Article: MODIfying the Indian job market

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MODIfying the Indian job market

With Prime Minister Narendra Modi completing three years in Office, let us take a look at the government's key employment initiatives, the challenges and the way ahead for the job market
MODIfying the Indian job market

At least 10 million young people enter the country's workforce every year.  The daunting task of creating and expanding job markets has always been a tough row to hoe for the government of most countries. A recent India Exclusion Report 2016 has highlighted the growing joblessness and the shift towards informal and low-paid employment avenues. As anticipated, Job creation in India certainly has not kept pace with such huge influx of job seekers. Contrary to this market perception, India’s unemployment rate has halved from 9.5 per cent in August 2016 to 4.8 percent in February 2017.

On the third anniversary of the existing government, Let us get into a sneak preview of the current scenario of the Indian job market including new employment initiatives and challenges with a blend of what the future holds for us.

Rise in employment opportunities in rural areas

In the opening year of this new government, Our Prime Minister along with his team had created 2.75 lakh jobs which is 118% jump between Jul-Dec, 2014. Many BPOs were set up in each North Eastern state and rural areas with the aim of training one crore students in smaller towns and villages in a span of five years. 

As per the data furnished by the rural development ministry, around 8.13 billion person-days of work have been created in the rural sector. In fact, UP has logged the highest rate of decline in the unemployment rate among major states in between August 2016 to February 2017 due to government’s focus on rural jobs.

All these encouraging numbers are a result of many flagship programs, including the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Around 6.36 billion person-days of work was generated under MGNREGA and 0.78 billion under the Pradhan Mantri Gram Sadak Yojana (PMGSY).

Under another program called the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), around 1,35,000 candidates have been employed in 2015-16.

Foreign direct investment (FDI)

More FDI translates into more jobs.  A country where foreign investments are on a high means achieving technical know-how and generating employment. Interestingly, In 2016 FDI jumped 18% to a record $46.4 billion, at a time when global FDI inflows were quite low.  According to the government data, FDI during October 2014 to May 2016 grew by 46% to USD 61.58 billion after the launch of Make in India program. And for the second consecutive year, India appears in the top 10 of FDI Confidence Index standing at the 8th position as against 9th last year.  As per US traders, India is moving forward to become a major destination for FDI. 

India, under Modi, has emerged as among the favorite destinations for foreign investors. And this is much to do with the increased young skilled workforce, surpassing China and constant deregulation and amendments taken up by Prime Minister Narendra Modi.

Special Initiatives

Let us look at some of the important schemes launched by the Modi Government during last three years

Start-up and Stand-up India

  • The recently modified definition of ‘start-up’, under the new ‘Start-up and Stand-up India’ initiative aims to support businesses that are seven years old.

  • This will make businesses eligible for government-sponsored funding, tax, and other benefits. 

  • Earlier, start-ups active for maximum five years were selected for the scheme.

  • With the implementation of GST effective 1st July 2017 the government has relaxed norms to provide tax benefits to start-ups for roping in the benefit to create more jobs.

  • Business entities who wish to be a part of this program need to be working towards innovation, development or improvement of products or processes or services with a high potential of employment generation.

Pradhan Mantri Rojgar Protsahan Yojana

  • To incentivize employers for creating new employment, the Government has transferred the benefits to 1,954 establishments covering 75,848 beneficiaries under the scheme with an expenditure of Rs 6 crores.

  • Under this scheme, the Government of India will be paying the 8.33% EPS contribution of the employer for the new employment.

  • For the textile (apparel and made-up) sector, government additionally declared to pay 3.67% employees provident fund contribution of employers for new employees. 

    0.98 billion person-days of work was generated under this scheme by the Modi Government.

Udaan Scheme

  • Udaan program is a special initiative to address the needs of the educated unemployed in J&K. Udaan program is focused on the youth of Jammu & Kashmir (J&K) who are graduate, post graduate or three-year diploma engineers. 

  • It aims at providing corporate the exposure of the rich talent pool available in Jammu and Kashmir.

National Career Service Portal

  • Launched in the year 2015, over 3.87 crore candidates and 14.8 lakh establishments had registered on the National Career Service (NCS) portal which has mobilized over six lakh vacancies.
     
  • Around 540 jobs fair had been organized in 2016-17 alone. 

  • The portal aimed to bring on board around 20 million job seekers already registered with employment exchanges across India. 

  • The plan was to post all job vacancies available in central government ministries and departments and state-run enterprises.  

  • This game-changing initiative could have taken a far better shape had this been implemented more effectively.

The challenges

Underemployment vs unemployment

More worryingly, it is not just joblessness but “underemployment” that needs to be addressed currently. There’s a rise of a serious problem which is - “a job that needs to be done by one person is often performed by two or more workers”. Such disguised unemployment related to over-qualification, overstaffing or involuntary part-time work is a typical feature of a developing country where the unemployment figures do not show a higher number as most workers are involved into subsistence work or occasional jobs. 

Niti Aayog stressed on the need for creating high-productivity and high-wage jobs. Apparently, there seems to be a clear shift towards informal and low-paid employment avenues. And growth is actually not resulting in formal employment.

Stumbling Skill India

Pradhan Mantri Kaushal Vikas Yojana (PMKVY) aims to create skilled manpower at grass-root level by providing them vocational, technical and skill development education. As per Arun Jaitley this ambitious program, launched under National Skill Development Mission, was aimed to impart skill training to 24 lakh youth over the next year and trained candidates would be awarded incentives.  

Unfortunately, after a year it has been found by a government committee that PMKVY had failed to achieve its key objectives. With an investment of Rs 1,500 crore in skilling over 18 lakh people, this stumbled to achieve the key objectives of higher rates of job placement. 

The Skill India campaign compromised in the quality of training, assessment, and certification while monetarily benefiting a great number of training institutes. Out of 18.03 lakh persons trained under PMKVY in 2015-16, only 12.4% persons were placed. Moreover, the NSDC hasn’t been able to verify the mandatory Aadhaar number of more than 570,000 students a year after the PMKVY-1 ended. As experts say, this is an indication of a large number of non-existent candidates or multiple enrolments of a single candidate to inflate the total number.

Way ahead

Tapping global markets for Make in India 

The Make in India initiative has showcased India as a potential manufacturing hub in the eyes of the world. With around 170 global and Indian manufacturers committing investments over $90 billion, this has huge potential for job creation. As per our Prime Minister, “Even a 20 to 25 percent reduction in imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India.” 

The ‘Make in India’ campaign needs to be followed by manufacturing services for global markets. India’s service industry has powered its global rise similar to what electronics and automobiles have done for China and Japan respectively. This slowing demand for workforce in services industry coupled with an estimated 12 million new job seekers each year actually presents an ideal opportunity to diversify India’s economic portfolio through “Manufacturing” new markets. 

Reforming Existing Initiatives

In a calculated move to create employment opportunities, the government needs to reform their existing schemes and initiatives with a blend of good governance and stringent performance measurement mechanisms. The youngest population in the world is currently housed in India and the whole ecosystem is in place. In fact, with a competitive advantage over the aging workforce of China, many global large-scale firms in labour-intensive sectors currently manufacturing in that country are looking for lower-wage locations. India would be a natural home for these firms. 

The National Policy for Skill Development & Entrepreneurship 2015 has identified skills gap of 109.73 million in 24 key sectors. Such numbers cannot be achieved without addressing the BoP 55 million from rural India. This presents an unprecedented opportunity for India to train its BoP youth population and place them in jobs across the world and realize its demographic dividend.

The major decline in the unemployment rates is primarily due to the government’s efforts in providing new employment opportunities in rural areas. The government needs to re-look at other quick factors which have the potential to generate employment sooner in urban areas too.

Connecting the dots

The Sector Skill Councils (SSCs) and the NSDC (set up with the private partnership) were created with the idea that industry will have to partner and train the workforce it requires. Though there has been some momentum, not as much as required. The Ministry has sorted out the differences in the policies at the Centre and the State level. Gradually, the states too are taking a plunge into this.

The current scenario calls for a shake-up and consolidation of all kinds of initiatives taken up by the current government. Effective Implementation, skillful regulatory oversight, constant performance reviews, good governance and a stringent monitoring mechanism needs to be strategized in order to create an accountable delivery mechanism. It’s all about creating an efficient robust employment environment at the right time and in the right way.

References

India's unemployment rate sees sharp decline: Report
FDI inflows into India jump 18% to a record $46.4 bn in 2016 despite global fall
Has Modi government really been successful in creating jobs

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Topics: C-Suite, Recruitment, Skilling

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