The Job Crunch And The Growing Fires Of Nativism

Context: Haryana’s legislation that mandates reservation to locals in private jobs opens up debates on the growing job crunch, threats of sub-nationalism and a diminishing role of states in the job creation matrix.

Root causes for Haryana legislation

• Unemployment: Highest unemployment rate among all states in India, as per data from the Centre for Monitoring Indian Economy, or CMIE. (80% of women who want to work cannot find a job)
• Lack of financial autonomy: After the introduction of Goods and Services Tax (GST), State governments in India have lost their fiscal autonomy;
  • They do not have control over the immediate availability of skilled manpower or to use taxes as a tool to lure.

Factors that control jobs:

• Political factors: 11 out of 18 million voters of Haryana do not have a regular job.
  • World history warns us that when such a vast majority of adults are jobless, it inevitably leads to social revolutions and political upheavals.
  • Haryana is not alone; other states include Jharkhand, Tamil Nadu.
  • An elected government that operates on a five­ year electoral cycle, confronted with millions of jobless voters, will resort to appeasement policies to salvage an ominous employment situa­tion.
• Economic factors: Job creation is an outcome of the performance of the larger economy.
  • Ease of Doing Business: States can compete (in providing land, ‘ease of doing business’ facilities) to lure foreign companies (like Amazon) to their State and help create new jobs.
  • Lack of equal competition: Realistically, in India, in very few of these parameters can a poorer State compete against a richer State to attract Amazon.
• Social Progress: The availability of skilled local labour is a function of many decades of social progress of the State and cannot be retooled immediately.
• Provision of infrastructure: State governments also have the ability to provide land at affordable prices or for free to attract investments.
  • Agglomeration effect: A State with an already well-established network of suppliers, people, schools, etc., are at a greater advantage to attract even more businesses than other states.
  • ‘3-3-3’ effect: is an undue impact of agglomeration effect – It means –
    • The three richest large States (Maharashtra, Tamil Nadu and Karnataka) are three times richer than the three poorest large States (Bihar, Uttar Pradesh and Madhya Pradesh), in per-capita income, compared to 1.4 times in 1970.

Conclusion: There is a need for instituting a level playing field much greater fiscal freedom provided to the States; otherwise, the potent combination of widening inter-­State inequality, a ‘rich States get richer’ economic development model, may fuel nativistic sub­nationalism in other states too.