Article: Jobless growth in Indian economy may not persist for a long term


Jobless growth in Indian economy may not persist for a long term

A lag effect comes into play when an economy moves towards automation and this is what we are experiencing at this point
Jobless growth in Indian economy may not persist for a long term

Employers will continue to invest in people-intensive processes and people-skills will continue to be in demand


T o a large extent, I don’t think that the Indian economy will have a jobless growth in the longer term. In many places, a lag effect comes into play and this is what the economy is experiencing at this point. But this lag effect will go and the economy will start adding more jobs in the future. Jobless growth can also happen when the economy starts moving toward higher automation. This is exactly what is happening in the Indian economy where most of the large employers are investing in higher automation.
Automation is for two purposes: it improves quality and is directly aimed at replacing people. Fundamentally, I disagree that on a longer term basis it can be a jobless growth because we are still a very highly human resources intensive economy and the industry values people skills. What is encouraging is that there is ready availability of skills in the market place. I believe that employers will continue to invest in people-intensive processes and people skills will continue to be in demand in this market in the coming times.

As we go into a higher level of technological sophistication and customer services mechanisms, the demand and the expectation levels are also going up. This is happening across all sectors, including government services. Many professions in the IT and IT-services sector that were unthinkable in the past are emerging now. The IT sector is a classic example of how an economy creates continuing jobs and builds the need for more skills.

People have started talking about more IT jobs in other Asian economies compared to India. There are essentially two reasons behind it. Corporations have started realising that outsourcing work to an economy like the Philippines brings forth higher tax benefits as compared to outsourcing jobs to India. Some Asian economies are offering better tax structures and have also built capabilities and skills that are comparable to those in India. The Indian tax laws have historically been extremely good for IT export but some of that is changing. There is talk that the tax department is going to disallow some of the profits from the exempt category and put them in taxable category. This is forcing some of the work in the IT sector to go out of India. The other reason why these were coming up was that they were really running out of skilled manpower. However, this problem will not persist for too long as the economy will continue to produce skilled IT manpower.

Some years back, TCS opened a small office in one street with just 150 people. The next day there was a tea shop coming up, and the next day there were two auto-rickshaws coming up. While it is hard to measure, there is always a multiplier effect on jobs associated with the growth of a large employer. In the last few months, we’ve seen large employers setting up fewer establishments in new locations as compared to earlier years. While the reasons are many, this has led people to believe that the economy is growing but the jobs are not growing proportionately. It can be hoped that the jobless growth phenomenon will not persist in the long-term.


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Topics: C-Suite, Strategic HR, #ExpertViews

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