Unemployment on the rise in neoliberal capitalism, but numbers camouflaged by flawed data entry methodologies

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Unlike advanced capitalist countries, a reduction in employment opportunities in India does not take the form of a greater proportion of the workforce being excluded from employment, but almost everyone having fewer days off. job.

This reflects the fact that only a tiny fraction of the workforce is employed full time. Most are either self-employed, such as peasants or traders, where many more or fewer family members may share a given amount of work; or are causal workers who may get work on a given day but not another.

The same number of people, in other words, get more or less work; it can be said that unemployment fell in the first case and increased in the second. There is no close correspondence between the magnitude of the work and the number of people working. The question arises: how to measure the evolution of unemployment in such a situation?

Because of this problem, official statistics in India have long used not one but several different measures of unemployment. We will not go into all of these measures here. But the problem with each of them can be illustrated by taking any one of them.

Let us take as an illustration the concept of unemployment “current weekly status”: if a person has not held even one hour of employment in a gainful activity, despite looking for a job, during the week previous (before interview), then the person’s “current weekly status” is unemployed; otherwise, the person’s “current weekly status” is used.

But consider a person who worked four hours in the previous week during the survey in a given year; in the next survey a few years later, such a person had only worked two hours in the previous week. It is therefore clear that in reality the person is more unemployed at the later date than at the previous date; and, if it turns out that this person is typical, then the unemployment situation worsened in the country between these two dates. But the “current weekly status” unemployment rate as measured by official statistics would have remained unchanged.

This being more or less true for all official measures, none of them are effective in capturing trends in unemployment. How then to grasp unemployment trends? When the quantity of labor available per head of labor decreases, i.e. when unemployment really increases, it is perfectly reasonable to believe that the real earnings of an average worker per hour of labor could not be expected. not increase.

But since at such a moment the number of working hours per worker would be decreasing, it follows that the product of the two, which is the real per capita income of the labor force, must be decreasing. It follows that a symptom of rising unemployment, other things being equal, would be a decrease in real per capita earnings of the labor force.

As a result, when unemployment falls, real per capita earnings of the labor force are expected to rise. Therefore, a reasonable approximation of the trend in the unemployment rate, if other elements can remain unchanged, would be to take the change in real per capita earnings of the labor force.

The problem, however, is that other things don’t stay the same. In particular, when the per capita incomes of workers decline and the share of the economic surplus increases in total output, the size of the class of “undesirables” who remain from this surplus, such as lawyers, business executives. business, advertising agencies and the like, is also increasing, and they are also generally classified as belonging to the “workforce”.

The “labor force”, in other words, does not only include workers, peasants, agricultural workers, artisans, artisans, fishermen, etc., whose unemployment rate is our real concern; it also includes company lawyers, managers, etc.

Therefore, while the movements in per capita earnings of the former alone could have given us a reasonable approximation of unemployment trends, the observed per capita earnings of the so-called “labor force” could be misleading. as an approximation.

There is a way out, however. It is reasonable to believe that when the real per capita earnings of the upper strata section of the “labor force”, which really consists of the over-employed, increase or remain unchanged, their per capita intake of food grains will fail. not decrease.

When the observed intake of food grains per capita declines, it can certainly be inferred that the real per capita gains of the “labor force” made up of the real workers must have diminished.

It follows that movements in the per capita uptake or availability of food grains, in any situation where there are no food grain supply constraints, can be considered a reasonable approximation of trends in the market. unemployment rate.

This can be opposed on the grounds that it makes unemployment trends almost synonymous with hunger trends. But unless an increase in hunger is caused by a shortage of supply of independent food grains, it reflects a growing shortage of purchasing power in the hands of workers, which is symptomatic of a upward movement in unemployment.

And almost throughout the neoliberal period, there have been more stocks of food grains with the Food Corporation of India than is deemed necessary for its purposes, so there is no question of an independent shortage. food grain supply. Our indirect measure of unemployment trends therefore becomes quite legitimate.

Of course, the availability of food grains fluctuates from year to year; what matters to us, however, is its evolution, and we examine it by comparing the average annual availability per inhabitant for two three-year periods, one belonging to the initial dates and the other to the end dates of the period of our study.

For the 1989-91 triennium, that is, just on the eve of economic “liberalization” in India, the average annual net availability per capita of food grains was 180.2 kilograms; for the 2016-18 triennium, just before the pandemic, for which we have fairly firm data, it had dropped to 178.7 kilograms.

According to our argument, therefore, there was an increase in the unemployment rate during the period of neoliberal economic policies. Lest this result be thought to be due to the particular dates we have chosen, we must clarify that for no subsequent triennium during the entire neoliberal period has the net per capita availability of food grains been greater than in 1989-91. The conclusion about its decline over the whole of this period is therefore unmistakable.

There is another fact that reinforces this conclusion. After the introduction of the Mahatma Gandhi National Rural Employment Guarantee Scheme under the first UPA government, some jobs were provided under this program, which increased workers’ incomes and hence their demand for food grains. If, despite this, there had been a decline in per capita cereal supplies during the neoliberal period, it follows that the decline would have been even greater in the absence of MGNREGS.

The question can be put differently. We can distinguish between the employment provided by the functioning of the neoliberal capitalist system and the employment provided by the MGNREGS, which is an additional source of employment. The fact that unemployment, despite taking MGNREGS employment into account, increased during the neoliberal period suggests that the system’s capacity to provide employment was even more constrained than it appears to be. our indirect measure, that the rise in the unemployment rate would have been even greater if the neoliberal capitalist system alone provided employment.

The reason for this phenomenon of rising systemic unemployment is twofold. First, in addition to the natural increase in the working population, there is an influx of peasants in distress in search of paid employment in the cities. This is happening due to the strangulation of peasant agriculture under neoliberalism, through the withdrawal of input subsidies by the government and the dismantling of the price support mechanism in the case of cash crops.

Second, the removal of all restrictions on technological and structural change, as well as the opening up of the economy to competition from imported goods, forces the adoption of such a change, which usually results in a displacement of labor. work and therefore very low employment growth, regardless of the GDP growth rate.

These two factors together ensure that the unemployment rate continues to rise in an economy under neoliberal capitalism. This increase, however, escapes the full capture of conventional official statistics in India. This becomes apparent, however, if we examine indirect measures of the type we have suggested here.

(IPA Service)

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Courtesy: People’s Democracy

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