The Economic Survey has claimed that India is not creating enough productive jobs.
The country had the dubious distinction of having some of the most comprehensive labour laws in the world, even while having one of the largest fractions of the working population unprotected.
The Survey said not only do informal workers had lower productivity and earn less, but they were also more vulnerable to violations of basic workers’ rights such as reasonable working conditions and safety at work. The survey felt “it may be the stringent protection that is afforded by the existing regulations that is responsible for both the paucity of good jobs as well as inadequate protection that most workers have.”
In India, reforms were typically implemented only after some sort of political consensus was reached on them. “It is, therefore, imperative that consensus building on labour market reforms should start soon.”
The country needed many more firms in the formal sector, especially firms that continue growing and creating productive jobs. It might take time to build political consensus for fundamental reforms. “In the meantime, States could be allowed more flexibility to experiment without coming into conflict with Central statues. As best practices evolve, success in job growth would resolve theoretical debates more easily than thousand papers. “If indeed rigid labour laws are determined to be the key constraining factor in the creation of productive jobs, win-win reforms are easily available,” it said.
India should create good quality jobs in manufacturing and services sectors. The future holds promise for India if it seized the demographic dividend, with nearly half of the additions to the labour force between 2011 and 2030 expected in the 30-49 age group.
“Because good jobs are both the pathway to growth as well as the best form of inclusion, India has to think of ways of enabling their creation,” it said.
“India is creating jobs in industry but mainly in low productivity construction and not enough formal jobs in manufacturing, which typically are higher productivity. The high productivity service sector is also not creating enough job,” it said.