‘GDP growth is not creating enough jobs’

India’s employment growth is beginning to show signs of a slowdown even as official data showed a pick up in GDP growth, according to a study by Care Ratings.

Jobs growth slowed to near-zero during 2014-15 in a sample of 1,072 companies. These companies created only 12,760 jobs in 2014-15. In the previous year, they had added 188,371 jobs.

Employment growth in the sample slowed to 0.3%, the slowest in four years, an analysis of the annual reports of the companies surveyed in the sample by the ratings agency showed.

The number of jobs in manufacturing sector companies in the sample, despite the government’s ‘Make In India’ push, declined. Employment growth in the manufacturing companies plunged to (-) 5.2% in 2014-15 from 3.2% in 2013-14.

Manufacturing accounted for more than 40 per cent of the jobs, the highest share in employment, followed by banking (23.0 per cent) and IT (18.4 per cent). “This means that the future of job creation would largely be dependent on the growth in this sector and the low growth in the last 3 years is a cause for concern,” according to the study. In the current financial year, 2015-16 too, growth in the sector has ranged around 3 per cent.

The study on trends in employment in the last four years is based on employment numbers provided by companies in their balance sheets. It does not include the impact of outsourcing. One reason the study gives for job creation not showing on the books of companies is the possibility of more jobs getting outsourced—in which case it would be accounted for elsewhere in the suppliers’ registers. Jobs that were performed by employees such as security, administrative functions and back office, are increasingly being outsourced in many companies.

However, the findings of the latest quarterly survey by the Labour Bureau in the Ministry of Labour and Employment do not support this argument.

The survey released last month shows a decline of 21,000 in contractual jobs during January-September 2015, against an increase of 1.20 lakh in the corresponding period of 2014.