The Hindu : WHITHER EMPLOYMENT?

Online edition of India's National Newspaper
Saturday, Feb 28, 2004

Opinion

Opinion - Editorials

WHITHER EMPLOYMENT?

THERE IS MUCH to cheer about how the Indian economy is doing, but when it comes to employment generation there is more cause for concern than celebration. There is no indication that the current acceleration in economic growth is leading to a more rapid creation of new opportunities for work in agriculture, industry or services. The Government puts out statistics to claim that the rate of job creation has doubled since the late 1990s, and that more than 80 lakh employment opportunities have been created annually between 1999-2000 and the second half of 2002. These, however, are not credible statistics. Economists have pointed out that these data also reveal, unbelievably, that the working population among rural youth has shrunk during the same period and that the number of women workers has declined. There certainly are a few sectors, notably computer software and business process outsourcing, where companies are going on a major hiring spree. But this is essentially a phenomenon concentrated in less than a dozen cities. While the Information Technology boom has made a significant difference to the urban educated youth, the annual intake here, according to the latest estimate, is at best 1.5 lakhs. This is just a drop in the ocean of nearly one crore new entrants into the workforce every year.

The larger employment challenge is the creation of sufficient demand for labour in rural India. Nearly three-fourths of the population still lives in villages; roughly the same proportion of the labour force looks for employment here. Rural workers remain largely dependent on agriculture for their livelihood. An unfortunate development in the 1990s was a gradual slowing down of the shift in rural employment towards non-agricultural activities. There has been no sign of this diversification acquiring fresh momentum in recent years. The result has been a continuing dependence on the farm sector, whose performance in recent years has not contributed to an expansion of the opportunities for employment in rural India. For a different set of reasons, the scenario is not very different in urban India. Jobs in the organised sector, restricted to industry and services and located in towns and cities, account for merely 10 per cent of total employment. The opportunities for such jobs are actually narrowing in at least two areas. Public sector employment is contracting and not expanding. Equally worrying for the skilled and semi-skilled entrants to the labour force is the fact that a large number of companies are not planning additional recruitment.

The Federation of Indian Chambers of Commerce and Industry has found that only a fifth of the 504 manufacturing companies that were surveyed earlier this year planned to increase their staff strength over the next six months. The desire to control costs in all areas is behind this reluctance to employ more workers even during an economic boom. All this leaves the service sector as the only major avenue of urban employment. A majority of working men and women in cities already hold jobs in services. These comprise positions in organised trade, hotels, financial institutions and the relatively new IT sector. A huge number are self-employed or work as casual hands in the small-scale service establishments. The latter is by far the larger constituent of the service sector. Today it is employment growth in a variety of formal and informal service organisations that is potentially the most dynamic. However, while services have been consistently clocking annual growth rates of seven per cent, they have not been able to offer a similar pace of expansion in employment.

Printer friendly page
Send this article to Friends by E-Mail

Opinion

News Update

Stories in this Section

WHITHER EMPLOYMENT?

THE NADER FACTOR

Good nukes, bad nukes

Putin tightens his grip

Mayawati's comments

Tackling indiscipline