Economy Watch – Job creation is vital for a new India !!!

An inclusive India would be one where good jobs are available to all people everywhere.The Indian economy’s employment elasticity has been declining in the last few years.

Prime Minister declared his vision for a “New India” in his victory speech after sweeping the Uttar Pradesh elections. “The poor want a leg-up, not a handout,” he said. A few days earlier, a national newspaper summarized what its journalists had gathered from citizens at election rallies. It reported this on its front page in the plea of a Dalit woman. “Give my husband a job: I don’t want LPG,” she said.

Jobs and livelihoods are what people want. Considering the huge population of the young that India has—the largest in the world—India should also be generating more jobs than other countries. But the Indian economy is a laggard in job creation despite good GDP (gross domestic product) growth. India’s rate of job creation is only two-thirds of the global average. Moreover, the employment elasticity of the Indian economy—the numbers of jobs it creates with economic growth—has been declining in the last few years. Modi must pull the aeroplane out of a nose-dive to lead the country to a vision of an inclusive India, where good jobs are available to all people everywhere, including Dalit men and women in the backwaters of India’s heartland.

Two recent reports, both produced jointly by the Confederation of Indian Industry and Boston Consulting Group, have analysed the reasons for low job creation and suggested how more jobs can be generated.

One, “India: Growth And Jobs In The New Globalization”, looks at global forces that are creating unemployment and increasing inequality around the world. “Capitalization” of production systems, with increasing automation, is reducing jobs for workers, and producing more wealth for owners of capital than for workers in production systems. “Financializing” of economies, with even more money being made from purely financial assets, has turbo-charged the increase in inequalities in incomes and wealth around the world. The report also points out that “Industry 4.0” automation technologies, more flexible, and less dependent on labour, are enabling production systems to be localized within developed countries’ markets. Combined with the pressure on governments everywhere to generate more jobs within their own countries, production systems are likely to become more local and less globally interconnected than they have been in the past 20 years.

Each country must develop its own job-creation strategies with the participation of domestic stakeholders because, while technology is universal across countries, social and economic conditions vary. The other report, “Future Of Jobs In India, Enterprises And Livelihoods”, is focused on India, and was prepared with the participation of over 170 diverse organizations and persons. It takes a broad systems’ view of the process of job creation, including societal forces that will make technology adapt to societal needs.

Both reports recommend strategies for:

(1) strengthening clusters and networks of small enterprises which can create more widespread employment and with less capital investment than large factories;

(2) developing life-long learning systems that will enable people to learn new skills “just-in-time” when the content of their work changes, which it will often in future when new technologies are applied and new industries emerge;

(3) re-framing labour law reform from a paradigm of more flexibility to “hire and fire” to a paradigm of better social security systems, without which societies will not allow employers more freedom to shape contracts with those who work in their enterprises (which Uber, for example, is discovering in many countries); and

(4) providing easier access to finance for micro-enterprises. Both reports also highlight the Brahma face of technology as a creator of jobs, while recognizing its Shiva face of a destroyer of jobs at the same time.

A youthful country of 1.2 billion people, with the largest number of employment seekers in the world, must create more jobs in many sectors. It must pursue more growth in manufacturing and build infrastructure.

It must vigorously pursue other avenues too. India has a large growth opportunity in natural produce sectors—food, fruits, vegetables, dairy, poultry and fish.

Rural and urban economies support each other through natural produce supply chains. Natural produce enterprises can generate jobs around the country. India has enormous and diverse assets of natural beauty, heritage and culture, spread across all its states.

Therefore, another sector where India has huge, insufficiently tapped potential for widespread generation of livelihoods is tourism and hospitality. Some other sectors with large potential for more enterprises and sources of livelihoods around the country are healthcare, renewable energy, water and sanitation.

A vision of a “new India”, with widespread opportunities for “a leg-up” for all, requires a coordinated, “whole of government” approach to policy reforms which are explained in the second report. It highlights that job creation must become an overarching goal for government along with economic growth, which it has not been so far.

Plans at all levels of government—at the Centre, in the states, and in cities—must be directed towards creating ecosystems that generate better livelihoods and jobs, and progress must be measured accordingly.

Finally, since jobs emerge from a healthy jobs ecosystem and cannot be sprinkled into the economy from above, many stakeholder groups must participate in systematic processes at the Central, state and city levels for finding and implementing solutions together.