In an indication of poor economic growth taking its toll on the job market, an estimated 12 million people may be forced to look for low-quality, low productivity rural or agriculture jobs over seven years, a reversal of old trend of migration from farm to non-farm employment opportunities, pointed out a report of CRISIL Research.
Job generation in the non-farm sector will slow down sharply in the coming years. Employment outside agriculture is expected to increase by only 38 million between 2011-12 and 2018-19 compared with 52 million between 2004-05 and 2011-12. Due to insufficient employment creation in industry and services sectors, more workers will become locked in the least productive and low-wage agricultural sector or remain unemployed. An estimated 12 million people will join the farm workforce by 2018-19, compared with a decline of 37 million in agriculture employment between 2004-05 and 2011-12.
The report attributed the declining job trend in non-farm sector not just to slowing GDP growth but also to less labour-intensive services segment that is increasingly driving GDP growth as well as the inability of labour-intensive sectors such as manufacturing to absorb people on account of rising automation and complicated labour laws.
“We expect the Indian economy to expand at slower pace of six per cent per year in FY 2013-19 from 8.5 per cent in FY 2005-12. Further, GDP growth is driven increasingly by less labour-intensive services such as financial, real estate and business services (including IT-ITES). For eg, in FY 2012, these services, with nearly 19 per cent share in GDP, employed only 3 out of 100 workers in the economy,” said Dharmakirti Joshi, chief economist, CRISIL.
Mukesh Agarwal, president, CRISIL Research stated that apart from GDP growth, India needs to raise the demand for labour, especially in the manufacturing sector, by simplifying labour laws and debottlenecking labour-intensive industries such as textiles, gems and jewellery and leather.
“Policymakers should also focus on expanding the health, education, construction sectors. This will not only raise India’s growth potential, but also generate a significant number of jobs,’’ he said adding, “it will also be critical to ramp up the supply of skilled workforce as majority of graduating engineers are not employable due to lack of technical & soft skills.
Large supply of youth was seen as a major contributory to country’s brightening prospects – the so-called demographic dividend. However, with insufficient jobs, this can turn into a demographic liability.