INTRODUCTION #
Achieving a high rate of growth of GDP has been the focus of the erstwhile Indian planning commission along with substantial employment generation for creating adequate work opportunities for the rising labour force. Prevalence of unem- ployment leads to poverty entailed with numerous social problems. In the background of this, providing employment to the labour force has been an area of central concern in all Five Year Plans which have been according due priority to achieve this goal. Initially the generation of employment was viewed as a part of the process of development and not as a goal to be pursued independently of economic growth.
The general impression was that employment growth would trickle down resulting in improvement of employment situation. Though employment is treated as a corollary to growth, the trends of the last two decades shows that growth has not yielded desired results in the area of employment generation. The rate of growth of employment was found to be slower than the rate of growth of economy. In the light of that, successive plans, strategies, policies and programmes were designed and redesigned to bring about a focus on employment generation as a specific objective.
The employment situation in the Indian context has not been quite impressive particularly keeping in view the unskilled and semi-skilled work force.
During 1950-70, Indian economy grew by 3.5 per cent against the projected growth of 5 per cent .per annum. Employment grew by 2 per cent per annum while the growth in labor force was 2.5 per cent, thus, resulting in overall increase in unemploy- ment. During 1970s, 1980s, and 1990s, a number of employment generation and poverty alleviation schemes were implemented with thrusts on gainful employment to the people in the labour force on one hand and improvement in level of income on the other. Some such schemes like Integrated Rural Development Programme, National Rural Employ- ment Programme and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) etc. being presently pursued emerged as a vehicle to provide wage employment through public works programme.
It also saw emergence of schemes to promote self employment and entrepreneurship through provision of assets, skills and other support to the unemployed and the poor. These steps led to steady expansion of employment levels. However, the rate of growth of employment lagged behind the rate of growth of labour force. A notable rising trend has been observed in unemployment among educated youth. Another area of major concern has been the quality of employment and level of productivity. These developments are indicative of the fact that growth alone cannot generate sustainable and quality employment opportunities.
EMPLOYMENT CHALLENGES FOR THE TWELFTH FIVE YEAR PLAN #
Need for correct estimates/projection of employ- ment and unemployment at frequent intervals correct estimation of employment and unemployment is essential for proper planning and policy recommen- dation for a Five Year Plan. Normally there are three approaches (UPSS, CWS and CDS) used in estimating employment/unemployment. Decision on the proper approach to be followed would help in correct estimation and planning.
The current employment/ unemployment situa- tion should form the basis for projections for the 12th Plan period. At the same time the estimates of employment/ unemployment should be available at frequent intervals for more effective policy inter- ventions.
Expand employment opportunities in the formal sector, including the Services Sector. One major challenge to be addressed for the 12th Plan period is how to increase the share of formal sector employ- ment opportunities. Movements and transformation of employment from informal sector to formal sector needs to be analyzed. Incentives have to be given for expanding organized sector employment.
Employment interventions already initiated by the Government need to be evaluated. Service sectors like insurance, finance and banking, tour- ism are going to major generator of employment opportunities. Sector specific strategies need to be adopted generate employment opportunities. Rigidity in labour laws is often quoted as a major constraint in augmenting organized sector employment. How- ever, the focus should be to promote labour market flexibility without compromising fairness to labour.
Expand employment opportunities especially in the manufacturing sector. When any economy grows, over a period of time the contribution of agri- culture sector to GDP should decline while that of manufacturing and services sectors should increase. Concomitant with this the share of employment should also increase in manufacturing and services sector.
Unfortunately, for the Indian economy although contribution to GDP from the agriculture has declined sharply (less than 20%) but the number of people
employed in agriculture continues to be very high. Although some expansion in employment has taken place in the manufacturing and non-manufacturing sectors, however, a large part of the same falls under informal employment. It is necessary to have urban and rural labour market planning for shifting surplus work force from rural areas.
However, option for geographic targeting is lim- ited considering the endowment of different States. Manufacturing sector, however, have limits in gener- ating new employment as more and more industries adopt capital intensive technologies. Global trends in employment indicate that employment in service sector has increased. Hence, strategies in India must lay emphasis on the service sector for generating more employment.
Addressing the Issue of Productivity, both in the formal and informal sectors increasing employment as well as productivity is equally important. Produc- tivity is a relationship between output and inputs. Productivity can be measured either in terms of all factors of production combined (total factor produc- tivity) or in terms of labour productivity alone. In the long term, productivity is the main determinant of income growth. Productivity gains increase in real income in the economy which can be distributed through higher wages.
Strategy for employment generation must be to augment productive employment opportunities during the 12th Plan period both in the formal and informal sectors. Innovation would have to play a major role for augmenting productivity.
Address problems of specific categories – gender, educated, youth, minorities, SC/ST, differently abled people. NSS data shows that female employment has declined both in rural areas and urban areas in recent years. This is a major concern and needs to be addressed during the 12th Plan period.
Women workers are the most vulnerable to job losses in case of any global crisis. Unemployment among educated people is going to be a major issue during the 12th Plan period. India is one of the few countries which have the phenomenon of educated unemployment in large number. The major reason behind this is the dearth of vocational and technical education among youths. Similarly, the issue of
promoting employment opportunities for minorities, SC/ST and differently abled people assumes impor- tance. Employment needs and education provided needs to be matched.
Hence, the role of skill development programmes would occupy centre stage in any employment strategy for the 12th Plan period. This will help in harnessing the demographic dividend. Problems of the Working Poor Problems of the working poor needs to be highlighted as there is always the pos- sibility of this segment to relapse into distress and unemployment unless they are given due attention and protection.
EMPLOYMENT IN THE FACE RECURRENT ECONOMIC CRISES #
Issues of infrastructure, economies of scale and management needs to be addressed for meeting any subsequent global economic crisis. Any global crisis is bound to have some impact on the Indian economy as the level of international integration increases. Service sectors including IT, tourism, civil aviation and banking and real sector involving manufacturing exports are likely to be impacted. Downsizing in sectors like IT and finance would be common. Indian workers in sectors with high exposure to global markets including those employ- ing large number of women workers have faced job cuts during the last global crisis of 2008 – Civil Aviation, Textiles, Leather, Marine Products, Gems and Jewellery.
Employment and income should be the central focus of government’s stimulus package. Priority should be given to public spending programmes that have high multiplier effect on employment. However, scope for fiscal stimulus to deal with such crises would be limited given the high level of fiscal deficits at the Centre and in States. Hence, fiscal sustainability becomes a major challenge to be tackled through effective resource generation and expenditure measures.
REASONS FOR JOBLESS GROWTH #
In a jobless growth economy, unemployment remains stubbornly high even as the economy grows. India experienced such growth in post liberalization era, when the economy shifted from agrarian to
service sector in terms of contribution to GDP, but remained agrarian in terms of labour participation.
Reasons behind describing the nature of eco- nomic growth in India as jobless growth are:
- Service Sector led growth: In India, growth is attributed to service sector, whereby both employment and wages have seen a rise. But as figures say, the biggest employing sector in India is the Agriculture sector, employing more than 50% of the population but contrib- uting 15% to the GDP, whereas Service sector is the biggest contributor to the GDP (65%) but employs around 35%.
- Stagnant manufacturing sector: Manufac- turing sector contributes 16% to the GDP and employs around 13%. Further use of automa- tion and robotics has limited its employment potential. So, over the years, employment al- most remained stagnant.
- Disguised Unemployment in Agricultural sector: It employs more than 50% popula- tion, while contributing around 14% to GDP. It already has large scale disguised unem- ployment, so it has limited capacity to pro- vide new employment opportunities.
- Constrained Micro Small and Medium Enterprise sector: MSME sector has huge potential to provide jobs to semi-skilled and skilled persons. However, the sector is facing many constraints like inadequate finances, outdated technology, lack of training and ex- pertise etc. In such a case they are unable to provide gainful employment opportunities.
- Un-employability of work force: Recent surveys shows that the workforce entering the job market every year is mostly un-em- ployable. The mismatch between the course curriculum of colleges and the requirements of the employers, is one of the reasons con- tributing in this. Inadequate set of skills is an- other factor.
Recent policy initiatives like Skill India Ini- tiative, Digital India, Make in India, focuses on infrastructure growth, all showcase the seriousness of jobless growth India facing since last two dec- ades. All these initiatives have employment growth
as one of their objectives. 12th Five Year Plan also focuses on creating more than 50 million non-farm jobs during the plan period.
So, with India poised to become the fastest growing economy in the world, overtaking China, we need to take concerted efforts to create adequate employment opportunities for the workforce.
RECOMMENDATIONS #
The National Employment Policy (NEP), already drafted, may be finalized at the earliest.
Employment figures on an annual basis are a pre-requisite to enable the government to develop effective employment planning and initiate several short term supportive measures in response to growth fluctuations. However, the need for annual or frequent labour force surveys is more important for urban areas.
The best way of considering the set of working poor is to analyze the consumer expenditure data collected in the employment-unemployment surveys.
There is a major need to strengthen self-em- ployment and entrepreneurship programmes as it will go a long way in resolving educated and youth unemployment problem.
Creation of a portal for employment-unem- ployment data on a national basis to bridge the demand-supply gap is essential.
There is need for flexible labour laws without compromising fairness to labour.
The disconnection between industries and man- power should be addressed.
Employment needs and education provided need to match.
Labour market information cell should be estab- lished in each State.
A combination of more effective school educa- tion on the one hand, and better vocational education and training on the other with geographic targeting of districts where the marginalized groups (like SCs/ STs/ Muslims) are concentrated would be critical for their employability.
Backward regions/ backward States are often not getting benefits of employment schemes – hence,
special emphasis of policy is required for such regions/ States.
Several support services have to be extended to the informal sector workers in order to enhance their productivity and well-being levels.
The self-help group approach of supporting women’s work has been extremely successful in Andhra Pradesh and Kerala and needs to be repli- cated in other States/UTs.
Expand the scope and outreach of vocational education in secondary and higher secondary schools, reforming the government Industrial Train- ing Institutes (ITIs) and private Industrial Training Centres (ITCs), raising the standard of polytechnics and improving quality of both publicly and privately provided higher technical education. A second com- ponent of this reform is to rapidly formulate and implement the National Qualification Framework.
The Employment Exchanges may be upgraded, computerized and be used as Vocational Counseling Centres.
It must be realized that the employment guar- antee programmes are only a short-run respite and, therefore, from the long run point of view the growth itself has to be made more employment intensive.
Recommendations for the Agriculture Sector #
Non-crop activities like poultry, dairying, fisher- ies, horticulture, floriculture, animal husbandry have scope for generating more employment.
The draft NEP has suggested that in agriculture existing policy packages need to strengthened and new ones evolved to facilitate diversification or agricultural products and shift from on-firm to off- firm activities. Overwhelming majority of farmers in India consist of small and marginal farmers, for whom a strong package of support in respect of credit, inputs, technology and marketing should be devised to enable them to realize their productive potential and enhance their remuneration from employment.
Recommendations for the Manufacturing Sector #
A structural shift in the employment composi-
tion can be possible through rural industrialization
-agro-based industries and other light goods indus- tries have to be created in the rural areas to ensure rural diversification.
Government policy during the 12th Plan must focus on the four requirements viz. credit from for- mal banking sources, support for marketing efforts, design innovation and technology upgradation, for promotion of the traditional industries, using the cluster approach.
The small and medium sized enterprises have to grow sizably and attempts have to be made to make them economically viable. Ensuring credit for micro, small and medium enterprises (MSMEs) from banks and financial institutions will remain a major priority during the 12th Plan period.
The draft NEP mentions that a sub-sectoral approach to policy making is necessary to improve employment intensity of manufacturing. Labour intensive industries (textile products, leather prod- ucts, beverages, food products and wood products) needs to be given special policy support and incen- tives to grow faster. The micro and small enterprises needs to be provided strong technology and skill support through a package of extension services and training to suit their requirements.
The draft NEP further suggests that a special package of support should be developed for small, multi product clusters in backward areas particularly utilizing the forward and backward linkages that could be locally realized.
National Rural Livelihood Mission has a poten- tial roll in enhancing employment of women in non-farm sector.
The National Manufacturing Policy 2011 has identified the following sectors that will create large employment:
- Textiles and Garments
- Leather and Footwear
- Gems and Jewellery
- Food Processing Industries
- Handlooms and Handicrafts.
The MSME sector #
The base for the manufacturing sector—has
also been identified for employment and enterprise generation. The Approach Paper to the Twelfth Five Year Plan (2012-17) mentions that these sectors needs to be encouraged.
The Approach Paper to the Twelfth Five Year Plan (2012-17) mentions that unless manufacturing becomes an engine of growth, providing at least 100 million additional decent jobs, it will be difficult for India’s growth to be inclusive.
Recommendations for the Services Sector #
The IT sector and IT-related services have to grow so that they provide a major outlet to the skilled manpower of the country. Besides, they are expected to create secondary employment in which the semi-skilled and unskilled work force can be engaged.
Increase productive employment in employment generating services sector like hotels, IT, transport, financial institutions and construction sector.
The draft NEP has indicated certain sector specific policy for their faster growth and greater employment orientation. The sectors that can be eas- ily identified for special treatment from the employ- ment view point are agriculture, manufacturing, construction, retail trade, tourism and information and communication technologies (ICT).
The draft NEP mentions that although the construction sector has registered high employment growth and high employment elasticity, poor qual- ity of employment is a matter of serious concern. Implementation of various provisions of labour regulation, minimum wages, safety and welfare, need to be implemented. A special programme for development of skills to meet the requirements of changing technology in the construction sector needs to be developed.
The draft NEP further mentions that the trade sector has experienced one of the fastest growth in employment over the past decade; and is likely to sustain this growth in coming years. The quality of employment especially in retail trade needs improve- ment.
The draft NEP also states that tourism indus- try has grown rapidly and so has employment in the sector. Tourism projects that integrate local
socio-economic development, through forward and backward linkages, should be encouraged. Capacity for training tourism personnel at different levels needs to be vastly expanded.
The Approach Paper mentions that the potential of tourism to provide income opportunities must be seized too. Along with construction, it is one of the largest sectors of the service industry in India. It is capable of providing employment to a wide spectrum of job seekers from the unskilled to the specialized, even in the remote parts of the country.
Finally, compared to other modern sectors, a higher proportion of tourism benefits (jobs, petty trade opportunities) accrue to women.
The Approach Paper also mentions that con- struction sector provides direct/indirect employment
to about 35 million people and is expected to employ about 92 million persons by 2022. Hence, better managed processes are required for the develop- ment and deployment 37 of human resources for this industry.
Considering the demand for workforce for construction, the industry and government should further strengthen the mechanism for providing training to unskilled workers who constitute bulk of the workforce. Such efforts need to be further expanded in order to meet the workforce require- ment of the sector.
In order to provide a boost to the construction sector, rural irrigation programmes and major infra- structure building programmes both in the rural and urban areas have to be initiated in a significant way.
