BT Buzz: What the new govt can do to create more jobs
India, over the decades, has under-invested in healthcare, education, and skills development. All of this will come to bite the new government as it braces up to the challenge of finding millions of jobs every year.
- May 23, 2019,
- Updated May 23, 2019 9:14 AM IST
The new government at the centre faces a winner's curse when it comes to jobs - if the last five years were difficult, the next 10 would be equally challenging.
Growth creates fewer jobs than it used to. Azim Premji University's State of Working India report states that a 10 per cent rise in gross domestic product (GDP) now results in less than one per cent increase in employment. In the 1970s and 80s, when GDP growth was around three-four per cent, employment grew at two per cent an annum.
One of the reasons for this divergence is the mega trend of automation driven by newer technologies. This is the reason why any government will struggle to show good jobs numbers in either manufacturing or services. Companies are building smart factories that require one-fourth or less of the manpower needed even five years ago. The second mega trend is anti-globalisation, which could lead to lower exports growth support for Indian manufacturing and services companies. Complicating these two secular trends are a few historical neglects. India, over the decades, has under-invested in healthcare, education, and skills development. All of this will come to bite the new government as it braces up to the challenge of finding millions of jobs every year.
1. A new Industrial Policy that aligns trade policy to industrial goals, cluster development
2. Hike minimum wages in big cities so that labour-intensive industries are forced to relocate to smaller towns in states with high labour supply
3. Centre-state governments can create ready-to-use infrastructure for industries re-locating to smaller towns to make it capital-lite, and less risky
4. A National Urban Employment Guarantee Programme, on the lines of MGNREGA
5. Ease of business: Introduce a Unique Enterprise Number to replace over 25 current numbers that enterprises get from the government
The new government at the centre faces a winner's curse when it comes to jobs - if the last five years were difficult, the next 10 would be equally challenging.
Growth creates fewer jobs than it used to. Azim Premji University's State of Working India report states that a 10 per cent rise in gross domestic product (GDP) now results in less than one per cent increase in employment. In the 1970s and 80s, when GDP growth was around three-four per cent, employment grew at two per cent an annum.
One of the reasons for this divergence is the mega trend of automation driven by newer technologies. This is the reason why any government will struggle to show good jobs numbers in either manufacturing or services. Companies are building smart factories that require one-fourth or less of the manpower needed even five years ago. The second mega trend is anti-globalisation, which could lead to lower exports growth support for Indian manufacturing and services companies. Complicating these two secular trends are a few historical neglects. India, over the decades, has under-invested in healthcare, education, and skills development. All of this will come to bite the new government as it braces up to the challenge of finding millions of jobs every year.
1. A new Industrial Policy that aligns trade policy to industrial goals, cluster development
2. Hike minimum wages in big cities so that labour-intensive industries are forced to relocate to smaller towns in states with high labour supply
3. Centre-state governments can create ready-to-use infrastructure for industries re-locating to smaller towns to make it capital-lite, and less risky
4. A National Urban Employment Guarantee Programme, on the lines of MGNREGA
5. Ease of business: Introduce a Unique Enterprise Number to replace over 25 current numbers that enterprises get from the government