Article: Concern over growth sans jobs

Strategic HR

Concern over growth sans jobs

While the Indian economy is growing steadily, employment statistics reveal that job creation has not kept pace.
Concern over growth sans jobs

Job creation is a gradual process which includes right economic setting, capital inflows, capital allocation, skilling and most importantly, the right policy. However, with the growing economic nightmare that is reminiscent of an era gone by, has been a tortuous process where market forces have had to shrink. While there are differences on whether the method of collecting employment statistics accurately captures the full measure of employment in India, what cannot be disputed is the disturbing trends in employment based on the available data.

With the grueling situation of jobs in India, President Pranab Mukherjee has expressed concern over dip in employment generation inspite of the steady rise in the country’s economy.

 'Mere statistical enhancement of the gross domestic product (GDP) is not acceptable unless there is growth in “jobs and prosperity”.

There is no solid growth in employment generation in recent years. Adding more to the arduous situation, he said, 

'Last year, employment growth was least in (the) last seven years. We cannot have jobless growth. Unless we have growth in jobs (and) prosperity, mere statistical enhancement of the GDP is not satisfactory.”

Addressing an event at St Stephen’s College, New Delhi, Mukherjee had some dismal and alarming facts to share.

'According to Labour Bureau data, employment generation fell down to 1.35 lakh in 2015 from 4.21 lakh in 2014. The employment figure was pegged at 4.19 lakh for 2013".

The Bureau also noted that the October-December period of the last year was the worst fourth quarter in the last seven calendar years in terms of employment generation. They data was a compilation focusing selected sectors, including textiles, automobiles, gems and jewellery, transport and Information Technology/Business Process Outsourcing (BPO)

Looking back at 2013, People Matters spoke to policy experts, industry leaders and recruitment bodies to explore what lies beneath this problem and came out with some interesting facts in its Cover story.

To compensate for this period (2005-10) of jobless growth, the Indian economy needs to create 150 million jobs between 2010 and 2020 to assimilate new entrants into the workforce and people looking to move out of self-employment. 

'In the period 2013-14, growth has taken a nosedive since 2011 and there is no evidence to show that the economy is moving away from jobless growth. 

The economic survey 2012-13 prepared by the country's chief economist Raghuram Rajan also notes that India is creating jobs mainly in low productivity construction and not formal jobs in manufacturing, which typically yields higher productivity. The urgent need of the day is to improve exports amidst a more inclusive employment pattern and not surprisingly, both are linked to the growth of labour-intensive manufacturing. 

The growing Indian economy has long provided a fertile setting for movement of people from agriculture into manufacturing and construction. A combination of rising productivity in an extremely backward agricultural sector and rising aspirations will naturally push people from agriculture into industry. While this exodus is visible in the drop of 14 million agricultural jobs between 2005 and 2010, the troublesome reality has been that India's manufacturing sector too has lost 5 million jobs in this period.

While India's manufacturing sector has grown by 9.5 per cent per annum in the 2005-2010 period, employment intensity of manufacturing (measured as number of people employed per Rs. 1,00,000 in output) has fallen from 1.2 to 0.73. This is the backdrop for possibly one of the most glaring shortcomings of the India growth story - the virtual absence of large-scale labour intensive manufacturing.

'The construction sector created 18 million jobs between 2005 and 2010, services contributed 3.5 million jobs, while the manufacturing sector actually lost 5 million jobs."

In the absence of labour intensive manufacturing, the overarching macro employment trend over 2005-2010 has been the exodus of workers from agriculture into construction. The growth in construction employment has been guided by an increase in infrastructure investment during the 11th Five Year Plan (2007-12) from 4 per cent of GDP to 7.5 per cent of GDP in 2012.

The need of the hour is to have a structured assemblage of labour laws, infrastructure, land accessibility, SME incentivisation, skilling, education reform in order to escalate overall growth in India.

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Topics: Strategic HR, Talent Acquisition

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