Time to link jobs with Economic Expansion

As many as five million jobs were lost between 2004-05 and 2009-10, paradoxically during the time when India witnessed the highest and consistent eight per cent growth in its economy, throwing a big question whether growth should be linked to employment generation, an ASSOCHAM study has said. On the one hand, about 13 million youth are entering the labour force every year , on the other hand, the gap for the employment and growth got only widened during the period of study which noted  that over-emphasis on services and neglect of the manufacturing were mainly responsible for this “jobless growth” phenomenon.

The Indian economy  went through a period of “jobless growth” when five  million jobs were lost between 2004-05 and 2009-10 while the economy was growing at an impressive  rate of more than eight per cent annually. According to the Census India data, the number of people seeking jobs grew annually at 2.23 per cent between 2001 and 2011, but growth in actual employment during the same period was only 1.4 per cent , leaving a huge gap in the form of unemployment.

Paradoxical it may seem, India’s “demographic dividend” is also a “demographic cross “ as the new generation youth is  more demanding and aspirational. This large work force needs to be productively engaged to avoid socio-economic conflicts.  That such a combination is a recipe for enhanced social tensions and political unrest is well known and has been reinforced by recent experience across the world. For that reason alone, surely the government should sit up to take notice of its own large scale sample survey. The changing demographic patterns suggest that today’s youth is better educated, is probably more skilled than the previous generation and also is highly aspirational.

Experts argue that the growth of manufacturing will be the key for growth in income and employment for multiple reasons. For every job created in the manufacturing sector, three additional jobs are created in related activities. The other is that manufacturing in India is scalable and has higher labour absorption in comparison to services. In a services-driven economy, which contributed 67.3 per cent  (at constant price) to the GDP but employed only 27 per cent  of total working population in 2013-14, enough jobs will not be created to absorb the burgeoning workforce. In 2013-14, the manufacturing   contributed 15 per cent  to the GDP and employed about the same percentage of total workforce, demonstrating  that the sector   has a better labour absorption  means compared to services.Employment data indicates that India’s recent growth has been largely jobless; the government must adjust its policies and promote job creation.

By Dr. Asmi Raza



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