Why Reservations Are Not a Solution to the Job Crisis - Vivek Kaul's Diary
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Why Reservations Are Not a Solution to the Job Crisis

May 17, 2016

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Last week, the government of Haryana notified the the Haryana Backward Classes (Reservation in Services and Admission in Educational Institutions) Act, 2016.

The Act provides 10 percent reservation to Jats, Jat Sikhs, Rors, Bishnois, Tyagis and Muslim Jats, in Class III and Class IV government jobs. It also provides a 6% reservation in Class I and Class II jobs to the castes mentioned above. Further, the Act provides a 10% reservation to these castes for admission into educational institutes.

In February, earlier this year, Jats had gone on an agitation, resorted to violence and destroyed public property across Haryana, to demand reservation in government jobs. The Parliamentary forces had to be called in order to control the mess that followed.

But the point is will this reservation in government jobs help the Jats? Or to ask a more speciic question, does reservation really help these days?

Take a look at the following table. It shows the number of people employed by the government of Haryana over the years. Honestly, when I started writing this column, I was apprehensive that I would be able to find such data. Nevertheless, I did. The data is two years old. If it was more recent, the analysis would have been a little more definitive.

Date Number of Employees
March 31, 2014 3,40,698
March 31, 2013 3,40,086
March 31, 2012 3,35,945
March 31, 2011 3,28,370
March 31, 2010 3,26,021
March 31, 2009 3,23,149
March 31, 2008 3,27,490
March 31, 2007 3,17,245
March 31, 2006 3,11,340
March 31, 2005 3,13,775
March 31, 2004 3,11,005
March 31, 2003 3,11,938
March 31, 2002 3,16,135
March 31, 2001 3,19,027
Source: Census of Haryana Govt Employees

Despite slightly old data, one can make some very good inferences. Between March 2001 and March 2014, the number of employees of the Haryana government went up from 3,19,027 to 3,40,698. This means an increase in jobs at the rate of 0.51% per year, over a 13-year period. This is slower than the rate of population growth.

Interestingly, the total number of people employed by the government of Haryana fell between 2001 and 2004. How do things look if we take March 2004 as the base year? The numbers of jobs grew by around 0.92% per year.

The point being that the Haryana government jobs have been growing at a very miniscule pace. In this scenario, the reservations in governments jobs that Jats have got, is not going to be very beneficial.

In fact, what is valid for Haryana is valid at the country level as well. Take a look at the following table of central public sector enterprises.

Employment Average Annual Emoluments in CPSEs

The number of permanent employees in the public sector was 16.14 lakh in 2006-2007. But by 2014-2015, this had fallen to 12.91 lakh. This essentially means that the public sector enterprises on the whole did not create any jobs between 2006-2007 and 2014-2015. In fact, the number jobs came down by 20%.

Given this, on the whole, reservations did not benefit any caste, when it comes to employment in the public sector enterprises. What is interesting nonetheless is that the average salary of a public sector employee has jumped three-fold in the eight-year period. This essentially means an average increase of around 14.9% per year.

How do things look for the central government employees? On January 1, 2006, the central government had a sanctioned strength of 38.25 lakh. Against this, it had 32.74 employees on its roll. By January 1, 2010, the sanctioned strength had gone up to 38.92 lakh, while the number of employees had fallen to 32.31 lakh.

By January 1, 2014, the sanctioned strength had risen to 40.49 lakh whereas the number of employees had risen marginally to 33.02 lakh. So between 2006 and 2014, the central government basically added around 28,000 jobs.

Let's look at some more data. Data from the Centre for Monitoring Indian Economy suggests that the number of people working in the public sector in India has come down over the years. This includes people working in the central government, state governments, quasi government bodies and local governments. In 1991-1992, the year the economic reforms were initiated, the public sector employed close to 1.92 crore individuals. By 2011-2012(the latest data that is available) fell to 1.76 crore. So over a period of two decades the number of jobs in the public sector has come down by 16 lakh.

There is nothing that suggests that this scenario has changed between 2011-2012 and now. Given that jobs in the public sector have been coming down, reservation in government jobs, on the whole, can't be of any benefit.

It only benefits politicians briefly, who try and take credit of having given reservation to a certain caste. But given that the government isn't creating many new jobs on the whole, reservation as a process of upliftment of certain weaker sections of the society, doesn't work anymore. Of course, it needs to be said here that Jats do not belong to the weaker section of the society.

Interestingly, the jobs in the organised private sector between 1991-1992 and 2011-2012 went up from 78.5 lakhs to around 1.2 crore. This basically meant an increase of 2.1% per year.

The era when the government created jobs is long gone. Of course, people do not still realise this and given this they demand a reservation in government jobs. The trouble is that the organised private sector is also not creating enough jobs for the 13 million Indians who are entering the workforce every year. As far as the unorganised private sector is concerned, without access to good data, it is difficult to say anything.

Also, it needs to be mentioned here that the Haryana government has created another major problem for the country in the days to come. By giving reservation to the Jats, who resorted to violence while demanding reservation, they have set a precedent. It is more than likely that other well-off communities across the country, might resort to a similar strategy in the days to come.

And this can't possibly be a good thing.

Vivek Kaul is the Editor of the Diary and The Vivek Kaul Letter. Vivek is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. The latest book in the trilogy Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System was published in March 2015. The books were bestsellers on Amazon. His writing has also appeared in The Times of India, The Hindu, The Hindu Business Line, Business World, Business Today, India Today, Business Standard, Forbes India, Deccan Chronicle, The Asian Age, Mutual Fund Insight, Wealth Insight, Swarajya, Bangalore Mirror among others.

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13 Responses to "Why Reservations Are Not a Solution to the Job Crisis"

KIRIT SARAIYA

May 18, 2016

though new jobs are not created but jobs of retired person is important. As a matter of fact if you go to any govt. office you will see more and more b c and other staff, that is what disturbs es. more important thing when you try to explain them your problem they just do not understand,and not care to understand,they are secure job holders.

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Shirish Potnis

May 17, 2016

Thanks Vivek for another insightful article. I am sure every right thinking analyst would agree with your views. A few observations :

1. The average salaries of central government employees seems to have gone up by almost three times in the period between 2006-07 and 2014-15 an annual increase of 14% - 15%? This is on top of the 6th Pay commission? Sounds too bad. Especially since the world has gone into a tail spin in the interveneing period.

2. Average salary may have also gone up because of reduction of number of employees in the lower levels?

Although the number of government employees has remained fairly stagnant (or reduced marginally) in the period under consideration, there is no guarantee that the trend may not get reversed if some uber populist government / political party does that.

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sethu

May 17, 2016

They should consult Karunanidhi of Tamilnadu the father of reservation and corruption in this country.

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Ram

May 17, 2016

Though caste reservations are not solution to our social and economical problems, its still gives more power to the community who gets it, and is the reason more people look forward. Dont just look into reduction of govt jobs, as people continue to be replaced after retirement though on diminishing scale. So say after 10 to 20 yrs, their say and hold on govt machinery will increase.

Main reason for attraction towards govt jobs and towards reservations is what happened during the last decade or so. Thats increase in salary that too with job security and less responsibility to deliver. Decade back top IT companies were paying 30k for entry jobs and still doing the same or less. During the same time govts pay increased from 15k to 60k for similar qualifications at entry level. Take teaching field, 10 yr exp high school teacher is available for around 20k, but govt is paying around 50 to 60k. Former has to work for more hours and less leaves and has to deliver to retain his job. Now even attender will get 20k in the govt.


All this happened as govts stopped questioning unions/groups(not just trade). So any group or community who commands few lakh votes can get things done. Govts are just taking this burden and to fund they are increasing all sorts of taxs, levies, fees etc

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Niranjan Parikh

May 17, 2016

You have given total data.What is relevant is annual recruitment due retirement and other reasons.New categories will participate and current/old catagories will get less job.

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kalpesh

May 17, 2016

i like your analysis.
It would be interesting to know the retirement % in the govt staff of haryana.That would be added to the new jobs filled.thr real recruitment rate would have given better picture.

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atanu gupta

May 17, 2016

I am fully agreed that there is no job opportunities in in state as well central Govt. The politicians for their vest interest go for reservation to satisfy BC. It is not healthy precedent for the future. It is giving red signal.

Like (1)

Mahesh k rathi

May 17, 2016

Ref to vivek kauls article, i would like to say only one thing...india is a sleeping nation.

Otherwise how can reservations be allowed to happen in a country,( where there are thousands of lawyers all asleep), on the basis of a) religion, or caste when our constituion expressly forbids discrimination on the account of caste, religion etc and b) how can you give qualifying pass marks of 35 or 40 % to those from the underprivileged classes, while those who get 85 or 90 %fail to make it to premedical, or law, or engineering simply on the presumption argument , the govt. gave...that those who were from the underprivileged classes didnt get the facility to study top notch such as tutuions etc., and so they should be given those less marks to qualify.

Mind you, sir, not one person in this country, has found the time or resources, to challenge this one point, and stop this malpractice.. how how can you say that the child didnt get resources, otherwise he or she wouldn't have made it to class x or xii even ?did he get any special facilities all these years,? then how he did make it so far.. ,simply by working hard... so he should have at least qualified with those cut off marks...be it 85 or 90 percent.

First at least you qualify with the same marks..then reserve..what kind of engineers, doctors, lawyers , ips , ias, ifs officers,dm , magistrates, you will have in society otherwise.certainly those who are laggards in hardwork or studies only get 35 or 45 percent.not those who are serious about their studies.

Nobody has challenged the lowering of the qualifying marks. Whoever does, will win the case, and this could put a temporary hold to this madness of clamouring for a sc st certificate, alebit a forged one, available for 20000 rupees, by even our children.

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MUTHUKUMAR N

May 17, 2016

As you said the job opportunity in Government and public sector are limited. Hence the politicians wants reservation in private sector also. If it also materialise what will happen to our country - guess

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Mukund G Korde

May 17, 2016

India cannot call itself a developing country unless it abolishes all reservations, including those for jobs, admissions to educational institutes, elections, housing allotments and even for women. The only reservations in public places should be for physically and mentally challenged persons, pregnant women and senior citizens. In fact, our constitution should have stipulated a reservation quota for fifty years, at say 25 % to start with , to be gradually reduced by half percent per year, so that there is an incentive for everybody to improve their lot in life on their own merit.

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