Job creation and skilling: New government priorities for inclusive growth
In an earlier interview, investment guru Jim Rogers made a candid statement “Indians would rather like jobs and a better economy rather than all these laws, regulations and bureaucracy”. As the incumbent government takes charge in its second term, this statement couldn’t be truer.
There is a dire need for structural reforms in the education system, employment and labour ecosystem. Driving sustained and rapid employment growth, particularly in the manufacturing and services sectors, will curb rising unemployment. If all goes according to plan, with India’s demographic dividend and massive talent pool India, the estimated 7.5 million new entrants to the labour force can be provided gainful employment. It is not ambitious to aim for record employment growth unless those jobs also deliver real wage growth. The main agenda of the government should be to overhaul archaic processes and policies and act as an employment enabler. The speed of decision making and execution will be the key to good governance.
In spite of the Make in India initiative, manufacturing sector's share in the GDP is at 18 per cent against the target of 25 per cent, failing to provide the necessary job creation impetus. To create more jobs an effective employment ecosystem must be built on firm foundations of skill development to do high-paid, high-skilled jobs of the future, a robust infrastructure, and a non-discriminatory business environment without any regulatory cholesterol for the private sector.
India’s centrally planned economy post-independence has a complex system of permits necessary to run a business in the country. In the past year, India is up 23 places to 77th in the World Bank’s Ease of Doing Business Index for 2019, from 100th in 2018 and 130th in 2017.We now need to create a Universal Enterprise Number (UEN) to replace the 25+ current numbers that enterprises get from multiple government departments that will enable various government entities (issuing import licenses, building permits, EPFO, ESI, etc.) to provide seamless services and simplify cumbersome administrative tasks. The GST council has been a successful model of centre-state partnership. There is a need to create a similar council to focus on a mandate to rationalize, simplify and digitize the current 60,000 compliance rules, 3,800 filings and 600 changes done every year.
While there was focus on labour reforms in the previous tenure – simplification and consolidation of all central labour laws into four broad codes, digitization in the functioning of EPFO and ESIC etc., it slowed down due to various reasons. The ruling government should now initiate a clear roadmap and policy direction to further reduce it to a single labour code, make EPFO & ESIC more present-day and employer friendly and formalize and implement the earlier decision allowing employees to choose NPS and health insurance as an option in lieu of PF and ESI. It should also renew its commitment to increase transparency and remove red tape and corruption by declaring a hard deadline for implementing India Stack - Paperless, Presenceless and Cashless. Extending PMRPY for 3 more years as it encourages wider enrolment of workers and benefits all stakeholders - entrepreneurs as well as workers will be a step in the right direction. Similarly, the new government should also continue tax targeting of formal employment by service enterprises by extending 80JJAA for another 3 years.
Apprenticeship provides a larger, productive, ready to deploy talent pool: creating the necessary human capital for businesses, and helping them to invest in the future of our nation. The government should scale up Apprenticeship subsidy to encourage more adoption. The government should consider forming a National Apprenticeship Corporation by merging RDAT (Regional Directorate of Skill Development and Entrepreneurship) and BOAT (Board of Apprenticeship Training) that will function as a unified entity to be able to enrol 10 million Apprentices from the current 1 million and help them find employment by setting up National Matching Platform. In addition, an exclusive job portal for apprentices, and massifying higher education.
The short point is, none of these initiatives on its own can provide concrete results for mass employment generation. That is exactly what decentralized governance will do. In doing so, the benefits of the reforms will reach the grassroots. Another focus of the economic program should be employment generation for the underprivileged and the deprived factions of society. Finally, by improving productivity and women participation in the labour force, we can – raise living standards, channel inclusive growth and create an employment economy fit for the future.