A group of candidates participating in a recruitment drive in Nagaland. (Morung File Photo)
Dr N Janbemo Humtsoe
Investments in education are determined by two main reasons. One is to secure a decent job and the other is to earn a decent income. The benefits of education to the individual and the society are enormous, but the prospects of good employment and income are the primary factors that induce learners and parents to invest in education.
Nagaland was a late entrant into the modern education system, mainly because of the territorial isolation from the rest of the Indian subcontinent. This is evident from the fact that the literacy rate of Nagaland in 1951 was only 10.5 percent. As more people understood the value of education, they invest more in education. This pushed the literacy rate to 79.5 percent in 2011, which is higher than the national average of 74 percent.
However, the increase in education and literacy were not accompanied by proportionate expansions of the labour market. The end result is high unemployment rate, which has become a huge socio-economic problem. If the problem is not addressed urgently, it could even create law and order and political problems. High unemployment and underemployment exacerbate poverty and inequalities, fueling a sense of resentment and despair, often leading to conflicts and crime in the society. Aristotle once said, “poverty is the parent of crime and revolution”. Evidently, many revolutions in the past and present were linked to poor governance, inequalities and poverty.
The psychological, economic and human cost of unemployment are multifaceted. Whitney Young said “the hardest work in the world is being out of work”. Not being able to find a job, with no income, no security, burdened by debt and poverty after investing lakh of rupees on education cannot be a pleasant experience for anybody. But again, the impacts are more severe for those who comes from poor financial background. James Baldwin summarized it in one sentence when he says “anyone who has struggled with poverty knows how extremely expensive it is to be poor”.
During the great depression in the 1930s, unemployment in the US rose to 24 percent. This was considered as abnormal and an economic mess. The current rates of unemployment in Nagaland are worse than that. Yet, it seems to ring no bell nor stir an action. As per the periodic labour force survey (PLFS, 2019-20) released this year, unemployment rate for the working population (15-59 years) is 27.8 percent- the highest in the country, against the national average of 5.2 percent. Youth unemployment (15-29 years) is more troublesome at 70.1 percent -also the highest in the country, against the national average of 15 percent. Educated unemployment is also unreasonably higher at 26.7 percent for secondary, 34 percent for higher secondary, 46.3 for graduates and 56 percent for individuals with post graduate degree and above.
Ironically, the unemployment rates for the illiterates are zero, while it is 6.3 for primary education. If we regress these data, we would get an inverse relationship between education and unemployment; implying that acquiring more education reduces the prospects of employment. These results are contrary to the theory of human capital, which otherwise posits that education leads to lesser unemployment, better and varied job opportunities and higher income.
In that case, is it worthwhile to invest in education? Many of us might have come across some individuals negating the value of education. We often hear from them that it is useless to pursue education when one can’t even find a job of a peon or a chowkidar. But this anomaly in the relationship between education and employment is not the fault of the educational system alone. It is mostly economics, in that the economic system fails to generate enough jobs to absorb the teeming graduates.
High or mass unemployment is often the result of poor economic growth. But if we observe the state’s gross domestic product, the average economic growth for the period 2012-13 to 2019-20 (8 years) is 12.2 percent at current price and 5.6 percent at constant price. An average growth rate of 5 to 6 percent is not bad for a resource poor state like Nagaland. This shows that unemployment in our state is not cyclical, which is caused by deficient demand leading to low growth. Ours is more of a chronic and structural one that requires structural reforms.
This takes us to another pertinent question as to who benefits from this economic growth? If growth does not translate into creating more jobs in the economy, it certainly is not an inclusive growth. It would then imply that only few sections of the economy are benefitting from this growth. Such jobless growth will only redistribute resources in favour of the affluent sections and thus escalate inequalities and other economic problems. This is another issue that needs attention.
The burning issue, however, is the high unemployment, where 7 out of 10 youths are unemployed in the state. According to the Nagaland economic survey 2019-20, there are currently over 90,000 unemployed individuals registered at the employment exchanges. With an unemployment rate at 27.8 percent, this figure is an understatement. Even a conservative estimate puts the current number of unemployed at around 3 lakh.
Taking a minimal average monthly income of Rs 7500 (Rs 300 *25 days), if we calculate it for 90000 individuals registered at the employment exchanges, the amount comes to Rs 67.5 crore per month. Multiply it into 12 (one year), we get Rs 810 crore. That’s the potential income lost due to unemployment in a year for just 90000 individuals. If we do the math for 3 lakh individuals, the figure would come to Rs 2700 crore in a year. Imagine the effect it would have on people’s welfare and economic growth if these people somehow find gainful employment and earns money. Apparently, nothing is more alarming than having lakh of our population not being able to find work, unable to remain productive or contribute towards the progress of the society.
The higher unemployment rate among the educated workers could be due to the mismatch between the output of our educational systems and the demands of the labour market. This is a classic case of structural unemployment prevalent in developing economies. This kind of unemployment cannot be corrected by fiscal measures alone. According to the Friedman’s natural rate of unemployment, the impact of money, in the long run, is primarily on the price level. Real variables such as output and employment are determined by real factors (such as, factors of production, technology and institutions of the economy). Therefore, it is important to invest in infrastructure, accelerate industrialisation, strengthen economic institutions, integrate technological solutions and upgrade human capital to address such structural deficiencies.
Textbook economics recommends providing government sponsored trainings focusing on specific skills and qualifications to enable the unemployed to qualify for the job openings. Such training or skill upgradation programs can be intensified by outsourcing training programs to private firms. Mismatch of jobs and employment can also occur due to geographical immobility. This occurs when workers are unable to move from areas of high unemployment to areas where jobs are available. This could occur due to barriers in language, cultures, or difficulties in accommodations. It could also be due to family attachments to their current area.
Barriers in language and cultures can be corrected through education or sensitization programs. With regard to accommodation problems, both in terms of costs or availability, government can either provide housing subsidies or construct houses in select cities and provide rents at affordable price. Attachment towards our own land or community is very common among the Naga society. Forget about working outside Nagaland, we find many people not willing to work outside of our home towns. Such attitudes or perceptions should change and young people should be encouraged to take advantage of the globalized labor market.
Another way to increase employment is to invite industries located outside by providing fiscal incentives and other concessions. Focus should be given to the labor-intensive production units including medium, small and micro enterprises. According to economist Wicksell, “cheaper credit to businessmen [entrepreneurs] is the most effective measure to fight unemployment”. The debate on credit problems faced by entrepreneurs have been going on for a while vis-à-vis the SARFAESI act. Government should apply its best mind to remove the bottlenecks in the credit flow so that deserving entrepreneurs find access to credit.
The state may also consider constituting an ‘employment commission’ by roping in experts from various fields to devise a comprehensive and practical plan to address employment issues. Huge unemployment, in our case, reflects not just the failure of the economic systems but also the political systems. Nagaland has been embroiled in political conflicts for decades. These conflicts have kept away potential investors and restricted the expansion of industries. In addition, multiple taxation, extortions, unfair trade practices and corruption in governance have created non-conducive environment for growth. Hence, political resolution to the vexed Indo-Naga problem is pre-requisite to pave a way for peace, growth and development in all aspects of life.
