Thursday, March 31, 2011

Water Water everywhere ......

........ Nor any drop to drink, goes The Rime of the Ancient Mariner by Coleridge. He could very well be describing the labour situation in India. It seems to be one of perennial shortage. How can this be ?

After all, India is a land of 1.2 billion people. The unemployment rate is officially at 9.4 %, but we all know that the real number is much higher. This is because of seasonal employment in agriculture and unemployment outside the seasons. Underemployment is even higher - getting some job just to exist, but capable of doing much more. While India's growth is impressive in recent years, it has created nowhere near the number of new jobs required to cater to the number of people entering the job market every year. And India is a young country, not an ageing one. More and more people join the workforce each year.  The unemployment situation is so acute that the government runs a hugely expensive National Rural Employment Guarantee Scheme. And yet, ask any company what their biggest problem is - finding people to work for them and then staying.

At the more skilled levels, this talent shortage is easy to understand. The education system, despite all the improvements in recent years, is woefully inadequate. So talent is in real shortage. That's why you see the scarcity of talent to fill skilled jobs. At any level of skills (I am not talking just of IT here, but plumbers, fitters, draughtsmen, etc) you can command multiple jobs. Employers chase you rather than the other way around.  That is, at least, somewhat understandable.

But what about unskilled jobs - jobs that require no skill at all. Jobs like a security guard who is now ubiquitous in every building. Cleaners, maids, etc. There is a huge shortage of people even here and attrition rates are the highest in this sector (some 10-15% a month !). This foxes me.

There are some reasons for this phenomenon. The obvious one is that  jobs are in urban India while most of the labour is in rural India. While there are a lot of migrant workers, it becomes increasingly a very costly option for the worker due to one simple fact - the cost of housing is simply unaffordable. Even a place in an awful slum living in appalling conditions costs a lifetime of earnings. But another more important reason in my view is the increasing unwillingness to work hard. That's why a Railway clerk position attracts a stampede of applicants, but a field salesman's job in a private company is not so attractive.

There are really only two solutions to balance the demand supply equation. The first is education. On a massive scale. About 10 times the level at which it is today. This is a job for both government and private industry. And secondly to take jobs away from urban into rural areas. The only sector that can do this on scale is manufacturing. A huge lobby, fueled by misguided NGOs, is blocking this by resisting every land transfer from agriculture to industry.

Meanwhile, in this land of 1.2 billion people, we still can't find enough workers to man our jobs.