New Delhi: As many as five million jobs were lost between 2004-2005 and 2009-2010, paradoxically the time when India witnessed the highest and consistent growth of eight percent in its economy, throwing up a question whether growth should be linked to employment generation, said an Associated Chambers of Commerce (Assocham) study.
According to the study, nearly 13 million youth are entering the labour force every year but on the other hand, the gap for the employment and growth got only widened during the period of study which noted that over-emphasis on services and neglect of manufacturing were mainly responsible for this “jobless growth” phenomenon.
According to the Census India data, the number of people seeking jobs grew annually at 2.23 percent between 2001 and 2011, but growth in actual employment during the same period was only 1.4 percent, leaving a huge gap in the form of unemployment. “This large work force needs to be productively engaged to avoid socio-economic conflicts,” said Assocham secretary general D.S. Rawat.
He said the changing demographic patterns suggest that today’s youth is better educated, is probably more skilled than the previous generation and also is highly aspirational. Experts argue that the growth of manufacturing will be the key for growth in income and employment for multiple reasons.
“For every job created in the manufacturing sector, three additional jobs are created in related activities. The other is that manufacturing in India is scalable and has higher labour absorption in comparison to services,” the report said.
“In a services-driven economy, which contributed 67.3 percent (at constant price) to the GDP but employed only 27 percent of total working population in 2013-14, enough jobs will not be created to absorb the burgeoning workforce,” it added.
In 2013-14, manufacturing contributed 15 percent to the GDP and employed about the same percentage of total workforce, demonstrating that the sector has a better labour absorption means compared to services.