The Jobs Precipice
Aclose study of the latest quarterly report on employment released by the Labour Bureau reveals some alarming data. At a time when the economy is growing at a little over 7 per cent, job creation has not kept pace, growing only 1.1 per cent in the nine-month period from April to December 2016 compared to a year ago. Only 2.3 lakh jobs were created during the period in eight key sectors, nowhere close to Prime Minister Narendra Modi’s much-talked-about promise of adding 10 million jobs a year, which has embarrassed the government when it celebrates three years of power at the Centre. These supposedly labour-intensive sectors include manufacturing, construction, trade, transport, accommodation and restaurants, IT-BPO, education and health. What makes it even more worrying is that a million aspirants are added to the Indian job market every month. Of the 2.3 lakh new jobs, manufacturing added 1 lakh, education and healthcare 70,000 and 30,000, respectively. Manufacturing may create the maximum number of jobs but not nearly enough as it has been going through a slowdown. This is because private players are loath to invest in projects, state-owned banks have almost frozen their exposure to critical sectors like infrastructure and power and the huge delays in setting up businesses. Private investment growth has been
falling since 2012, and was in negative territory for much of 2016. The proportion of stalled private sector projects rose to a 13-year high of 20.2 per cent in the March 2017 quarter, a Centre for Monitoring Indian Economy (CMIE) report said in April. Manufacturing accounted for 28 per cent of these stalled projects. The response to the government’s Make in India campaign has been tepid so far in terms of actual investment, except for a few Chinese mobile handset makers (Xiaomi, LeEco etc.) and an automotive firm (Kia Motors).
Adding to the woes in manufacturing is how traditional jobs are being rendered obsolete with the introduction of new digital systems and technologies—the internet of things, cloud computing and artificial intelligence, among others. Coupled with a squeeze in the services sector, they are
threatening jobs in the IT sector too, with many companies planning to lay off thousands. No wonder, then, that the IT/BPO sector added just 20,000 jobs in April-December 2016. “Apart from technology, muted growth prospects and the fear of regulations and imminent taxes on outsourcing/ offshoring have led to IT firms tightening belts,” says Arup Roy, research director at Gartner India.
Meanwhile, the construction sector has been among the worst hit, with job creation moving into the negative zone. Demonetisation, which hit the real estate sector hard, could have contributed to this fall, just as it affected other sectors. As many as 1.52 lakh casual workers lost their jobs in the three months to December 2016, the Labour Bureau report says. The failure to create jobs could well prove to be the Achilles heel of the Modi government.