Given the declining rate of job creation, the Government must look at the service sector for employment opportunities
The labour Bureau’s quarterly survey of employment trends which coveres textiles, leather, metals, autos, gems and jewellery, transport, information technology/business process outsourcing and handlooms and power looms, in its report for July-September 2015 quarter, found that 1,34,000 jobs were created in these sectors. But the average for the last eight quarters was just over one lakh jobs per quarter (2013-2015).
This is lower than the 1.5 lakh jobs created in the previous eight quarters (2011-2013), and really worse compared to the eight-quarter average before that (nearly three lakh jobs every quarter in 2009-2011).
A long-term snapshot, based on National Sample Survey (NSS) data shows the same trend. An HDFC bank report also indicates that India’s employment elasticity, which measures growth in jobs compared to every percentage point rise in gross domestic product (GDP), is heading south.
All these reports indicate that the rate of job creation in India is declining over time. The Union Government has, therefore, started for additional employment generation, selectively targeting employment intensive sectors, starting with textiles, where a unit of investment in the clothing sector generates 12 times as many jobs as the automobile sector, and 30 times as that of steel. So, this appears to be a good beginning.
However, as per the Order Books, Inventories and Capacity Utilisation Survey, carried out by the Reserve Bank of India (RBI), for the period between October 2015 to December 2015, the capacity utilisation of 1,058 manufacturing companies which responded to the survey stood at 72.5 per cent.
With more than one-fourth capacity lying idle, we really cannot expect any additional employment in these manufacturing units. Further, the current trend is towards automation and this is irreversible unless and until free movement of labour is possible. However, the impact of automation is much wider in the manufacturing sector than in the service sector. In view of all the aforesaid, the Government must next look at service sector for additional job creation.
The country’s manufacturing sector generates just 16 per cent of India’s GDP, much less than the 57 per cent that is genetrated from services. Estimates based on National Accounts Statistics data indicate that the service sector has clocked an average annual compound growth rate of 8.7 per cent per annum between 1999-2000 and 2009-2010, as against 7.7 per cent achieved by the manufacturing sector during the same period.
India has the second fastest growing services sector with its compound annual growth rate at nine per cent, just below China’s 10.9 per cent, during the last 11-year period from 2001 to 2012, the Economic Survey for 2013-2014 said. Within the service sector, group transport, storage and communications has grown the fastest at 11.8 per cent, followed by trade and hotels at 8.5 per cent and other business services at 7.9 per cent.
Also, the three services taken together accounted for more than 56 per cent of the total India jobs. In fact, urban manufacturing and services together accounted for 36 per cent of the absolute additions to total employment.
In West Bengal at a compound annual growth rate of 15.2 per cent, the tertiary sector has been the fastest growing among the three sectors during the period 2004-2005 to 2009-2010. The growth has been driven by trade, hotels, real estate, finance, insurance, transport, communications and other services.
The present Governments, both in West Bengal and at the Centre, are pushing tourism, health care, hospitality, road and transport, education and housing. All these are job-intensive particularly for the unskilled and semi-skilled workers with some basic training.
Further, the Government’s facilitation of start-ups is expected to lead to self employment. However, entrepreneurship is a contagious behaviour. People who know start-up founders are more likely to found start-ups.
What’s more, people who live in the more enterprising and richer parts of the country are more likely to know entrepreneurs overall than in other areas of the country. That is why continuous mobility assumes importance.
Finally, the Government’s promotion of digitisation will make networks wider and move faster, know more about market and react quicker to market demands and thereby increasing business opportunities and correspondingly additional job creation.