for the view that the so-
called fallacy may after all be correct.

There are two underlying premises for why long-term difficulty could develop. The one
that has traditionally been deployed is that ascribed to the Luddites (whether or not it is a
truly accurate summary of their thinking), which is that there is a finite amount of work
available and if machines do that work, there can be no other work left for humans to do.
Economists call this the lump of labour fallacy, arguing that in reality no such limitation
exists. However, the other premise is that it is possible for long-term difficulty to arise
that has nothing to do with any lump of labour. In this view, the amount of work that can

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 exist is infinite, but machines can do most of the "easy" work, the definition of what is
"easy" expands as information technology progresses, and the work that lies beyond
"easy" (the work that requires more skill, talent, knowledge, and insightful connections
between pieces of knowledge) may require greater cognitive faculties than most humans
are able to supply, as point 2 continually advances. This latter view is the one supported
by many modern advocates of the possibility of long-term, systemic technological
unemployment.

8. SKILLS LEVELS AND TECHONOLOGICAL UNEMPLOYMENT

A common view among those discussing the effect of innovation on the labour market
has been that it mainly hurts those with low skills, while often benefiting skilled workers.
According to scholars such as Lawrence F. Katz, this may have been true for much of the
twentieth century, yet in the 19th century, innovations in the workplace largely displaced
costly skilled artisans, and generally benefited the low skilled. While 21st century
innovation has been replacing some unskilled work, other low skilled occupations remain
resistant to automation, while white collar work requiring intermediate skills is
increasingly being performed by autonomous computer programs.
Some recent studies however, such as a 2015 paper by Georg Graetz and Guy Michaels,
found that at least in the area they studied – the impact of industrial robots – innovation is
boosting pay for highly skilled workers while having a more negative impact on those
with low to medium skills.2015 report by Carl Benedikt Frey, Michael Osborne and Citi
Research, agreed that innovation had been disruptive mostly to middle skilled jobs, yet
predicted that in the next ten years the impact of automation would fall most heavily on
those with low skills.

Geoff Colvin at Forbes argued that predictions on the kind of work a computer will never
be able to do have proven inaccurate. A better approach to anticipate the skills on which
humans will provide value would be to find out activities where we will insist that
humans remain accountable for important decisions, such as with judges, CEOs, bus
drivers and government leaders, or where human nature can only be satisfied by deep
interpersonal connections, even if those tasks could be automated.
In contrast, others see even skilled human laborers being obsolete. Oxford academics
Carl Benedikt Frey and Michael A Osborne have predicted computerisation could make
nearly half of jobs redundant within 10 to 20 years, of the 702 professions assessed , they
found a strong correlation between education and income with ability to be automated,
with office jobs and service work being some of the more at risk. In 2012 co-founder of
Sun Microsystems Vinod Khosla predicted that 80% of medical doctors jobs would be
lost in the next two decades to automated machine learning medical diagnostic software.

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 TYPES OF UNEMPLOYEMENT IN INDIA:-
1. CLASSICAL UNEMPLOYMENT:-
Classical, or real-wage unemployment, occurs when real wages for a job are set above the
market-clearing level causing the number of job-seekers to exceed the number of vacancies. On
the other hand, some economists argue that as wages fall below a livable wage many choose to
drop out of the labor market and no longer seek employment. This is especially true in countries
where low-income families are supported through public welfare systems. In such cases, wages
would have to be high enough to motivate people to choose employment over what they receive
through public welfare. Wages below a livable wage are likely to result in lower labor market
participation in above stated scenario. In addition it must be noted that consumption of goods and
services is the primary driver of increased need for labor. Higher wages leads to workers having
more income available to consume goods and services. Therefore, higher wages increase general
consumption and as a result need for labor increases and unemployment decreases in the
economy.

Many economists have argued that unemployment increases with increased governmental
regulation. For example, minimum wage laws raise the cost of some low-skill laborers above
market equilibrium, resulting in increased unemployment as people who wish to work at the
going rate cannot (as the new and higher enforced wage is now greater than the value of their
labor).Laws restricting layoffs may make businesses less likely to hire in the first place, as hiring
becomes more risky.

However, this argument overly simplifies the relationship between wage rates and
unemployment, ignoring numerous factors, which contribute to unemployment. Some, such as
Murray Rothbard, suggest that even social taboos can prevent wages from falling to the market-
clearing level.

In Out of Work: Unemployment and Government in the Twentieth-Century America, economists

Richard Vedder and Lowell Gallaway argue that the empirical record of wages rates,
productivity, and unemployment in American validates classical unemployment theory. Their
data shows a strong correlation between adjusted real wage and unemployment in the United
States from 1900 to 1990. However, they maintain that their data does not take into account
exogenous events.

2. STRUCTURAL UNEMPLOYMENT: -

This type unemployment is associated with economic structure of the country. When
demand for labour falls short to supply of labour due to rapidly growing population
and their immobility, the problem of unemployment appears in the economy. Besides,

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 due to growing population, rate of capital formation falls down which again limits the
employment opportunities, this type of structural unemployment is basically related
to this category of unemployment.

3. UNDER-EMPLOYMENT:-

Those labourers are under-employment who obtains work for but their efficiency and
capability are not utilized at their optimum and as a result they contribute in the
production up to a limited level. A country having this type of unemployment fails to
exploit the efficiency of their labourers.

4. DISGUISED UNEMPLOYMENT:

If any person does not contribute anything in the production process or in other
words, if he can be removed from the work without affecting the productivity
adversely, he will be treated as disguisedly unemployed . The marginal productivity
of such unemployed person is zero. Agriculture sectors of underdeveloped/developing
economics posses this type of unemployment at a large scale.

5. OPEN EMPLOYEMENT

When the labourers live without any work and they don’t find any work to do, they
come under the category of open unemployment. Educate unemployment and
unskilled labour unemployment is included in the open unemployment.

6. EDUCATED UNEMPLOYMENT:-

Even when a person who is educated/trained and skilled, fails to obtain a suitable job
suited to his qualifications, he is to be educated unemployed. Presently this type of
unemployment has become a problem for developing economies, particularly for
India.

7. FRICTIONAL UNEMPLOYMENT: –

The unemployment generated due to the change in market conditions is called

frictional unemployment. Agriculture is the main occupation in India. The supply
condition still depends on weather’s mood and similarly demand conditions depend

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 on availability of resources. Any change arising either of any or both creates a
diversion from the equilibrium which results in frictional unemployment.

EFFECTS:-

High and persistent unemployment, in which economic inequality increases, has a

negative effect on subsequent long-run economic growth. Unemployment can harm
growth not only because it is a waste of resources, but also because it generates
redistributive pressures and subsequent distortions, drives people to poverty,
constrains liquidity limiting labor mobility, and erodes self-esteem promoting social
dislocation, unrest and conflict. 2013 Economics Nobel prize winner Robert J. Shiller
said that rising inequality in the United States and elsewhere is the most important
problem.

1. INDIVIDUAL :-
Unemployed individuals are unable to earn money to meet financial obligations.
Failure to pay mortgage payments or to pay rent may lead to homelessness
through foreclosure or eviction. Across the United States the growing ranks of
people made homeless in the foreclosure crisis are generating tent cities.
Unemployment increases susceptibility to cardiovascular disease, somatization,
anxiety disorders, depression, and suicide. In addition, unemployed people have
higher rates of medication use, poor diet, physician visits, tobacco smoking,
alcoholic beverage consumption, drug use, and lower rates of exercise. According
to a study published in Social Indicator Research, even those who tend to be
optimistic find it difficult to look on the bright side of things when unemployed.
Using interviews and data from German participants aged 16 to 94—including
individuals coping with the stresses of real life and not just a volunteering student
population—the researchers determined that even optimists struggled with being
unemployed.
In 1979, Brenner found that for every 10% increase in the number of unemployed
there is an increase of 1.2% in total mortality, a 1.7% increase in cardiovascular
disease, 1.3% more cirrhosis cases, 1.7% more suicides, 4.0% more arrests, and
0.8% more assaults reported to the police.
A study by Ruhm, in 2000, on the effect of recessions on health found that several
measures of health actually improve during recessions.As for the impact of an
economic downturn on crime, during the Great Depression the crime rate did not
decrease. The unemployed in the U.S. often use welfare programs such as Food
Stamps or accumulating debt because unemployment insurance in the U.S.
generally does not replace a majority of the income one received on the job (and
one cannot receive such aid indefinitely).

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Not everyone suffers equally from unemployment. In a prospective study of 9570
individuals over four years, highly conscientious people suffered more than twice
as much if they became unemployed. The authors suggested this may be due to
conscientious people making different attributions about why they became
unemployed, or through experiencing stronger reactions following failure. There
is also possibility of reverse causality from poor health to unemployment.
Some researchers hold that many of the low-income jobs are not really a better
option than unemployment with a welfare state (with its unemployment insurance
benefits). But since it is difficult or impossible to get unemployment insurance
benefits without having worked in the past, these jobs and unemployment are
more complementary than they are substitutes. (These jobs are often held short-
term, either by students or by those trying to gain experience; turnover in most
low-paying jobs is high.)
Another cost for the unemployed is that the combination of unemployment, lack
of financial resources, and social responsibilities may push unemployed workers
to take jobs that do not fit their skills or allow them to use their talents.
Unemployment can cause underemployment, and fear of job loss can spur
psychological anxiety. As well as anxiety, it can cause depression, lack of
confidence, and huge amounts of stress. This stress is increased when the
unemployed are faced with health issues, poverty, and lack of relational support.
Another personal cost of unemployment is its impact on relationships. A 2008
study from Covizzi, which examines the relationship between unemployment and
divorce, found that the rate of divorce is greater for couples when one partner is
unemployed. However, a more recent study has found that some couples often
stick together in “unhappy” or “unhealthy” marriages when unemployed to buffer
financial costs. A 2014 study by Van der Meer found that the stigma that comes
from being unemployed affects personal well-being, especially for men, who
often feel as though their masculine identities are threatened by unemployment.
Unemployment can also bring personal costs in relation to gender. One study
found that women are more likely to experience unemployment than men and that
they are less likely to move from temporary positions to permanent positions.
Another study on gender and unemployment found that men, however, are more
likely to experience greater stress, depression, and adverse effects from
unemployment, largely stemming from the perceived threat to their role as
breadwinner. This study found that men expect themselves to be viewed as “less
manly” after a job loss than they actually are, and as a result they engage in
compensating behaviors, such as financial risk-taking and increased assertiveness,
because of it.
Costs of unemployment also vary depending on age. The young and the old are
the two largest age groups currently experiencing unemployment. A 2007 study

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 from Jacob and Kleinert found that young people (ages 18 to 24) who have fewer
resources and limited work experiences are more likely to be unemployed. Other
researchers have found that today’s high school seniors place a lower value on
work than those in the past, and this is likely because they recognize the limited
availability of jobs. At the other end of the age spectrum, studies have found that
older individuals have more barriers than younger workers to employment,
require stronger social networks to acquire work, and are also less likely to move
from temporary to permanent positions. Additionally, some older people see age
discrimination as the reason they are not getting hired.

2. SOCIAL:-

An economy with high unemployment is not using all of the resources,

specifically labour, available to it. Since it is operating below its production
possibility frontier, it could have higher output if all the workforce were usefully
employed. However, there is a trade-off between economic efficiency and
unemployment: if the frictionally unemployed accepted the first job they were
offered, they would be likely to be operating at below their skill level, reducing
the economy's efficiency.

During a long period of unemployment, workers can lose their skills, causing a
loss of human capital. Being unemployed can also reduce the life expectancy of
workers by about seven years.

High unemployment can encourage xenophobia and protectionism as workers fear

that foreigners are stealing their jobs. Efforts to preserve existing jobs of domestic
and native workers include legal barriers against "outsiders" who want jobs,
obstacles to immigration, and/or tariffs and similar trade barriers against foreign
competitors.

High unemployment can also cause social problems such as crime; if people have
less disposable income than before, it is very likely that crime levels within the
economy will increase.
A 2015 study published in The Lancet estimates that unemployment causes
45,000 suicides a year globally.

3. SOCIO-POLITICAL:-

High levels of unemployment can be causes of civil unrest,[88] in some cases

leading to revolution, and particularly totalitarianism. The fall of the Weimar

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 Republic in 1933 and Adolf Hitler's rise to power, which culminated in World
War II and the deaths of tens of millions and the destruction of much of the
physical capital of Europe, is attributed to the poor economic conditions in
Germany at the time, notably a high unemployment rate[89] of above 20%; see
Great Depression in Central Europe for details.

Note that the hyperinflation in the Weimar Republic is not directly blamed for the
Nazi rise—the Hyperinflation in the Weimar Republic occurred primarily in the
period 1921–23, which was contemporary with Hitler's Beer Hall Putsch of 1923,
and is blamed for damaging the credibility of democratic institutions, but the
Nazis did not assume government until 1933, ten years after the hyperinflation but
in the midst of high unemployment.

Rising unemployment has traditionally been regarded by the public and media in
any country as a key guarantor of electoral defeat for any government which
oversees it. This was very much the consensus in the United Kingdom until 1983,
when Margaret Thatcher's Conservative government won a landslide in the
general election, despite overseeing a rise in unemployment from 1,500,000 to
3,200,000 since its election four years earlier.

REMEDIES OF UNEMPLOYEMENT IN INDIA:-

Recently UPA Government has come up with Rural Employment Guarantee program
which aims to provide minimum days of employment to people living in the villages.
This is a laudable programmed if implemented sincerely because it will provide
employment to people during natural calamities like drought, floods etc. The remedial
measures for reducing unemployment may lay greater emphasis on creation of
opportunities for self -employment, augmentation of productivity and income levels
of the working poor, shift in emphasis from creation of relief type of employment to
the building up of durable productive assets in the rural areas and instead of
attempting to revert somewhat to protectionist policies the pace of privatization may
be accelerated.

1. Population Control:-

The growing population in India is a major cause of many socio-economic

problems. Our population is growing on an average at the rate of 2.48% per year.
We are adding every year more than 120 lakh to 130 lakh people to our

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 population. At the same time, about 5 million people attain the employable
position every year.

2. Promoting Economic Development:-

The main solution for the problem lies in achieving substantial economic
development. This can be materialized, only if attention is paid equally to
agriculture and industry.

Promoting Economic Development:-

A. Irrigation Projects:-

The employment opportunities in the agricultural sector may be increased

through the construction of major and minor irrigation projects, expansion and
development of plantation, intensive agriculture and horticulture. Unutilised
land may be brought under- cultivation.

B. Development of Fisheries:-

The development of forest and fisheries and encouragement of animal

husbandry [dairy farming, poultry, piggery, etc.] is also a major step in the
direction of improving agricultural production.

C. Encouragement of Cottage and Household Industries:-

In the Indian context, cottage and household industries which are often
associated with agriculture play a vital role in the development of economy.
Hence they should be given due encouragement. Basket making, brick-
making, toy-making, beedi rolling, agarbati making, carpentry and furniture
making, leather works, carving, smithery, and such other works are to be
encouraged to keep our people engaged with work that fetch economic
rewards.

D. Encouragement for Growing Commercial Crops:-

Commercial crops can make agricultural tasks economically attractive.

Commercial crops such as areca, coffee, tea, pepper, ginger, cardamom,
cashew, tobacco, ground nut, vegetables and fruits, etc., can bring good

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 income to the farmers. Due encouragement is to be given to the farmers to
grow such commercial crops.

E. Attractive Local Programs and Projects:-

Depending upon the local needs and feasibility new agricultural programmes
and projects are to be launched so that the young people of the area get new
opportunities to use their talents and energy for the developmental
programmes. The U.P. Government, for example, introduced in 1990-91, a
land army called “Bhoomi Sena”. The Bhoomi Sainiks [young men of the
local area] are given funds by the state government in the form of bank loans
for the aforestation of land.

Industrial Development:-

Planned development of industries is essential for creating more and more job
opportunities. Development of industries may include: (a) large-scale
industries, (b) small scale industries, and (c) village and cottage industries
including handicrafts. Proper balance should be maintained between
agricultural growth and industrial development, so that industry would not
destroy handicrafts and household industries. The unchecked process of
mechanization and the domination of multinational companies are adversely
affecting the creation of new job opportunities. In the name of industrial
growth new labour-saving machine are installed which are taking away the
jobs of men. Gandhi ji had opposed the process of mechanization in this
regard. Sufficient care should be taken to see no new machine takes away the
jobs of existing workers.

The process of economic liberalization let loose by the central government

recently has given new scope for the multinational companies to establish
their domination over the indigenous industries. The governmental invitation
for these companies may erode the job opportunities for millions of people.

3. EDUCATION REFORMS:-

Education has much to do with employment and unemployment. Our education is

not much job- oriented, it is degree-oriented. It caters more to urban needs rather

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 than to rural requirements. It has not completely come out of the British colonial
bias. Hence, it has failed to create an army of self- reliant, self-dignified young
men and women. It very badly requires a thorough overhauling.

Throughout the country, primary education should be made more popular and
effective. Much publicized slogan “operation black-board” must be transformed
into reality. Our villages should become the centre’s of concentration in this
regard. At the same time, some control has to be established over higher
education. Long back in 1957, the then chairman of the UGC, Sri C.D.
Deshmukh, had reiterated that we shall have to restructure university education by
and large to the number of university educated men and women that the country
will be needing from time to time.

Due practical training should be given to our educated youths to help them to
pursue one or the other vocation, and proper guidance and information should be
given to them regarding new job opportunities. Employment guidance bureaus
and employment exchange agencies can play a vital role in this regard.

4. FIVE-YEAR PLANS:-

Almost all the Five-Year Plans have given utmost importance to generate as much
employment opportunities as possible. They have given priority to agricultural
growth, industrial development and creation of vast employment opportunities.
Expansion of employment opportunities by making use of the available man
power and natural resources was indeed, the main aim of the Third Five-Year
Plan. Though the Govt. had spent about Rs. 180 crores for creating employment
opportunities in the First Five – Year Plan, there were about 5.3 million
unemployed people at the end of the plan period.

From the beginning of the First Plan [1951 -56] till the completion of the 10th
Plan in 2007 the number of the unemployed people went on increasing in spite of
the efforts made by the planning system to provide maximum number of jobs. It
was estimated that during the Tenth Plan [2002-07], the new entrants to the labour
force would be around 35 million. Adding to this, the backlog of 35 million
unemployed people, the job requirements of the Tenth Plan would be around 70
million. “Since the economy at least would be able to create 50 million jobs, the
backlog of20 million will remain at the end of the Tenth Plan. But if proper
policies are pursued, the rate of unemployment which was 9.21% in 2001-02
would decline at 5.11% in 2006-07″

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Employment Requirements during the 11th Plan:-

On account of the increasing participation of females, the total increase in labour

force will be around 65 million during the 11th Plan. To this may be added the
present backlog of about 35 million. Thus, the total job requirements of the 11th
Plan workout to be 100 million .The planners intend to provide 65 million
additional employment opportunities. Even then, the 11th Plan will not create full
employment, but it will at least ensure that the unemployment rate falls
somewhat.

Promotion of Employment Generation in the 11th Plan:-

The 11th Plan intends to generate additional employment opportunities mainly in

the services and manufacturing sector. Measures would need to be taken in the
Plan to boost, in particular, labour intensive manufacturing sector such as food
processing, leather products, footwear, textiles and service sectors such as tourism
and construction. The planner’s state “Organized sector employment would
double over the 11th Plan… but this would leave about 55 million new workers
for the unorganized sector to absorb.” “The 11th Plan aims to increase private
organized sector employment ambitiously by at least 10 million. Along with the
public sector, organized sector jobs would then expand by over 15 million, a
growth rate of about 9% per annum. This would still leave nearly 50 million new
workers to be absorbed in non- agricultural unorganized employment “.

Generation of Employment Opportunities by Information

Technology:-

It is heartening to note that information technology [IT] has opened enormous

opportunities for educated youth in the country. It is estimated that one segment
of IT industry that is, computers which includes – both hardware and software,
computer engineers and systems analysts is having a million jobs at present. In
addition to this, the IT sector provided 2.2 million jobs to computer professionals
and other related personnel engaged in IT sector. It is estimated [as per
NASSOM-McKinsey Report 1999] that by the end of the year 2008, IT enabled
services will provide 11 million jobs and generate a revenue of 17 to 18 billion
U.S. dollars. In this sense, IT industry has great future in expanding employment
opportunities.

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What is disturbing in the present economic situation is that IT education is very
costly and IT jobs are being grabbed by the relatively rich section of the society.
The Government here has a major role to play in expanding computer education
to rural areas in the country so that the capabilities of the people are developed to
acquire better quality jobs in the IT sector. To conclude, it could be said that the
planning Commission has optimistic view of the economy’s employment
potential. As per its report, “as against 3.9 million employment opportunities
created during 1993 and 1999, additional employment generated during 1999 and
2002 averaged 8.4 million per year. There is need to increase it to 10 million per
year.”

Employment Guarantee Act-2005 [National Rural Employment

Guarantee Act]

Under the National Common Minimum Programme of the UPA Government

adopted in Sept 2004, and as per the advice of the National Advisory Council, the
Govt, passed the National Rural Employment Guarantee Act in 2005. The main
features of the Act are as follows:

1. Every household in rural India will have a right to at least 100 days of
guaranteed employment every year for at least one adult member per family.

2. The employment will be in the form of casual manual labour at the legally
fixed minimum wage that is, Rs. 60/- per day.

3. Work should be provided in the local area, that is, within the radius of 5 K.M.

For whatever reason, if work is not given, the person shall be paid a daily
unemployment allowance. This allowance will be at least 1/3 of the minimum
wages.

For non-compliance with rules, strict penalties have been laid down.
The gram sabha will monitor the work of the gram panchayat by way of social
audit.

The District Collector / Chief Executive officer will be responsible for the
programme at the district level.

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Probable Cost of this Employment Guarantee Programme:-

It is estimated that employment Guarantee Programme will cost at least 1% of the

GDP [Gross Domestic Product], The calculations reveal that the said –
programme will cost Rs. 100/- per person per day at 2004-05 prices. This includes
60/-Rs. as wages and Rs 40/- for the non-labour costs [including materials and
administrative costs]. Thus, the total cost for providing 100 days of employment
in a year per person will be Rs. 10,000/-. As per 2001 Census, there were 20
crores of people that is, 4 crore households, living below the poverty line. Thus,
the programme per year will cost Rs. 40,000/- crores [Rs. 10,000/- per person
multiplied by 4 crore households].

As per this scheme, the Centre will bear 80% of the total cost [that is, 60% as
wage component and 20% as share in materials component] and the State Govt.
will share the remaining 20% of the total cost. The Centre is however, conscious
of the fact that once the programme gathers momentum, democratic pressures are
bound to enlarge the programme to all unemployed and also to withdraw the limit
of 100 days and make it a programme operative throughout the year.

Critical Remarks about the Programme:-

An important aspect of this Employment Guarantee Act is that, it gives a legal

right to the people enforceable in court. This will increase the bargaining power of
the people. It also makes administration accountable for if the jobs are not
provided; unemployment allowance will have to be paid. The critics have raised
their own doubts about the practical benefits of this Act. The experience of
Maharashtra is also not encouraging. This programme has been implemented in
Maharashtra for the past 30 years costing the State more than Rs 9,000 crores and
generating 370 crore mandays. But the programme has not produced adequate
results other in terms of poverty reduction or reduction in unemployment.

The programme still continues after 30 years without any decline in the demand
for unskilled wage work under this scheme. No dramatic achievements have been
made in poverty reduction or in unemployment reduction in the state. Critics also
say that in fact, Maharashtra has done poorly as compared with other states.
Noted economist Lord Meghan and Desai considered this NREGA scheme as
only a “palliative” a temporary measure and not a cure for the problem. Dr. C.H.
Hanumanth Rao commented that the scheme was a failure in Maharashtra because
it was not linked to the building up of rural infrastructure, such as rural irrigation,
rural roads, etc.

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CONCLUSION:-
National rural development programme Act is half – way measure in its present form its scope
has to be universalized to conclude all unemployed, and the programme must continue
throughout the year instead of being a learn season programme. The selection of assets should be
carefully done so that really productive assets are created which in turn should accelerate
agricultural as well as rural growth. In the initial stage, wages paid to automatic selection of the
poor. As the growth process gathers momentum wages may be gradually raised ultimately to
reach the goal of decent work for all. Both the central and states should Endeavour to provide
financial support for the programme, if the target of poverty eradication along with full
employment.

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BIBLIOGRAPHY:-

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