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The Cause And Effect Of The Unemployment Crisis In Odisha

Even after 21 years of (Biju Janata Dal) BJD rule in Odisha, the Naveen Patnaik government has failed to solve the problem of unemployment in the state. At the current time, the rate of unemployment in the state has surpassed the national average. Furthermore, this unemployment situation has been deeply aggravated during the Covid-19 pandemic.

 

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With the frequent lockdowns in various metro cities, lakhs of Odia migrants are returning to their home state. Now, this huge inflow of migrant workers has become a matter of worry for the state government to settle the migrants.

As it has been noticed over the years, Chief Minister Naveen Patnaik has received much appreciation from both the national leaders and among the state opposition leaders for his humble behaviour, strategic disaster management and provision of various pro-poor social security schemes. In fact, these are key secrets of his continuous winning of state elections.

However, these success stories of the Naveen Patnaik government have become unsuccessful in creating many employment facilities for its youth population. According to the Periodical Labour Force (PLFS) data (2017–18), the overall unemployment rate in the state has reached 7.1%, which is above the all-India average rate of unemployment (i.e., 6.1%).

Unemployment trends in Odisha, 1983 to 2017-18. (Author’s estimation using NSS data)

Additionally, the PLFS data also illustrate that employment in Odisha has declined by 19.3 lakh during 2011–12 and 2017–18. Moreover, out of this 19.3 lakh decline of employment, 15.3 lakh are youth. This means the youth (i.e., 15–29 years) in Odisha are suffering to get employment in the job market, which clearly indicates the employment crisis in the state.

Furthermore, academic literature related to Odisha’s economic growth has observed that the Naveen Patnaik government has been able to retain a steady growth over the past years (Sahu, J P, & Panda, S). However, the state’s economic growth has not been converted properly to generate enough employment opportunities.

This incident indicates that the state is going through a situation of “Jobless Growth”. That means the state is economically growing without creating many employment opportunities for its population. As a result of this, the state has secured the 13th position out of 30 states in terms of the unemployment rate.

The Reasons For High Unemployment

There are a few noteworthy reasons responsible for this rising unemployment in Odisha. The first reason could be the structural transformation in the economy where employment started falling in the agricultural sector with a corresponding rise of employment in the non-farm sector (Mehrotra, S, & Parida, J K).

That structural transformation followed the Lewisian transition, where people were moved to the non-farm sector with higher wages from the agriculture sector (Lewis, W Arthur). It pushed the youth to participate in the non-farm sector instead of working in the agriculture sector.

However, in the non-farm sector, manufacturing is the biggest employment creation field where most of the youth can get employment. But over the years, it has been observed that the manufacturing sectors in the state have been unable to absorb the declining labour force in the agriculture sector.

Similarly, the state has also witnessed a slow growth of employment in the non-manufacturing and service sector. Though there is slight employment growth in the non-manufacturing and service sectors, these two sectors have only provided employment to the low and semi-skilled workers.

boys travelling in the back of a truck
Higher unemployment among the educated youth is registered in the state.

However, the educated youths in Odisha have remained unemployed due to the problem of skill mismatch. Though youth populations are independent (in terms of active participation in work) compared to children and the elderly population, the lack of employment opportunities in the labour market has paralysed the young population.

As a result, higher unemployment among the educated youth (nearly 44 lakhs, 23.58% in 2017-18) is registered in the state.

Additionally, in the recent past, the state government has continuously organised various “Make in Odisha conclave” to attract the investors to invest in the state, but these conclaves have totally failed to attract giant investors, which have created big hurdles in the path of employment creation.

Consequences Of Unemployment

The rising unemployment in the state has produced a number of negative consequences for society in general and people in particular. High unemployment in the state has led to a very low per capita income of the people.

As per the Ministry of Statistics and Programme Implementation report, Government of India (released on 7 January, 2020), Odisha holds the 22nd position out of 30 states in India in the race of net per capita income (NPCSDP). It has achieved ₹84,854 net per capita income in FY 2018–19, while Goa (₹4,22,149) has the highest per capita income in the country, followed by Delhi (₹3,28,985) and Sikkim (₹3,17,134).

Secondly, the high unemployment among the people has made individuals spend less money on other developmental activities such as consumption expenditure, child education, health, housing, sanitation, etc. Consequently, the overall human development status of the state has been hampered to a great extent.

Thirdly, the rising unemployment among the youth has also persuaded them to engage in various anti-social or criminal activities. The recent rise in various criminal activities in the state may be due to the presence of high unemployment in the state.

Written by Shiba Shankar Pattayat and Dr Rajesh Barik.

References

Lewis, W Arthur. (1954). Economic Development with Unlimited Supplies of LabourThe Manchester School, 22(2), 139-191.

Mehrotra, S., & Parida, J. K. (2019). India’s Employment Crisis: Rising Education Levels and Falling Non-agricultural Job Growth. (No. 4; CSE Working Paper).

Sahu, J P, & Panda, S (2018). Political regime persistence and economic growth in Odisha: An empirical assessment of the Naveen Patnaik ruleEconomics Bulletin, 38(1), 610-622.

Featured image for representational purpose via piqsels
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