States with backward labour market ecosystems will see much of India's demographic dividend. While the demographic dividend is a rise in the rate of economic growth due to a rising share of working age people in a population, labour market ecosystem comprises labour demand, labour supply and labour laws. For instance, between 2010 and 2020, the states of Uttar Pradesh, Bihar and Madhya Pradesh will account for 40 per cent of the increase in 15-59 year olds but only 10 per cent of the increase in income. During the same period, Maharashtra, Gujarat, Tamil Nadu and Andhra Pradesh will account for 45 per cent of the increase in gross domestic product (GDP) but less than 20 per cent of the addition to the total workforce.
These revelations were made by TeamLease Services and IIJT Education in India Labour Report 2009 titled 'The Geographic Mismatch & A Ranking of Indian States by their Labour Ecosystem'.
According to India Labour Report 2009, while high economic growth will create employment, its sustenance depends on the ability of people to benefit from these opportunities. This ability of India's people to take advantage is undermined by three mismatches—the skills mismatch, the sectoral mismatch, and the geographical mismatch. These mismatches need an emergency response because demographics only create a small window of opportunity.
"Our employment exchanges are dysfunctional; they gave about 200,000 jobs to the 4 crore people registered. The best performing employment exchanges were in Gujarat, Tamil Nadu, and Maharashtra but the most new registrations are in UP and West Bengal. The Delhi Government budget shows that it costs the government Rs 228,381 for a single placement. The employment exchange in Chitradurga in Karnataka has been unable to provide a single job in the last four years. Also, about 89 per cent of the 15-59 year olds have had no vocational training. The current training capacity is a fraction of the 12.8 million new entrants into the workforce every year.," the report adds.
The report also states that most employment opportunities will arise in sectors where people have little experience. The largest component of labour force growth is in rural areas but the most growth in employment is in areas that require greater human capital. Wage inflation projection till 2026 flag skill shortages; salesman, teachers, managerial/ executive, professional, electrical, finance, doctors, engineers, jurists, technicians, the report futher says.
"India’s geography of work is creating a tragedy because jobs are being created in different areas from where people who need them are. But demographics are not destiny and states can bend the curve with a radical overhaul of their education, employability and employment regime," says Manish Sabharwal, Chairman, TeamLease Services.
The India Labour Report 2009 has also ranked states on the basis of their labour ecosystem that covered performance related to education and training, infrastructure, governance and the legal/regulatory structure — areas that are mostly determined by state-level efforts. The aggregate labour ecosystem index shows that the topmost performers are Andhra Pradesh, Karnataka and Maharashtra — each has had significant improvements in its index values and ranks. The report finds that almost all the states have made significant improvement in the 2000s. However, Orissa has not shown any improvement in the post reform period, the study states.
