Job creation rate not in sync with GDP growth a concern for India

Dr Rajiv Lall pointed out that things had changed, and India could not ensure it was future-ready unless it made necessary changes in not just the planning process, but also in understanding, defining the issues involved, as also work on solutions which would ensure job creation to meet the growing number of job seekers.

Jamshyd Godrej, past president, CII and chairman & managing director, Godrej & Boyce Mfg Co Ltd, said, “The gap between numbers of jobs created and jobs required has widened despite strong GDP growth during the past few years. There is a need to recognise the situation; as regards the solution, we need more innovations and ideas to create more jobs.” 

Job creation is about the challenge for inclusive growth globally, said Arun Maira, former member, Planning Commission of India. Providing an overview on the issue, he said, “India is the country which faces the largest challenge in this regard.” Focusing only on the top line while evaluating statistics on GDP growth can be the wrong approach, if job creation does not keep pace with the same, he said, adding that there was a need for companies to place human resources as assets on their balance sheets, while stressing on the need for continuing learning as also re-skilling to ensure human resources remained relevant to job requirements.

Times are changing, globally as also within India, and a systems-thinking approach and scenario formulations used by strategists and policy makers were not able to provide answers that would ensure job creation was done as per required numbers.

“The real challenge lies in identifying the relevant drivers that will dramatically boost India’s job creation potential. Every year, 10-12 million young Indians join the labour force, 5 million people leave agriculture to join the non-agriculture sectors. There is a total demand of 17-20 million jobs per annum,” opined Aparna Bijapurkar, project leader, Boston Consulting Group.

The impact of globalisation on India’s job scenario was best explained by statistics on GDP growth vis-a-vis job creation, wherein India posted 6 to 7 per cent GDP growth, while not being able to create sufficient new jobs to match the GDP growth rate. “India needs 15 million new jobs every year, 7 million jobs are being created annually. From a time when manufacturing was perceived as providing jobs while agriculture was the sector perceived to be creating about half of the new jobs, things had changed. With the rise in new digital economy, the ideal new strategy would be one where GDP growth and job creation both, will be at similar levels. Ensuring a ‘future ready’ human resource would be the main challenge going ahead,” she said.

Detailing the changed circumstances, Dr Rajiv Lall, explained that bulk of India’s job creating businesses are in the informal sector - as per 2012 figures, the data suggested 92 per cent of enterprises that created jobs were from the informal sector, and the biggest stumbling block for these was lack of formal credit. The agriculture sector was reducing the number of new jobs being created, while sectors like construction and services had created new jobs. 

The emphasis on agro sector as a driver of growth for the Indian economy notwithstanding, new jobs created by the agriculture sector had declined over the past years. Rate of job creation in the private sector was higher than that in the public sector, Dr Rajiv Lall pointed out. “Globally, large scale job creation because of technology had reduced, while in India micro, small and medium scale enterprises have been creating more jobs – the scenario is changing, and we need to be prepared to make changes as would ensure that the declining employment elasticity of GDP growth is dealt with – and growth in job creation continues on a positive note,” he added.