India’s job growth rate has been an issue of contention for quite some years now. Although Indian markets have seen a relatively steady growth, the same hasn’t been the case with jobs. The last quarter saw a quarter on quarter job growth. Many reports like the ManpowerGroup Employment Outlook Survey, point to an increase in staffing levels. But if one has to look at the year on year growth, the picture looks bleak.

A more alarming fact is that that such marginal growth in job creation is dwarfed by the increasing numbers of job seeking candidates who enter the labour market each year.  Cognisant of this trend, many political parties had made a mandate of creating more jobs, if elected and brought to power. Owing to the close relationship between politics and economics, a similar argument was used during the 2014 elections when the current Prime Minister, Narendra Modi fostered the popular vote by citing issues such as development and job creation for all.  But three years down the lane reports by the labour ministry paint a different picture. The government’s claim of creating 10 million jobs every year seems but a distant goal.  

In a report in Hindustan times highlights this fall in jobs creation.

The report shared that between July 2014 and December 2016, the eight major sectors i.e manufacturing, trade, construction, education, health, information technology, transport, and accommodation and restaurant created 641,000 jobs, data show In comparison, these sectors had added 1.28 million jobs between July 2011 and December 2013, according to labour ministry data. 

Policies not an end in themselves

The government, in order to improve the economic situation they had inherited post the 2014 elections, sought to improve the nation’s ability to provide jobs by introducing new policies. This led to many new initiatives like “Skill India” and “Make In India” to come into existence. Theoretically, these policies, and others of similar nature were aimed at skilling the ever-growing pool of job seekers, while also trying to stimulate the growth of regional manufacturing industries and bringing in foreign companies to manufacture locally. But these policies have done little to improve the rate of job creation. 

For example, recent reports on the much-touted skilling scheme, the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), indicates that policy is still far from achieving its intended result. According to the report in the Indian Express, data revealed that of the 30.67 lakh candidates who had been trained or were undergoing training across the country in June 2017, only 2.9 lakh had received placement offers. A percentage that’s less than a tenth of the total.

In order to rectify and take corrective measures, the newspaper reported, the government is now planning to move to a more district-centric approach, which it expects will provide better short-term results. According to what a senior government official told Indian Express, the "Centre has realized that the PMKVY scheme is struggling because of the lack of quality training and an information asymmetry regarding the demand-supply dynamics of skilled candidates. By making things more decentralized and bringing on district collectors to ensure proper implementation, the government expects more efficient monitoring."

The recent slowdown in the growth rate of GDP, combined with the disruptive impact of automation and robotics within the manufacturing and services sector have further accentuated the problem. Unemployment is the topmost risk that Indian businesses face, as per new data from a survey by the World Economic Forum (WEF) which is published by partners of the Forum’s Global Risks Report, Marsh & McLennan Companies and Zurich Insurance Group.

Although this is reflective of a global trend, the report observed, the problem of not enough jobs being available for individuals entering the market is more crucial for a country like India. As a country that’s often boasted its ability to reap a great “demographic dividend”, India surely needs to improve in its efforts to provide such a “dividend” an opportunity to contribute to economic productivity, while ensuring that individuals have access to suitable jobs. Promises have to be kept.

The need of structural reforms

The biggest challenge in front of the central government is to shape and modify the labour market in ways that make both the entrant access jobs that fulfils his/her potential while ensuring business find the right talent and in turn grow push the Indian economy further. A simple yet unbearably complicated task in today's rapidly changing business environment. 

India’s growth story has quite substantially banked upon the services sector. But the cracks in the sectors ability to sustain a high rate of job creations are already visible. Although investments in building skills to meet the sectors labour demands is still a priority, the service sector of late has undergone rapid technological changes. The Indian IT sector, for example, has been at the forefront of undergoing technological transformations and shifting business models. With increasing number of business processes within the services sector becoming less labour dependent, it would become a gamble to still hope the services sector to be the country sole driver of job growth.

One option could be to focus reviving medium and small businesses and boosting the growth of our manufacturing industry. They can be vital in providing blue collar jobs that the Indian labour markets have been so desperately missing. According to Meghnad Desai one way to look for the solution is “to focus on actually reforming the sector rather than looking at superficial programs which play on the same inadequacies within the economy that their predecessors had operated with.” He adds “while the current situation could be salvaged to an extent by reforming the manufacturing sector ensuring its constant growth.” This also helps ship some load off the services sector.

India will have the world’s biggest labour force by 2027 and the millennial generation is crucial to anchor and contribute to one of the fastest growing economies. To ensure this, both government and state institutions today would have to take a fresh look at introducing labour reforms and fix their often faulty implementation of development policies to generate enough employment opportunities to meet future demands.