Jobs' Problem is Fundamental...

In the backdrop of the 2008 financial crisis or the Great Recession the economists came to the conclusion that the economy must be given the stimuli of the monetary and fiscal policy to lower unemployment which reached double digits in the aftermath of the crisis with falling inflation which also made the Fed target higher prices while embarking on the quantitative easing program. The discussion centered around to lower unemployment and creating job oppourtunities in order to avert falling demand and prices for which money-supply was kept high to flow in to businesses with excess capacity which took time to increase because of low demand or higher unemployment, it was mainly about creating jobs to lower unemployment and increase inflation through wages instead of price-stability to increase demand, consumption and investment spending, it also increased depreciation and exports and lowered trade-deficit for some time. But, with excess supply of labour wages remained low and showed less pressure build up to increase demand, inflation and growth for a long-time; however the focus was on creating jobs and lower unemployment or achieve full-employment to arrest or increase falling growth which has been the primary objective besides the secondary objectives of price stability and full-employment of the economic policies. This might also help the policy making in INDIA to align policies to achieve its objective of providing productive jobs to its workforce, productive because it mostly uses unskilled labour which has kept wages and incomes depressed even though the workforce is fully employed.  The higher proportion of unskilled labour has kept productivity and wages low when higher inflation in the past had also kept real wages low that resulted in low demand and growth in the preceding years. The NREGA the flagship program of the previous UPA government even though increased employment, but failed to increase productive assets and human capital which led to higher inflation and wage demand and diverted resources away the market. The former government increased intervention in the market to increase jobs that are not so productive and may increase wage cost and lose competitiveness, however it tried to increase competitiveness by cutting real wages with inflation, as done to increase depreciation and exports. In 1991 our former PM in his stint as the Finance Minister tried depreciation to revive the economy. Even when free market and liberalisation is widely hailed the NREGA program is a direct intervention of the government to create jobs oppourtunites without increasing productivity, because when employment is increased it creates demand in the economy, but if production is not increased it would result in inflation and low real wages, moreover it would result in crowding out of private investment, the private sector would become costly and lose competitiveness. Therefore, NREGA is only a short term jugaad to provide temporary jobs without skills which actually should be provided by the market which is against the market principle, however if the government had spent on increasing productivity through investment in education and skills development according to the market it would have increased production and lower inflation, moreover productivity had also increased wages or real wages also because of lower inflation. The NREGA worked well for the politicians, but has made people dependent on the state for employment without their skill development, it is only a short-run fix for the problem of unemployment, unskilled labour-force and jobs which is also a drag on the Public-Finance that also needs re-orientation to create productive assets and human capital that would also help increase tax-base in the economy...