Employment Generation: Is this eluding India inspite of high growth? Or is growth a myth?

Last Updated: Wed, Mar 21, 2018 16:58 hrs
Man holds a leaflet at a military veterans' job fair in Carson

Employment generation in India has been on a low-key to average growth as seen over the last two years despite a stable and growing economy. 

Conversion of unorganized labour into the organized sector has been a key driver in the employment numbers growing over the last 5 years. Gig economy is here to stay and has been largely favored by the millennial workforce.

However, challenges with respect to employment growth in India can be classified as follows:

1. The belief that ‘Make in India’ can generate a lot of employment is not turning out to be a very realistic scenario. The country right now is unable to compete in all aspects of cost with China, which is currently the epi-center of manufacturing, be it in labor, material or capital and thereby the ease of doing business. Therefore, merely an assumption that manufacturing would move to India owing to its large and eager workforce would not sell. 

2. Another major problem plaguing Indian Industry has been employability of manpower at various levels. This is further compounded by recent initiatives of the government in rising labor costs viz, minimum wages, bonus, provident fund & employee state insurance etc. 

While the intent is to drive these as employment friendly measures, they have not been able to achieve the desired results of growth in employment numbers. On the contrary it has been pushing employers to keep least bench strength and look for just in time resources for project hires.  Gig economy has gained significantly on this interest of just in time resources and is likely to be a certain future prospect for job seekers at entry level.

 What should be done to create more jobs?

India has been a great success in services industry, therefore, services must be given better opportunity for growth rather than thinking that manufacturing could be a better prospect for driving employment numbers.

Agriculture has been the back bone of rural India and plays the role of a large employer without clear statistics. Conversion of this sector workforce and creating an ec system around that would not just create jobs but prevent migration of labor to cities.

Further, government spend in key areas like Public Infrastructure, Power, Telecommunications, Aviation and Railways etc. would drive employment generation. India is way behind in public utilities and improvement in that area not just creates opportunities for industry but helps in overall development of every region.

Privatisation or Public-Private partnerships in any of such areas would necessarily encourage participation of investments from global industry leaders particularly when India is expected to see a steady and growing GDP rates hovering 7-8% which is above several leading economies during the next decade.

❖ Is automation and artificial intelligence taking up all jobs?

This is not the first time automation is taking jobs away, when the software service industry boomed and people started depending on automation as a key area for several administrative tasks that did impact overall employment. While there would be certain opportunities for employment generation, even in the fields in which automation is adopted, a corresponding reduction of manual task driven jobs is a certainty. However, it is a hype that automation would take away all jobs and is a hindrance to growth.

Automation would redefine some of the job roles and not eliminate all, it would more be a hybrid model of adoption of automation with suitable manpower leading towards cost / scale / performance efficiencies. Automation will be an ongoing journey and new technology adoption would be a continuous affair and not a onetime threat to mankind. We must recall that automation has raised earning potential till now and that would continue to be a trend. While it has the ability to extinguish some jobs it would add that many higher paying jobs to the overall employment eco system. 

 Employment vs. Unemployment ratio in 10 years down the line.

Certainly all the low rate jobs and the entry level jobs are the ones which are likely to be affected in this kind of scenario. We did not see the services sector as a major job creator 10 years before, but we do see it as a major job creator today.

That is where the government should facilitate by identifying the right area and make sure to take initiatives in developing those areas. As long as they do that, there should not be any depression in the labor market generally which affects India in general and that should certainly not be impacting everybody in India.

Historically we have proved our population as our strength and governance must keep this in mid while formulating policies and not ape western practices blindly.

 This opinion piece is authored by Subramanyam S, Founder President and CEO of Ascent. He is a Corporate Lawyer and a Fellow member of the Institute of Company Secretaries of India. 

 He has had close to two decades of experience in Finance, Legal, Tax and Business Management, having worked in these areas in various corporates as a passionate professional before venturing to be an entrepreneur by setting up Ascent in the year 2002.