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Jobs not quotas: Expanding quotas will not address frustrations arising from jobless growth

May 2, 2016:The Times of India

Gujarat’s announcement of a 10% quota for economically backward classes in education and government jobs represents a misdiagnosis of a pressing problem. The proposal is bound to be challenged legally as aggregate quotas will overshoot the permitted 50% mark. Moreover the agitating Patels, who the announcement sought to pacify, have dismissed it as “another lollipop from the BJP factory".

The reality is that government cannot expand jobs fast enough to address contemporary society’s malaise: joblessness. Myriad agitations are only symptoms of the frustration among young Indians. If our demographic transition, where there is an ongoing surge in the working age population, is to translate into a dividend and not a nightmare, governments must address the challenge of joblessness. Over the last 15 years millions have moved out of agriculture, with only construction expanding noticeably to absorb the influx. Worryingly, manufacturing and services have not pulled their weight in job creation. For this, governments’ counterproductive policies must take the blame.

The nature of government intervention needs to be radically transformed. Right now, at both central and state levels, we are witnessing more government and less governance. In a complex world characterised by rapid changes in technology and trends, governments are not in a position to pick winners. Entrepreneurs are best placed to make these choices and governments need to get out of their way by removing barriers to economic activity. Simplification of regulations needs to be complemented by smarter regulation.

Enhancing the quality of public education, dismantling the licence raj shackling private education, skilling and physical infrastructure will help India grab opportunities. As wages in China increase, it opens the door for India’s export-led apparel industry and other labour-intensive industries, which can generate millions of jobs. A World Bank report, entitled “Stitches to Riches?" estimates that even a 10% increase in Chinese apparel prices can be leveraged to create at least 1.2 million jobs in the Indian apparel industry. This would be particularly good for women who are prolifically employed by the apparel industry, addressing India’s appalling gender inequities. But the government’s approach must be tailored to capitalise on available opportunities. For example India’s ruinous labour laws, which create a new caste system whose Brahmins are organised labour and whose quasi-untouchables are roughly 93% of the labour force consigned to the informal sector, must be reformed to give a better chance to the rest.

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