People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 23

June 06, 2004

         The National Employment Service – A Hoax


M K Pandhe


THE International Labour Organisation (ILO), Delhi Office, convened a meeting of central trade unions, employers’ organisations, ministry of labour officials and research institutions to review the National Employment Service undertaken by the government of India on May 11, 2004. The representatives of CITU, AITUC and HMS who attended the meeting sharply criticised the functioning of the scheme which miserably failed to provide any meaningful jobs for the working class.


The Indian ministry of labour, the ILO Delhi Office and the ILO Employment Service established on Indian Employment Promotion Programme in 2001 under NDA regime. However, the programme could not make any meaningful contribution in generation of jobs for the workers.


The union ministry of labour is monitoring the working of 932 Employment Exchanges all over the country. However, they collect data only for the organised sector while the vast area of unorganised sector is out of the purview of these exchanges. Moreover, these Employment Exchanges are only operating in the urban areas and have no centres in the rural areas. Hence, the data available with these centres do not reflect the real situation of unemployment in the country. Even in the urban areas all workers do not register their names in these Employment Exchanges since there is no guarantee that the workers would get a job after registering their names. According to a study conducted by a research scholar, not even 25 per cent of the workers in the urban areas register their names. Therefore, the extent of unemployment is much more than what is stated in the official data available with the Employment Exchanges.



According to the live register of the Employment Exchanges by the end of 2001 the number of job seekers stood at 4 crore and 20 lakh. The total number of job seekers in 1991 was at 3 crore 63 lakh. Due to non-availability of jobs the number of workers registering their names in these exchanges does not show much rise. The official data shows that not even 2 per cent of the workers were provided jobs by the Employment Exchanges during 2001. The data regarding provision of jobs are totally unreliable since they do not show for how many days the workers were provided with jobs after placement by the Employment Exchanges. The representatives of the trade unions therefore stated in the meeting that calling the scheme as National Employment Service is misnomer since it does not provide any worth noting service of providing jobs.


The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 made it mandatory for all establishments in public sector and private sector employing 25 or more employees to notify vacancies to the nearest employment exchanges. Thus the smaller establishments were excluded from the purview of the Act. Many modern establishments with less employees but huge turnover automatically get excluded from the purview of the Act. The government thus kept several loopholes for the private sector employers to avoid implementation of the Act.


To make the matter worse the government of India issued instructions only to public sector undertakings to fill vacancies from the panel of names submitted by the Employment Exchanges. However, the private sector managements were not having any obligations to recruit employees from the Employment Exchanges. As a result of this, the private sector managements were only sending notification of vacancies without any commitment to recruit which practically exempted them from the purview of the Act.


The Employment Exchanges further became meaningless when a subsequent judgement of the Supreme Court diluted the element of compulsion for the public sector management for making selection from the panel of names submitted by the Employment Exchanges. After this judgement the public sector managements have also been avoiding use of Employment Exchanges, which further eroded the faith of the workers about the efficacy of the government machinery to provide jobs. Over and above this, the rampant corruption prevalent in these exchanges for recommending a worker’s name for a particular job has created further hurdles in making the service useful for the workers.



With advancement of new technology in industrial undertakings, the training and development of skill acquires increasing importance. However, the government of India thinks that only through a training programme the unemployment problem can be tackled effectively. Already huge educated manpower is without jobs in the country while the steps to downsize the manpower in all major industries have already rendered a large number of skilled and trained workers unemployed in the country.


According to Employment Exchanges data by the end of 2000 two crore and ninety five lakh educated unemployed had registered their names. Of them one crore and sixty nine lakh were matriculates while 74 lakh were undergraduates. The number of graduates and postgraduates who were without any jobs stood at 53 lakh. The break up of the graduates and postgraduates who were not having any source of livelihood by the end of 2000 was follows:


Graduates and post graduates without jobs

1. Arts                   21,53,000

2. Science                9,97,000

3. Commerce          7,79,000

4. Engineering       2,19,000

5. Medicine               48,000

6. Veterinary   -           7,000

7. Agriculture  -        36,000

8. Law            -           21,000

9. Education   -         85,000

10. Others      -        2,57,000


It should be noted here that the actual number of educated unemployed will be much higher in view of non-registration of large number of educated personnel. The above data does not mention the highly skilled manpower, which has been rendered surplus in organised industries.


The above data does not include lakhs of apprentices who have received training of special skill but have not been provided with jobs. In Nasik in Hindustan Aeronautics has trained more than 400 workers for highly skilled jobs but they cannot get job except in aeronautics establishments. But HAL refused to provide them with work and thus they remained without work despite their high skills.


The growing unemployment among women is also reflected in the data available with the Employment Exchanges. The live register shows that of these exchanges 80,20,000 women sought employment in 1995. Their member went up to 1 crore and 5 lakh in 2000. The Directorate General of Employment and Training under ministry of labour has admitted that the live register of women job seekers has shown an increase of 48.9 per cent during 1991 and 2001. The unemployment of educated women has risen substantially during the period. The above data further shows that the percentage of women job seekers among the total women job seekers has increased from 68.7 per cent in 1991 to 78.1 per cent in 2000. However, placement of women in jobs is not even 2 per cent. Moreover, placement does not mean that the women proposed by the Employment Exchanges have really got a job of a permanent nature. The largest number of women job seekers are from Kerala followed by Tamil Nadu while the smallest number is from Rajasthan where taking job by a woman is generally discouraged by the social backwardness.



The review of the National Employment Service prepared by the ILO has suggested that the government of India should consider the scheme of giving unemployment allowance to the unemployed workers. However Deputy Director of the Directorate of Employment and Training has pointed out that the central government has rejected the proposal in view of high cost involved in introducing such a scheme. Certain state governments give some relief to the unemployed workers but the government of India does not agree with it and it apprehends that the employed workers will also try to take advantage of the scheme.


Trade union representatives strongly objected to the unilateral decision of the government of India on this issue and pointed out that the misuse of the scheme can be checked through proper administrative measures. They further pointed out that the government of India did not consult the trade unions before taking this decision. They stressed the need for the payment of unemployment relief. They considered it extremely important since sufferings of the unemployed in India are very pathetic. When new technology is introduced the number of jobs are reduced and the society must bear the burden of such growing unemployment in the country.


The employers’ representatives from PHD Chamber of Commerce expressed the view that in a period of liberalisation the employers should have a right to choose suitable workers and they should not be compelled to recruit workers only through the Employment Exchanges. They pointed out that the functioning of the Employment Exchanges is not up to the mark, which also results in private sector employers not using the services of the Employment Exchanges.


The employers’ representatives observed that the payment of unemployment allowance would put a heavy burden on the country and would adversely affect the development of the economy. They asserted that the employers would not be able to contribute any amount for payment of such allowance.


While referring to stiff competition among the industries due to the policy of liberalisation employer’s representatives argued that cutting down the cost of production was necessary to be competitive in the market. In such a situation down sizing the manpower was natural. Presently Indian industries are having huge surplus manpower making them non-competitive in international market, argued the employer representatives. 


The trade union representatives criticised the view of the employers who failed to generate any jobs in the economy. The private sector also does not have any commitment to provide jobs to scheduled caste and scheduled tribes workers. It also does not have any humane attitude towards physically handicapped persons who faith to get any jobs in the private sector undertakings.



M K Pandhe, president, CITU while initiating the discussion from the trade union side pointed out that the government of India has not announced any policy towards generation of jobs in the country. The prime minister himself announced 10 per cent reduction of jobs in central services. In every organised industry manpower has decreased drastically while large number of small scale and traditional industries have been closed down due to central government’s economic policies. Under these circumstances without any proper employment generation programme the working of Employment Exchanges is becoming meaningless.


About 30 years ago the union labour ministry had a Central Committee on Employment, which looked into the question of employment generation. However, the committee has been made defunct for over 3 decades and labour is not consulted by the central government on employment generation in the economy. The nomenclature of the ministry of labour and employment has now been changed to ministry of labour indicating that the government was not serious about generation of employment in the country.


The CITU representative criticised the Planning Commission’s approach to automatically linking employment generation with GDP growth. He pointed out how despite GDP growth the employment has declined in the country. He objected to the data provided by the Planning Commission about employment generation in the economy, which failed to reflect ground reality in the country.


Pandhe criticised the ILO report’s failure to mention introduction of land reforms as a source of employment generation in the rural India. He noted that without alternate policies regarding generation of jobs, the employment situation cannot improve and jobless growth cannot be checked.


The CITU opposed the proposal to allow private employment providing agencies. Already many employment rackets are operating in the country cheating young unemployed. Huge money is charged on the plea of providing jobs abroad and the agency disappears after collecting huge money. The clandestine employment of seamen is very common in this country. The government of India has failed to check the depredation by private recruiting agencies and their malpractices continue unabated today. In view of this ILO’s proposal to encourage development of private job providing agencies, only the central employment agency should be developed for providing jobs and trade unions should have a greater say in the matter of working of the scheme.


R A Mittal of HMS while criticising the functioning of the employment exchanges noted that workers have lost all faith in these exchanges since they do not provide any job opportunity to the workers. He drew attention to the decision of the Indian Labour Conference but the government of India failed to act on the recommendations. The bureaucratic functioning of the Employment Exchanges have only added to the paper work without providing gainful employment to the needy workers.


H Mahadevan of AITUC gave example of China, which modernized its economy and also created additional jobs in the economy. He noted that small-scale industry has provided more jobs to the workers but that sector is also facing crisis. Rural unemployment has gone up much higher. Under these circumstances mere extension of employment exchanges in the rural areas and among small-scale sector will not help in generating jobs. The central government economic policies will have to be changed to provide job orientation in economic development.


For such an important discussion the ILO Delhi Office provided only two and a half hours time. Hence, a detailed discussion was not possible. The representatives of trade unions pointed out the shortcomings of the meeting. The ILO promised a two-day meeting in July for a detailed discussion on the subject so that the question of employment generation can be discussed in depth.