Open Forum

New Delhi, 26 March 2013

Employment Challenges

BEING PRODUCTIVE IMPERATIVE

By Dhurjati Mukherjee

Notwithstanding that the latest Economic Survey has been interpreted widely, a crucial aspect of India’s growth story needs more attention -- the question of creating good and productive jobs. This in the background that “A good job is the best form of inclusion”. Growth in employment in the services sector has been rather slow. The Survey also noted that while people need to be moved out of agriculture if per capita incomes in that sector are to increase, industry is largely creating “low productivity non-contractual jobs in the unorganized sector, offering low incomes, little protection and no benefits”.

Though the shift in population from agriculture to industry and services in cities – a process termed modern economic development – is underway it has still a long way to go. The share of agriculture in total employment shrank from 57 per cent to 53 per cent between 2004-05 and 2009-10 with 15 million workers migrating to towns and cities for work. In fact, manufacturing shed five million jobs while services employed only 3.5 million jobs during this period. The Survey rightly warned that the demographic dividend should not be allowed to become a ‘demographic curse’ with industry unable to provide jobs for 16.7 million job seekers by 2020.

Thus educated unemployment is on the rise. This indeed has been a major problem in the country as educational accomplishments have not kept pace with employment opportunities. According to a recent survey of Assocham, India’s slow GDP growth reaching below the six per cent mark resulted in new job opportunities slumping by nearly 21 per cent in 2012 compared to the year before and indications are that it may grow at a modest pace this year although better than many other countries.

The last year (2012) saw a total of around 6-7 lakh new jobs generated primarily in IT/ITeS, healthcare, hospitality and Fast Moving Consumer Goods (FMCG) sectors. Apart from these, the other sectors involved in the process of hiring were non- machinery manufacturing, media and entertainment.

Information technology generated 2.1 lakh jobs followed by the education sector which generated over 34,500 jobs. Insurance, banking, auto, financial services and manufacturing services saw 20,000-30,000 new job openings. Engineering, hospitality and IT hardware sectors generated around 20,000 new jobs, the survey indicated.

However, the good news is that prospects for the current year happen to be much better and most economists predict a revival in economic growth and employment opportunities. Even the 12th Plan has been optimistic on this count. Information technology services and pharma sectors are likely to drive hiring growth this year to fill middle and senior positions, as per a report of HeadHonchos.com. a job and career management portal.

The report titled: ‘Management Hiring: Perspective Report 2012’ indicates that IT or software services and pharmaceuticals or life sciences could potentially drive the hiring growth in 2013. Pharma has already emerged as a powerful employer, replacing sectors like telecom, which also saw significant hiring in the previous year.

The construction or the real estate industry, despite slower growth, continues to see hiring given the infrastructure thrust in the country, the report pointed out.

Infotech professionals continue to be in demand with IT emerging as the top functional area that companies are hiring for. In fact, IT professionals are being recruited not just directly for the IT or software sectors but also in a gamut of other industries while sales, business development and HR professionals too are highly sought after in the past year and this trend is likely to continue.

Foreign direct investment (FDI) in retail is also expected to provide a much needed boost to the real estate industry and 10 lakh new jobs are expected across various sectors, specially FMCG, retail IT, and health care, as per findings of another survey of MyhiringClub.com. Additionally banking sector could see a fair amount of recruitment activities, specially with Parliament giving a go-ahead for a new legislation that allows for opening of new banks by private players.

It is generally agreed that hiring activities are to increase by anything around 15 per cent this year compared to the year before. As per the survey of  MyhiringClub.com, FMCG would lead recruitment generating 1.76 lakh new jobs followed by health care (1.72 lakh), ITeS (1.69 lakh), hospitality (1.06 lakh) and retail (1.02 lakh).

Education, training and consultancy (over 84,000), banking and financial services (around 73,000), media and entertainment (67,000) and real estate (52,000) are also expected to create job opportunities. Besides manufacturing, pharma and power would hire new employees, the survey added. According to industry sources, companies would not hesitate to pay a salary hike of 10-15 per cent to performers but at the same time some will remain very objective and cost conscious due to the economic scenario.

Meanwhile, the recent Annual Industries Survey released by the Ministry of Statistics & Programme Implementation has shown that last year Tamil Nadu was the leading State in providing employment with 15.4 per cent share followed by Maharashtra at 13.4 per cent, Andhra Pradesh at 10.3 per cent and Gujarat at 10.1 per cent. In terms of emoluments or compensation to employees, basic metals units have the highest share at 11.2 per cent followed by machinery and equipment at 8.3 and motor vehicles and trailers at 8 per cent.

The significant aspect of most surveys reveal that educated candidates in Bangalore, Mumbai and Delhi have been most in demand followed by Chennai and Pune and this trend is most likely to continue this year. Also most of the opportunities are in small and medium enterprises.

The big policy challenge ahead is to address the questions posed by the Economic Survey. Thus creating more productive jobs is imperative if the farm to non farm accelerates and the share of agriculture in employment goes further down from 52 per cent to say 42-45 per cent in the coming years. But if fewer jobs are created outside agriculture, more people will be forced to stay on in this sector, increasing the pressure on land and lowering incomes.

Manufacturing and services must become the engine of employment growth. For this, the massive skill development programme in the Budget is a well thought step in the right direction. Labour law reform that encourages greater flexibility while providing a safety net for the unemployed is equally necessary. Will the Government heed?

(Copyright, India News and Feature Alliance)