Employment

Why did increasing unemployment not hurt Prime Minister?

The latest National Sample Survey Office (NSSO) report reveals that unemployment has risen to a record 6.1% in 2017-18, almost triple the 2.2% in 2011-12. NSSO claims this is partly due to a change in methodology giving more weight to educated people, who have always had higher unemployment rates than illiterates.

Separately, Centre for Monitoring Indian Economy (CMIE) surveys have, for two years, shown high unemployment rates, the latest being 7% for April 2019. An Azim Premji University ‘State of Working India 2018’ study estimates unemployment in 2018 at 5%, with youth (15-29 years) unemployment three times as high. Youth unemployment (15-29 years) is most acute in urban areas. NSSO data for October-December 2018 reveals a whopping 23.7%.

Whose Job is This?
No wonder Congress and other Opposition parties harped constantly on Narendra Modi’s employment failure in the election campaign. Despite this, why did Modi sweep the general election? Even more mysterious, why did Modi get an especially high share of youth votes?

First, employment is a worry but rarely affects electoral outcomes. Second, prized formal sector jobs may be improving fast. Third, many people counted as unemployed are actually investing time in searching for the best jobs. Fourth, Modi’s political masterstroke has been the announcement of a 10% quota for weaker economic sections of all castes.

While unemployment has always been an issue, no party has offered a credible solution for decades. Not being a policy differentiator, employment has historically shown no correlation with election outcomes. When Atal Bihari Vajpayee was prime minister, jobs grew at a respectable 2.3% per year. Yet, he lost the 2004 election.

Then, in UPA-1, under Manmohan Singh, job growth dropped to just 0.8% per year. Yet, UPA won the 2009 election hands down. Under UPA-2 in 2009-14, job growth rose a bit to 1% per year. Yet, UPA was thrashed in the 2014 election. And now, despite NSSO data showing the worst unemployment levels in 45 years, Modi has won a landslide victory. No correlation!

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