National Employment Policy: A Panacea for Unemployment

Who can forget that day of 2014, when our Prime Minister announced in the winter session of Parliament about changing the digital payment landscape! And the backlash he received from one key opposition leader, who highlighted all possible challenges prevalent at that point of time? Circa to the present day, our country, has become the 2nd largest market for digital payment and is growing more and more!

Coming to the theme of my article, did you know that our current incumbent government is establishing a committee to frame India's first National Employment Policy (NEP) with the purpose of increasing employment in the country?

From the perspective of risk management, the government’s announcement of drafting a National Employment Policy (NEP) is a great development considering that we all have witnessed massive job losses across all sectors. However, it is a very reactive and late response. Why so? This idea was first proposed around 2008 during the then UPA rule, it has taken more than a decade and a global, devastating pandemic to make policymakers to wake-up! Sad indeed!

Why NEP is key to India’s future growth?

Unemployment rates have become really alarming! As per reliable sources, about 1 crore people lost their jobs in May 21 (Source: businesstoday.in). However, the actual figures may even be higher. Also, unemployment trends clearly indicate that unemployment has increased from 10% in Jun-20 to 12% in May-21 (Source: Business Today)

This is clearly not good, considering that we have a huge segment of our population comprising of youngsters. An enormous 67% of our population falls in the 15-64 years age bracket (Source: Statista). In addition to this, approximately 34% are in the youth (i.e. 15-24 years) category! (Source: Ministry of Statistics, Government of India). So, considering the fact that our population as of 2020 was around 1.3 billion, there are a mammoth 46 crores who fall in the 15-24 years bracket!! Indeed, a holistic NEP is the need of the hour and a critical milestone to be achieved so as to turn our demographics into a competitive advantage.

Some threats which could prevent NEP from becoming a success are -

a.?Delay in passing the NEP bill in both houses of Parliament

b.?Inadequate budget allocation to all sectors

c.?Lack of quantifiable metrics to measure NEP effectiveness

d. Lack of agreement/ alignment amongst ministries and states

e. Lack of competent bureaucrats in implementing policy objectives

In my humble opinion, some steps which can be taken to ensure NEP is a success are –

a.?Create a Task Force on Employment Reforms (TFER) - This can be an advisory body comprising experts from different industries including public sector to help the PM understand and appreciate the constraints, and ensure timely execution with fixed responsibility. This task force should have specific powers and functions, including sub-committees and regional committees, if necessary.

b.?The National Labour Ministers’ Council (NLMC) with Labour Ministers of all states and UTs, chaired by the Union Minister for Labour, should be constituted. This Council should take inputs from TFER, monitor NEP implementation in states and UTs, serve as a forum to resolve implementation issues, and understand the diverse perspectives of state governments.

The diagram below indicates communication between TFER, NLMC and the Prime Minister

c.?Create a business environment conducive for employment generation. This would mean taking some bold steps like –

·??Reducing the number of procedures, cost and turn-around time (TAT) in initial setup of a business from 12 to 5, 50% to 25% of income per capita and 27 to the benchmark of 12 days (OECD average) respectively.(Source: TMF Group)

·? Limiting construction permits to 10 or less and TAT to a mere 30 days. (Source: TMF Group)

·??Similar to central and state GST, decreasing the number of tax payments for businesses from an enormous 33 to 5 or less a year. (Source: TMF Group)

·? Bringing harmonization in business laws/ regulations and policies in all states, similar to GDPR, will make it easy for all domestic and international firms to operate in India’s diverse market.

d.? A key element in employment generation is education and up skilling of our country’s youth to ensure a smooth transition to become a part of the workforce. Integration of Institutions of Eminence (IoE) with the National Education Policy along with empowering the IoE’s with more autonomy and resources would be an important step in establishing world-class institutions.

e.?Key infrastructure (road and rail projects) like the 8-lane Delhi-Mumbai expressway, investment by private sector in 151 passenger train operations through public-private partnership (PPP) mode, etc. should be taken on a war-footing.

f.??Reforms like the Electricity Amendment Bill, which eliminates power “distribution license” and allows any company to supply electricity, after necessary regulatory approval, should be fast-tracked (Source: Business Standard). This will solve the challenges of power distribution companies, which are state-owned and a in a dismal state.

Conclusion

The NEP is indeed the first step in the right direction to resolve our country’s unemployment woes. Our policymakers should remember Sun Tzu’s words, “Every battle is won before it is fought.” and focus on establishing a holistic, comprehensive and forward-looking policy. Otherwise, we would miss an immense opportunity to leverage our demographics as a competitive advantage!

Questions to ponder on:

1.?What are the other risks and/or opportunities you foresee, apart from the ones mentioned in this article?

2.? In the next 5 to 10 years, which sectors would emerge as massive employment generators?

3.?Do you think the solutions mentioned above will help resolve of badly affected sectors like hospitality, aviation and tourism? If NO, what additional measures need to be taken?

4.? Should experts from private sector be made as part of NLMC also? If yes, why?

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