EMPLOYMENT GENERATION IN LABOUR INTENSIVE SECTORS –
ECONOMY
News: India
needs policies focussing on job-rich growth and equality: ILO chief Gilbert F.
Houngbo
What's in the news?
● Countries
like India are recovering from the
COVID-19 pandemic. As a G-20 country, India is very well-placed to move
forward. By focussing on job-rich growth and equality, India can move forward
further.
Key takeaways:
● More
than half of India's population (nearly 60%) falls within the working age group
(15-59 years) given the significance of employment needs in India.
● However,
the unemployment rate in India rose to
5.2% bringing out the need for creation of jobs in labour intensive sectors
to absorb the surplus labour force.
Problems in Indian jobs:
Despite being the fastest growing economy in the world, India has many challenges in the creation and availability of jobs at present.
1. Dominance of service sector:
● The
service sector contributes to nearly half of India's GDP, but employs only 24% of the working population.
Thus, the service sector is merely a capital intensive sector leading to rising
unemployment.
2. Informalization of economy:
● Agriculture,
the largest contributor to Indian employment was more informal and periodical.
Also, the rising informal sector jobs along with gig economy and congratulation affecting the job creation in India.
3. Failed transition:
● Unlike
developed nations, the Indian economy
directly transforms into a service economy from agriculture without
undergoing the dominant industrialized phase, leading to the present phase of
jobless growth in India.
4. Capital intensive industries:
● Since
LPG reforms, the capital-intensive
industries are rising at the cost of labor-intensive industries due to
multiple factors like modernization, technological upgradation, etc.
● Thus,
the phenomenon of missing middles (i.e. labor intensive light manufacturing
industries) in India, affecting its employment potential.
5. Stagnation of manufacturing output:
● India’s
manufacturing sector has languished at around 15% of its gross domestic product
(GDP).
● This
was further fueled by lack of investment
and innovation in the manufacturing sector causing lower potential of jobs.
Targeting labour-intensive sectors:
With rising labour force and unemployment, the Government needs to give attention to labour-intensive sectors to absorb surplus labour force in the economy.
1. Textile sector:
● The
textile & apparel industry’s contribution to 5% of the country's GDP and 5% of global exports employing nearly 90
million direct and indirect jobs.
● Developing
MSMEs in the sector to boost exports, which can create an additional 75 lakh to
1 crore skilled, semi-skilled jobs.
● The
recent initiatives such as PLI
(Production Linked Incentive) scheme and additional special economic zones and
extension of textile parks have the potential to increase employment opportunities
and production.
2. Food processing industries:
● India
has a strong raw material base for the food processing industry, one of the
largest in the world and it is expected to create
9 million jobs by 2024 in India.
● Demand
for processed food is rising with growing disposable income, urbanisation,
young population, changing lifestyle and increasing expenditure on health and
nutritional foods providing huge potential to the growth of this sector.
● The food processing sector has immense employment potential with the recent launch of PM-SAMPADA Yojana to establish modern infrastructure with efficient supply chain management from farm gate to retail outlet.
3. Leather industry:
● The
leather industry occupies prominence in the Indian economy because of its massive
potential for employment, growth and exports.
● It
provides employment to about 2.5 million
people in the country through various sub-sectors like footwear, leather
goods, and garments, finished leather, saddler and harness.
● Indian Footwear, Leather,
and Accessories Development Programme aims
for development of infrastructure for the leather sector, addressing
environmental concerns specific to the leather sector and facilitating
additional investments, job creation and increased production.
4. Electronics:
● India
has emerged as a leading manufacturer of mobile phones in recent years along
with boosting indigenous manufacturing
in various sectors, including consumer durables, power electronics, renewable
energy sector, telecom, automotive sector, strategic manufacturing and white
goods.
● The
recent government schemes such as PLI
(for IT Hardware, Mobile phones, Semiconductors and Display units), SPECS,
RoDTEP etc., promote electronics manufacturing through incentives, offering
huge potential for employment opportunities to absorb surplus labor force.
● India
as an electronics repair hub can create 5 million jobs in the next five years
through large scale manufacturing in India.
5. Tourism:
● Despite being severely
affected by disruptions caused by COVID pandemic, tourism is one of the largest
employing sectors contributing to over 10% of total employment.
● Tourism
acts as a fundamental pillar of economic development and has one of the highest
job-creating potentials across all sectors, such that for Rs 10 lakh of
investment, tourism can provide 78 jobs, as compared to 45 jobs in the
manufacturing sector.
● Several
initiatives such as Aatmanirbhar
Bharat's provision of emergency credit line, soft loans to MSMEs, Dekhno Apna
Desh has the potential to regain the lost potential of the tourism sector,
thereby enhancing employment opportunities.
6. Health sector:
● Health
sector can create jobs on a massive scale, particularly at the level of
frontline health workers and others.
● The
sector offers direct employment to nearly five million citizens in India.
● With
rising diseases along with COVID induced pandemic, the health sector offers
immense potential in absorbing surplus labor force.
WAY FORWARD:
● The
Government needs to step-in by
increasing its spend on asset creation, infrastructure, etc. which in turn
inspires the private sector to bring out modernization and investment in the
industrial sector, thereby resulting in increased production and employment.
● Bringing out decentralization of the industrial sector by giving impetus to MSME growth, thereby enhancing production and employment opportunities.
Growth
of labor-intensive sectors can have a large impact on reducing poverty, unemployment and promoting inclusive growth. Thus,
it is the need of the hour to formulate industrial policy focused on
labor-intensive sectors to accommodate rising demographic dividend.