Too Many Workers, or Too Few: India’s Massive Employment Challenge

by Brian Neeley
June 28, 2023


The dirt streets of Musallahpur in the northern Indian city of Patna are filled with pedestrians, banners and vending carts familiar to commercial centers across India. However, the hue and cry here is directed towards a single goal: to help youth get government jobs.

Musallahpur is full of brick-barn classrooms where 20 people crowd with their heavy bags to train for standardized employment exams. With about 1,800 applicants for each of the state’s top-tier jobs, they know it’s a long way to the last. But in a country where semi-employed drudgery defines life for millions, it is their only hope.

A thousand miles south, in the city of Coimbatore, M. Ramesh, a busy automotive parts entrepreneur, is tackling the other side of India’s deepening employment challenge. If the government has far more potential employees than it needs, Mr. Ramesh has far fewer.

To make complex aluminum castings that operate at speeds of up to 200 miles per hour with precision, they need workers who are willing to stay on the job, learn and earn. But he says he could not find enough people from the poorer north or elsewhere in the country who were competent and reliable. So he was one week away from partially automating his plant — turning to machines in the hope of employing fewer humans.

As India overtakes China to become the world’s most populous country, bridging its economic disparity is perhaps its most important task. Success could mean a more moderate-income future that delivers on the country’s world-shaking promise. Failure to do so could lead to a large part of India being mired in widespread poverty for decades to come.

The fate of the greatest generation of workers on the planet hangs in the balance.

India’s young and growing population, with more students dropping out of school every year to start careers, is the envy of countries that are facing a growing citizenry and a shrinking workforce. Its economic growth of about 6 percent per year is also a global bright spot.

But that growth isn’t creating enough jobs. And the jobs that businesses have to offer are often not in line with the skills and aspirations of India’s potential workforce.

It affects the whole world. If India’s economy, now the fifth largest and becoming more deeply embedded in the global exchange of goods and services every year, is to fuel growth elsewhere, as China does, it needs to do more with its workforce. Should take more advantage.

Within India, the long-term consequences of failing to provide enough jobs to its youth can be dire. The unfulfilled desires of these workers, more educated and more indebted than ever before, have become a destabilizing force. In the state of Bihar, whose capital is Patna, youths set trains on fire last summer, angered by a plan that could eliminate jobs in the armed forces.

Quiet exposure is a colossal waste of human potential. India’s anticipated “demographic dividend”, as its population continues its steady but manageable growth, may instead result in a vast majority being forced into incomplete and unproductive work when they are not completely out of employment.

Plus, managers grapple with enormous personnel problems. Finding people willing to uproot themselves for the most important factory jobs for long-term economic growth can be difficult. They can be expensive to train, and nearly impossible to maintain.

Economists say that if India is to follow the traditional path of development, it needs a more robust manufacturing sector. But as owners try to sidestep their labor issues by opting for automation, India is headed for “premature deindustrialization,” before manufacturing jobs can do their usual poverty-alleviation magic. Just disappearing.

Jayakumar Ramadoss, joint managing director of Mahindra Pumps, another fast-growing industrial company in Coimbatore, said, “We will either have to go for full automation, where we will have to reduce our manpower significantly, or do business with fewer people. Will happen.”
striving people

In India’s youngest, poorest and fastest-growing state, Bihar, with more than 120 million people, a feudal social structure and low rate of urbanization give rise to the old chicken-or-egg riddle that asks Why keep a poor place poor.

Here entrepreneurship seems to be another name for self-employment, and self-employment a euphemism for unemployment. More than half of India’s workforce is technically self-employed. That work is often piecemeal: imagine a railway station where 10 rickshaw pullers wait for passengers but the fare is enough for only two or three.

Hence, in India, many youngsters aim not for the stars, but for stability. In Bihar it means a government job, however low it may be. For example, the post of under-registrar in the Prohibition Office is also a coveted prize.

But competition is stiff. Around five lakh youth appeared for the Bihar Public Service Commission’s annual preliminary examination for a total of 281 jobs in February. For every batch of 2,000 hopefuls, 1,999 will walk away without taking anything.

At the national level, the situation is almost as bad. From 2014 to 2022, Indians filed over 220 million job applications with the central government. Of those, only 720,000 – less than a third of 1 percent – were successful, a government minister told parliament.

Yet, every year, Bihar’s capital, Patna, attracts thousands of students from densely populated rural areas, spending each year writing notes on calculus, geology and everything else they might encounter in state exams .

Praveen Kumar, 27, is both a student and employee at a coaching center in Patna. Although his parents never left their family farm, he earned a bachelor’s degree in mathematics and moved to wealthier parts of the country in search of work.

What he saw saddened him. Friends with engineering degrees got jobs on the assembly line making mobile-phone chargers for $146 a month. It is much more than what he would have earned in his home village, but not enough to leave his family behind for too long.

When Mr. Kumar returned to Bihar feeling defeated, he said, “I was getting depressed sitting at home.” He sometimes even contemplated suicide. In such a bad moment, the dream of entering the civil service arose in his mind.

Since then, he moved to Patna and attempted to clear the exam four times. While studying, he earns $110 a month by doing video production work on lessons for students like himself. With this he feeds himself, his wife and his 4-month-old child.

In India, where absolute unemployment hardly exists, many people are similarly distressed. “People cannot afford to be unemployed,” said Amit Basole, professor of economics at Azim Premji University in Bengaluru. “So, of course, they are working all the time, but they are working in occupations with very low pay and low productivity.”

The one exception to this is the educated youth – they are at that stage of life when they can, in essence, try to do something better. Unemployment levels reach 15 to 20 percent for people under the age of 30 with at least 12 years of schooling, Dr. Basole said. In young women, it can go up to 50 percent.

When there is nothing to be gained, even the most educated youth must choose whatever work they can find, whether it is working as a laborer in the city or helping in the fields back home.

In Mr Kumar’s home village, Nai Naiyawan, the symptoms of unemployment are visible in subtler ways. In the quiet rural lanes, a large number of beautifully carved wooden doors are locked. Whole families have left their homes in search of temporary work.

It is not as tough a place as it was when Mr. Kumar’s father was young; There is now adequate electricity, cheap phone and internet service, and subsidized food grains. “There are no jobs here,” says the younger Mr. Kumar. “Otherwise, all things are good.”

Those who are still in the village are taking care of the livestock and are openly wasting their working days. Except for men starting in their early 20s. They are completing university degree and dreaming of government standardized exams.
help Wanted

The valley around Coimbatore in the southern state of Tamil Nadu is a model of what India wants for itself in the coming decades. The state’s fertility rate is much lower than Bihar. Coimbatore’s business community is diverse, with approximately 100,000 small to medium-sized companies specializing in casting, machining, and irrigation equipment.

These businesses do not have a steady supply of reliable labor. Mr. Ramesh, managing director of auto parts maker Alphacraft, is optimistic about almost every aspect of his business. With orders rising and shipping costs being streamlined, they see growth potential across three continents. His only problem: a workforce he can’t trust “because they’re all coming from far-flung parts of the country.”

Most of the 200 workers from outside Tamil Nadu are from Bihar and speak only Hindi (Tamil is spoken by most people in Tamil Nadu).

Mr. Ramesh needs them because the youth of Tamil Nadu are looking elsewhere. So many people have earned advanced degrees, often bachelors in technology, that they don’t want to stay in the factory. They would love to earn less driving scooters for delivery apps (“jobs in technology”) and daydream about finding a professional job someday.

But it takes a lot of hard work to train the working class people of Bihar. Factory owners say they come with low levels of literacy and unfamiliarity with the schedules and standards that apply on modern, semi-automated factory floors.

Mr. Ramesh is the sole manufacturer of Aston Martin parts in Asia. The training investments he makes in migrant workers become a costly proposition when 80 percent of them “float”, he says – they leave at unexpected intervals, often for major festivals, and never return. Returning This keeps their HR department struggling.

Mr. Ramesh takes pride in providing a good life to those who remain loyal to his company, which is much more than what a government job salary in Bihar would pay. Still, he and other Coimbatore owners and managers are investing heavily in automation. For now, they need their migrant workers, but once they are able to afford more investment, they expect to need less of them.

Without much industry in places like Bihar, and without a greater supply of able, willing factory workers in places like Coimbatore, the great opportunity represented by India’s demographic moment remains in the shadows.