More and better jobs

India is a youthful nation with a median age of 27.6 years. Our working age population will increase from approximately 761 million to 869 million during 2011–2020. If more of our young people start working and earning, our economy will take off, and we will encash a ‘demographic dividend.’ But for that to become a reality, India needs to create large numbers of jobs for the 12.8 million youth who enter the work force every year. Recent data indicate that India’s ‘demographic dividend’ will probably last only one generation. Therefore it is imperative that we do not miss this crucial window of opportunity.

A recent report by McKinsey and Company indicates that India’s employment story is witnessing a transformation. Workers are moving from farm jobs to non-farm jobs such as construction and manufacturing. Between 2011 and 2015, the number of agricultural jobs declined by 26 million while the number of non-farm jobs increased by 33 million. That means a net addition of 7 million jobs in this time period.

An earlier report by the National Institute of Labour Economics Research and Development (NILERD, formerly Institute for Applied Manpower Research) indicated that between 2004-05 and 2011-12, 52 million non-farm jobs were created. In this time, 36.7 million people left agriculture. Net increase in jobs was 15.3 million.

Both the McKinsey and NILERD reports show that India’s job market is transforming. However, far more jobs need to be created to keep pace with changes in population and the labour force.

AIPC Position

  • AIPC will promote a two-pronged strategy for job creation in India. On the one hand, we need greater focus on investments in job creating sectors, be they related to farms, industries or services. On the other hand, we need to work hard and at a rapid pace to prepare our youth for 21 century jobs.

  • Public investment, particularly investment in infrastructure can create a huge number of jobs. But these investments can be increased significantly only if the government generates additional funds. Instead of wasting taxpayer funds on unproductive ventures, public investment in enabling infrastructure is needed.

  • To encourage private investment the government needs to create the right investment climate by clearing the policy hurdles and by providing the right incentives.

  • An important element to consider is the sector that attracts investments, because for the same amount of investments, different sectors create different number of jobs. So, naturally to create more jobs the government should focus on attracting new investments in the job intensive sectors.

  • We need to improve India’s ‘Ease of Doing Business’ ranking from the current 130. This won’t happen with slogans but with hard work and by streamlining the process for starting a business, getting various permits, easing access to credit, streamlining the tax enforcement system, and various other interventions.

  • There is a need for creating flexibilities in the labour market, especially in the export-oriented industry, given the cyclical nature of demand. At the same time, labour reforms should not mean leaving workers with no protections. Workers and professionals must benefit from progressive laws, even as businesses have the flexibility to adapt to changes in demand, technology or other factors.

  • AIPC will advocate for the creation of hundreds of new urban clusters around existing small and emerging cities and link them with public infrastructure facilities to scale existing economic activities.

  • Skill development must rank alongside secondary education, university education, total sanitation and universal health care in the priorities of the government.

  • Firms should be able to hire apprentices, a very effective way of providing “on-the-job training” to new employees.

  • Community colleges stand at the crossroads of higher education and the real world. These should be encouraged and allowed to grow as a way of creating more skilled workers.

  • AIPC will lobby for a review of the system of Industrial Training Institutes (ITIs) and ensure resources devoted to them are being used properly. This system requires an urgent renewal and it can only happen if we institute mechanisms of monitoring and evaluation to assess their functioning.