India’s Jobs Paradox

WSJ suggests that “despite the economic surge, many workers still lack steady pay.”

For many Indians, the economy’s resurgence isn’t translating into the one thing they want most — a steady paycheck. In fact, India has seen a marked decline in the number of jobs at companies with more than 10 employees in recent years.

[There are] hundreds of millions who work in the so-called unorganized sector, which accounts for 92% of India’s jobs. They are farmers, street vendors, truck drivers, traders or migrant laborers. All have little or no job security.

With nearly 10 million people entering the work force each year, India desperately needs to rev up its creation of jobs beyond high-profile industries like software. The good news is that India has one of the world’s youngest populations, and, by and large, students are staying in school longer. Some experts fear, however, that there will be too few jobs awaiting them.

Officially, India’s unemployment rate is about 8%. But economists note that figure doesn’t accurately reflect the reality of working lives in a country where the poverty rate exceeds 20% and many people are chronically underemployed.

“Employment is being generated in a few small pockets,” says R. Nagaraj, an economist at the Indira Gandhi Institute for Development Research in Bombay. “In Bangalore and Gurgaon, you really feel it. These cities are throbbing. But that doesn’t define India — just go a hundred miles away and nothing’s happening.”

In order to reverse the current trend of increasing unemployment, India needs to register growth rates of 8% or more on a consistent basis, according to the government’s own projections. While India will hit that target for the financial year that ended in March, economic growth is unlikely to exceed 6.5% in the current financial year.

Job creation has been India’s weak spot ever since the country began opening its economy in 1991. Since then, the situation at private and public companies with more than 10 employees — the “organized” sector — has been “practically jobless,” says S.P. Gupta, a senior official at India’s Planning Commission who focuses on employment. That is because those companies are shedding workers and increasing productivity in the face of new competition, he says.

The article also summarises where Indians work:
Agriculture: 191 million
Manufacturing: 41 million
Trade, Hotels and Restaurants: 38 million
Community and Personal Services: 31 million
Construction: 15 million
Transport and Communication: 14 million
Finance, Real Estate and Business Services: 5 million
Mining: 2 million
Utilities: 1 million

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Rajesh Jain

An Entrepreneur based in Mumbai, India.