TOPIC: GS PAPER-3 ; INDIAN ECONOMY
Jobless growth is defined as a phenomenon where the economy of a country grows but its unemployment rate remains stubbornly high. India has been witnessing this paradoxical pattern of economic growth where the economy has been on a sustained growth path. However, there has not been a commensurate increase in the level of job creation
Factors contributing to Jobless Growth in India:
- The slow growth of manufacturing sector is one of the main reasons for the jobless growth because we directly entered the tertiary sector (service) from the primary sector (agriculture) leaving the secondary sector (industry) behind
- Labour intensive manufacturing sector did not become the engine of growth in India. This is because most of the growth was led by the services sector which currently employs merely 30 percent of the population.
- Since the manufacturing sector was not developed, India remained an import oriented economy and the exports never flourished. This led to cheap capital goods from abroad flooding the Indian market
- Majority of the people were still employed in the agriculture sector which employs a total of almost 45 percent of the population with less than 18 percent contribution to the GDP
- The jobs which got created outside of the primary sector were in low wage and low productivity sectors such as trade, hotels and restaurants which contribute very less to the GDP
- Excess rigidity in labour markets and rigid labour regulations due to which employers are not able to create jobs
- Lack of infrastructure development is another impediment to the process of job creation as the infrastructure sector creates jobs due to its high employment generation potential
8. Flawed education system which does not equip an individual to be job ready. People do not have the requisite skills and knowledge to survive in this world–a world where the new age ideas of artificial intelligence and machine learning are doing the rounds.
The Pandemic is not the only reason for Ongoing Job Crisis-
1. When India’s growth was blooming in 2016-17, it earned the tag of the fastest-growing major economy in the world
2. Despite this growth, economists were worried about one anomaly — jobless growth
3. They warned that the rate of jobless growth could severely impact India’s economy which depends heavily on the middle class population, engaged primarily in salaried jobs and entrepreneurship
4. The pandemic and consequent lockdown laid bare the fragility of India’s formal job market, which has collapsed
5. Even after unlocking the economy, there has been no improvement in the salaried jobs space. The government has cited the unprecedented economic crisis behind the job situation in the country
How Can India Avoid Jobless Growth?
1. Jobs come from the Primary sector, Secondary sector and Tertiary sector industries. Primary sector jobs consist of main agriculture and a bit of mining in India. Core agriculture has already seen a significant reduction in jobs. That leaves Manufacturing and Services as the expected growth engine for job creation
2. India’s services sector holds enormous significance for the Indian economy; dynamic and endowed with a unique and distinct universe of its own. The services sector has emerged to contribute majorly to national and states’ incomes, job creation and contribution to the economy. This is unlike other developing economies where manufacturing plays a key role in job creation.
3. India’s policy-makers have to realise that the services and manufacturing sectors need to go together especially in the case of a large diversified economy like ours. Make in India cannot succeed without robust manufacturing activities accompanied by a healthy services sector. For instance, the growth of communication services might provide market demand and supply insights for manufacturing to regulate production and industrial inputs in the form of buses are imperative to a service sub-sector like transport services.
4. Make in India can be as much about services as it is about manufacturing. India’s services sector remained resilient even during the global financial crisis.
In sum, a new India is in the making in which services, along with manufacturing, will play a pivotal role in translating the 3D advantage of democracy, demography and demand into real growth and empowerment, through employment.