Sep 03, 2022 | 06:34 IST

Unemployment in Goa: the curious case of Atmanirbhar?

Deepali Desai

Goa has recorded high unemployment in the last quarter, with the CMIE reporting an unemployment rate of 15.5% in April, and although the state government’s response to this economic problem has been ‘atmanirbhar’ putting focus on self-employment shows a clear mistake by the government. Strategies. This response of self-sufficiency and creating jobs for oneself is the easy way to abdicate the responsibility of providing jobs.

The mere existence of government is to provide welfare in the market in the presence of market failures. Goa, with its high literacy rate and improving infrastructure, faces a conundrum in the labor market. Goa has been flagged as a top performer in terms of knowledge capital in the Niti Aayog Innovation Index. Knowledge capital indicates the tertiary level of human capital, the human capital needed to drive service-led growth. Ideally, these factors of good human capital, good infrastructure should lead to more jobs, but surprisingly, Goa’s labor market does not respond to these factors. This is a classic case of “labour market coordination failure” and the only actor that can solve it is the government. Let’s take an example to explain this; assuming that a group of workers in an economy with identical levels of productivity will only find it easier to increase effort output if every worker does.

The choice of each worker depends on the level of effort of the other workers. Therefore, if none of the workers work hard, an individual has no incentive to work. This lack of coordination also exists between companies and employees.

The situation where no employer invests in the skills of the companies invest in a region is known in economics as a low equilibrium and only a high equilibrium where the two entities make beneficial decisions in complementarity is the one where all the entities are better off. .

This is ideally the situation in Goa, where firms lacking jobs have no incentive to invest and the workforce has no incentive to invest in upskilling. Therefore, the government before proposing the solution of creating a job for oneself must ensure that workers have sufficient savings and therefore sufficient capital to invest, sufficient ease in regulatory procedures and legal to start a business. But in Goa, in terms of regulatory procedures and ease of doing business, there was a drop in ranking from 21 to 24, in the index published by the RBI. This lack of poor technical skills, coupled with complex legal procedures, deters companies from investing. The government slightly increased budgeted expenditure for university education to 18.36% in 2018-19 from 18.30% in 2017-18.

The systematic targeting of funds, increased spending on vocational education, introduction of the reforms suggested by the Department for the Promotion of Industry and Domestic Trade (DPITT) in the reform action plan business, implementing reforms in the legal and business environment should be the government’s long-term goal to overcome this crisis.