Literate State with the Highest Unemployment The state with the highest literacy rate—almost 97 per cent—has the highest unemployment rate too, when compared to the other states in India. That state is none but our neighbour, Kerala. Kerala is known for a large-scale migration of skilled labour to other states and countries. What ails the state that has such a high literacy rate and is also blessed by vast natural resources to have the highest unemployment rate in the country? No industrialist wants to set up any industry in Kerala due to labour problems. The state is bankrupt, besides being corrupt and largely politicised. Trade unionism is still alive in Kerala. One important feature of the Kerala economy, which makes it different from the rest of the country, is the net out-migration of the labour force, particularly, to Gulf and the inflow of huge remittances into the economy. The Centre for Development Studies (CDS) has been doing an interesting work on emigration and the impact of NRI remittances on Kerala’s economy. Kerala vitally depends on the transfers only—$5.8 bn in 2007 or 20.2 per cent of net state domestic product—from its Diaspora overseas. CDS has now scaled up its efforts statewide through its regular Migration Monitoring Studies (MMS). The latest MMS 2007 round data indicated stability in Kerala’s migration pattern. The number of emigrants (18.5 lakh), return emigrants (8.9 lakh), non-resident Keralites (27.3 lakh), and the proportion of households with a non-resident Keralite (25.8 per cent) has remained virtually the same since 2003. Emigration has had a major impact on the labour market of a state that has, perhaps, the highest unemployment rate (12.2 per cent) in India. If among the unemployed, the emigration rate is as high as 43.5 per cent, the process of going abroad for work lowers Kerala’s unemployment rate than it would otherwise have been. Inspite of the fact that a large section of the population has migrated out to Gulf, and elsewhere, for jobs, the rate of unemployment here is way above the all-India average. Instead of migrating to other states for jobs, Keralites should use their knowledge and expertise in establishing new productive activity on their own. Many of them should look at self-employment for overcoming the serious problem of unemployment. As on September 30, 2006, there were close to 40 lakh registered job seekers in the Live Register of Employment Exchanges in Kerala. This constituted about 46 per cent of the state’s population in the age group of 19–29. Of the total number registered, 58 per cent are females. There are few illiterates among Kerala’s unemployed, while the largest number of job seekers boasted academic qualification up to the matriculation level. Kerala’s unemployment problem is not only a serious problem of educated unemployment but also a substantial portion of this problem is simple unemployment of low-skilled workers. The population in the productive age group (15–29 years) in Kerala was 201.83 lakh (2001 Census) and they are the work seekers. The problem of unemployment in Kerala is very acute and has been worsening over time. The worsening unemployment situation is obviously related to the inability of the economy of the state to generate any fresh employment during the last decade or so, particularly, after the advent of liberalization in the country. While this phenomenon of ‘jobless growth’ is observable in all the states in the country, the situation in Kerala appears to be particularly distressing in this regard. The growth rate in employment during the period 1993–94 and 1999–2000 in Kerala was a meagre number of 0.07 per cent per annum. The problem of ‘simple unemployment’ (unemployment of simple, low-skilled labour) is also quite significant in Kerala. The National Rural Employment Guarantee Scheme, under the NREG Act, 2005, is aimed at enhancing the livelihood security in the rural areas. National Rural Employment Guarantee Act (NREGA) is being implemented in Wayanad and Pallakad districts of Kerala, which is a right-based constitutional approach. The Registration of rural unemployed has already begun in Wayanad and Palakkad districts under the scheme. It is clear that the problem of unemployment is not just one of unemployment among the educated youth. The unemployment and underemployment among workers in the traditional sectors like agriculture and household industries are indeed major concerns. One of the most important groups of such workers is the traditional agricultural workers. According to the 2001 Census, the number of agricultural workers in Kerala was around 16.20 lakh and this is more than twice, the number of cultivators (7.20 lakh) and more than four times, the number in the household industry (3.70 lakh). About three-fourth of workers in the household industry are in rural areas and close to half of them are female workers. The unemployment rate among the youth and females is also found to be high. The Department of Employment operates about 96 institutions and they provide placement service, vocational guidance, employment-market information, self-employment guidance, unemployment assistance, and self-employment scheme for the registered unemployed. But these services have been considered inadequate to tackle the problem of unemployment in the state, since most of the unemployed do not possess marketable skills, and this reduces their employability. This would call for a convergent action by the Employment Department and Industrial Training Department. Internal migration has also made a difference to the overall joblessness. Simultaneously, employment also had significantly increased by over 3 lakh persons during 2003–2007, with a 100 per cent increase in the private sector employment and a 20 per cent increase in the self-employment. But the biggest message of MMS 2007 is the shift from remittance-based consumption to remittance-based investments as the key driver of Kerala’s growth. In the early years of largescale emigration, Gulf remittances went into subsistence, children’s education, and housing. The return emigrants, then, also lacked the educational background or the know-how to start any businesses. But times are changing, as more than a million emigrants have returned with their accumulated savings and are ready to invest. Note that only less than 2 per cent of the surveyed households used remittances for starting a business. Much, of course, depends on the investment environment in the state, which determines how productively resources can be used. Unfortunately, Kerala is a laggard on this, in contrast to the experience of investment-friendly states like Tamil Nadu and Karnataka, which have harnessed resources from their non-residents and returned emigrants rather well. Case Questions 1. What are the reasons for unemployment in Kerala inspite of having a 97-per cent literacy? 2. Do you think emigration is a major reason for the unemployment in Kerala? 3. Migration of labour force is the highest in Kerala, to Gulf or any other state of the country. How can this feature of Kerala economy be used positively for generating employment in Kerala?