Too many workers, or too few: India’s colossal employment challenge
The dingy backstreets of Musallahpur, in the northern Indian city of Patna, are bustling with the foot traffic, banners and vending carts familiar to commercial hubs across India. Here, however, the cacophony is focused on one goal: helping young people find jobs in the government.
Musallahpur is packed with brick-shed classrooms where over-20s crowd and their heavy backpacks to train for standardized labor exams. With nearly 1,800 applicants for each of the state’s top positions, they know it’s the ultimate contender. But in a country where the drudgery of semi-workers defines the lives of hundreds of millions, it’s their only hope.
A thousand miles south, in the city of Coimbatore, a busy auto parts entrepreneur, M. Ramesh, faces the downside of India’s major employment challenge. If the government has far more potential employees than it needs, then Mr. Ramesh has far too few.
To make complicated aluminum castings that perform precisely at 200 miles per hour, he needs workers willing to stay, learn and earn. But he says he can’t find enough capable and reliable, from the poorer north of the country or anywhere else. So he was a week away from partially automating his factory – he switched to machines in hopes of employing fewer people.
As India overtakes China to become the most populous nation in the world, resolving the economic imbalance is perhaps the most crucial task. Success could mean a more middle-income future that delivers on the country’s earth-shattering promise. Failure could trap large parts of India in pervasive poverty for decades to come.
The fate of the greatest generation of workers in the world is at stake.
India’s young and growing population, with more students dropping out of school each year to pursue careers, is the envy of countries facing aging populations and a shrinking workforce. The economic growth of about 6 percent per year is also a global bright spot.
But that growth does not create enough jobs. And the jobs that companies have to offer often do not match the skills and aspirations of the potential employees in India.
This has consequences for the whole world. India needs to get more out of its workforce if its economy, now the fifth largest and more deeply intertwined every year with the global exchange of goods and services, is to drive growth elsewhere, as China is doing.
Within India, the long-term consequences could be serious if suitable employment is not found for its young people. The unfulfilled desires of these workers, more educated and more in debt than ever, have become a fleeting force. In the state of Bihar, of which Patna is the capital, young men set fire to trains last summer. furious with a plan which could eliminate jobs in the armed forces.
A quieter risk is a huge waste of human resources. India’s expected “demographic dividend” as the population continues its steady but manageable growth could instead bring a huge cohort forced to settle for unfulfilled and unproductive work if they don’t stop working completely.
At the same time, managers are struggling with huge staffing problems. It can be difficult to find people willing to uproot for the factory jobs most critical to long-term economic growth. Training them can be expensive and it can be nearly impossible to keep them.
If India followed a traditional development path, it would need a more robust manufacturing sector, economists say. But as bosses try to sidestep their labor woes by opting for automation, India is trending toward “premature deindustrialization,” with manufacturing jobs disappearing before they’ve worked their usual poverty-busting magic.
“We either need to move to full automation, where we need to drastically reduce our manpower, or look at doing business with fewer people,” said Jayakumar Ramdass, the joint managing director of Mahendra Pumps, another thriving industrial concern in Coimbatore.
striving masses
In Bihar, India’s youngest, poorest and fastest-growing state, home to more than 120 million people, a feudal social structure and low urbanization are old chicken-or-egg puzzles that ask what makes a poor place poor.
Here, entrepreneurship looks like another name for self-employment, and self-employment looks like a euphemism for unemployment. More than half of the Indian labor force is technically self-employed. That work is often patchy: imagine a train station with 10 rickshaw drivers waiting for passengers, but there are only enough fares for two or three.
So in India, many young people are aiming not for the stars, but for stability. In Bihar, that means a government job, no matter how low. For example, even a position as a sub-registrant in the Prohibition Bureau is a coveted prize.
But the competition is fierce. About half a million young people took the annual preliminary test Bihar Public Services Commission in February, for a total of 281 jobs. For every batch of 2,000 hopefuls, 1,999 will walk away with nothing.
At the national level, the odds are almost as bad. From 2014 to 2022, Indians submitted more than 220 million applications to the central government. Of those, only 720,000 — less than a third of 1 percent — were successful, a minister told parliament.
Yet Patna, the capital city of Bihar, attracts thousands of students from the densely populated countryside every year, who write notes every year on calculus, geology and anything else they might face in state exams.
Praveen Kumar, 27, is both a student and an 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 between the wealthier parts of the country, looking for work.
What he saw depressed him. Friends with engineering degrees found assembly line jobs assembling cell phone chargers for $146 a month. That is considerably more than they would have earned in their native village, but not enough to leave the family behind for long.
After Mr. Kumar gave up and returned to Bihar, he said, “I got frustrated sitting at home.” Sometimes he contemplated suicide. At such a low point, he was inflamed with the dream of being admitted to the civil service.
He has since moved to Patna and tried to pass the exams four times. While in college, he earns $110 a month doing video production for classes for students like himself. With that he knows how to feed himself, his wife and their 4 month old baby.
In India, where outright unemployment hardly exists, many scurry about in a similar way. “People cannot afford to be unemployed,” said Amit Basole, an economics professor at Azim Premji University in Bengaluru. “So, of course, they work all the time, but they work in occupations with very low wages and low productivity.”
The only exception is well-educated young people – those who are at a stage of life where, in short, they can endure something better. For people under 30 with at least 12 years of schooling, the unemployment rate reaches 15 to 20 percent, said Dr. base. In young women, this can be as high as 50 percent.
When nothing comes out, even the best-educated young people have to settle for whatever work they can find, whether it’s wage labor in the city or helping out on the farm back home.
In Mr. Kumar’s home village, Nai Naiyawan, the signs of unemployment appear in subtle ways. On quiet country lanes, a striking number of the beautifully carved wooden doorways are padlocked. Entire families have left their homes in search of temporary work.
It’s not as hard a place as it was when Mr. Kumar’s father was younger; now there is enough electricity, cheap telephone and internet services and subsidized grains. “There is no work here,” says the younger Mr. Kumar. “Otherwise all things are good.”
Those still in the village herd cattle and openly laze their weekdays. Except for the men in their early twenties. They are in the process of completing university studies and dream of government standardized tests.
Help Wanted
The valley around Coimbatore, in the southern state of Tamil Nadu, is a model for what India wants for itself in the coming decades. The fertility rate of the state is much lower than that of Bihar. Coimbatore’s business community is diverse, with about 100,000 small to medium-sized businesses specializing in casting, machining and irrigation equipment.
What these companies do not have is a constant supply of reliable workers. Mr. Ramesh, the general manager of auto parts maker Alphacraft, is optimistic about almost every aspect of his business. The number of orders is increasing, shipping costs are being streamlined and he sees growth opportunities on three continents. His only problem: a workforce he can’t count on “because they all come from distant parts of the country.”
Of the 200 workers who come from outside Tamil Nadu, the majority are from Bihar and speak only Hindi (most people in Tamil Nadu speak Tamil).
Mr. Ramesh needs them because the youth of Tamil Nadu are looking elsewhere. So many have earned higher degrees, often a bachelor’s degree in technology, that they don’t want to settle for the factory floor. They’d rather earn less riding a scooter for a delivery app (“a job in engineering”) and daydream about finding a professional job.
But it takes a lot to educate the working class men of Bihar. They arrive with low levels of literacy and an unfamiliarity with the kinds of schedules and standards that govern a modern, semi-automated factory floor, factory owners say.
Mr. Ramesh is the only manufacturer of Aston Martin parts in Asia. The training he invests in the migrant workers becomes an expensive affair when 80 percent of them “float,” he says — often leaving for major festivals, at unpredictable intervals, never to return. That confuses his HR department.
Mr. Ramesh prides himself on being able to provide a good income to the men who remain loyal to his business, far beyond what a government job in Bihar would bring. Yet he and other owners and managers in Coimbatore are investing heavily in automation. For now, they need their migrant workers, but once they can afford more investment, they hope to need fewer.
With no more industry in places like Bihar, and a greater supply of skilled, willing factory workers in places like Coimbatore, the great opportunity represented by India’s demographic remains moment in the sun under a shadow.