The Jobs Precipice

India Today - - UPFRONT - By M.G. Arun

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.


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