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Sluggish growth in employment

The need for a new emphasis on gainful employment for Indias workforce of 460 million that focuses on improved quality of work and the income derived from it. It emphasises for a structural shift from agriculture towards the non-farm sector.

Sluggish growth in employment

The sluggish growth in employment in the organised sector has been confirmed by data published in the recent Economic Survey. During March 2006 to March 2012 employment in the organised sector increased from 269.9 lakh to just 295.8 lakh. This marks a growth of 1.6 per cent per annum.

Public Sector continued to record a decline in employment, from 181.9 lakh to 176.1 lakh during this period. In the private sector employment expanded from 87.7 lakh to 119.4 lakh; the major growth came from the services sector of finance, insurance, real estate… - from 6.5 lakh to 19.1 lakh;  community, social and personal services recorded an increase from 18.8 lakh to 24.5 lakh; manufacturing sector recorded an increase from 45.5 lakh to 55.3 lakh.

 

Focus on quality of work and income

In a discussion paper on India’s Labour Market, the McKinsey Global Institute presented in June by Jonathan Woetzel, Anu Madgavkar and Shishir Gupta pointed to India’s labour market experiencing a structural change: “we see the need for a new emphasis on ‘gainful employment’ for India’s workforce of 460 million that focuses on improved quality of work and the income derived from it.”  The survey shows a 3 per cent decline in India’s overall labour force participation between 2011 and 2015. It emphasises a structural shift from agriculture towards the non-farm sector, particularly construction, trade and transport. Agriculture jobs shrank by 26 million while non-farm jobs rose by 33 million.

The paper points to three areas that point to more opportunities for gainful employment:

1. Increased public investment in infrastructure and ‘soft’ areas of health care and education create work opportunities for several million at wages that are 70 per cent higher than for average farm workers.

2. Rapid advances in automation technologies are affecting India’s information technology and business process outsourcing sectors. Still, industry estimates job opportunities would expand up to 2.5 to 3 million more workers by 2025.

3. In line with global trends, New work opportunities with better pay and links to organised value chains would arise in independent work and micro entrepreneurship aided by new digital eco systems. The paper estimates the rapidly growing sectors of cab-hailing platforms, e-commerce, and digital financial services have improved income opportunities for 18 to 22 million workers in the past three years.

The paper suggests stimulating the creation of gainful employment through targeted programmes and by further removing hurdles that block private investment and innovation: “business and policymakers can work together in areas such as labour-intensive tourism sector, unlocking the digital economy’s potential to create work opportunities and reskilling the work force.” 

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