“How would you solve the jobs problem?” etc..
At a meeting a few days back in Indore, I was asked a question that is probably on the minds of most youngsters in India today: “Why are there so few jobs?” – and more pointedly, “How would you solve the jobs problem?” Â Below is a somewhat hurried summary of my response…
We have 2 issues here: (i) on the “supply” side and (ii) on the “demand” side.
On the “supply” side, we are faced with vast numbers of young graduates and school drop-outs who are mostly “unemployable”, have very little “skills” and suffer from serious “attitude” issues (especially in big cities, metros). They also suffer from a “mai-baap” complex, somehow believing that the government will magically take care of their problems. To fix this, we need a massive overhaul of the education system and a laser-focus on developing vocational skills. Add to that, a revamping of the curriculum, getting accountability in the system and getting government out of it.
On the “demand” side, there are simply not enough jobs.   “We have about 550 million youths under 25 years of age..â€Â for whom we “need to create 15 million jobs annuallyâ€. So says Sam Pitroda.  The government is simply incapable of “creating” these many new jobs (and so resorts to populist measures like NREGA). Neither does the services sector have the capacity to absorb these many graduates. Our only hope is manufacturing – not large-scale, capital intensive industries but SMEs. But instead of encouraging the only sector that can create jobs at a large scale, the government continues to put hurdles in the way of anyone trying to start and run an honest business/enterprise in India..
And finally, I repeated the concluding lines from one of my blog posts:
It (entrepreneurship) matters because there is only one certain way for us to get ourselves out of the sheer, grinding poverty and lack of opportunities that plague much of India. Entrepreneurs create jobs. Jobs lead to growth. Growth leads to prosperity.
It is that simple.
I wish the government understood that. Jai Hind, Jai Bharat!
Related Posts:  The coming “Jobs War”.,,and my own tiny effort and Is our young population a time-bomb waiting to explode? Also read these concluding lines from Why is no one talking about jobs?
Unfortunately in India, SMEs are no one’s favourites. Too small to “contribute†to election funds, they remain at the fringes of policy making. For most, business means managing to stay afloat in the swamp of rules and regulations, high interest rates and cash crunch.
In fact, the smaller you are, the worse it is.
…What else is wrong?
Our agriculture sector employs just over half the workforce but generates barely 16% of GDP. Clearly that is not helping either. We need manufacturing – lots of it, and investment in infrastructure, more trade & services including “creative†services (tourism, heritage conservation for instance). And we need to seriously consider exporting skilled manpower. India can become the talent hub for the world, just like China is the manufacturing hub. But it will not be easy. And it will need bold vision and a determination to upset the status quo. And don’t forget entrepreneurship. We need that too – lots of it, actually.
Somewhat related:Â 4 Lakh illegal rickshaws, 6 Lakh illegal vendors
Image Courtesy: Tehelka screenshot from an article titled “Too Many MBAs, Too Few Jobs” by Shaili Chopra, June ’13
P.S. A slightly modified and updated version of this post appeared in my column in ToI earlier last week.
“Our agriculture sector employs just over half the workforce but generates barely 16% of GDP. Clearly that is not helping either.”
The answer here is very simple, in my view. You need modern manufacturing — i.e., extremely low carbon footprint — that takes advantage of agricultural output. Lever the strength of half the workforce being employed by agriculture by increasing the value of agriculture. You do that by *not* following the route of cash crops dominating agricultural output. India is an agricultural nation, still, and the riches of her next 15 years lie in the sampoorna bhojan thaali.
Improving the value of agriculture will give breathing room for non-agri-manufacturing industries to develop and grow organically (pun intended 😉 ).
India has 1.25 billion people who require 3.75 billion meals a day. They require houses to be made and maintained. They require clothes, schools, colleges, books. they need entertainment, vacation, transportation, healthcare, medicines, old age care, banking, infrastructure, communications ad infinitum.
The point I am making is that there is really no dearth of work in India, besides stealing and begging in which a large proportion of our energies are currently engaged.
We need to find ways to get people who want to work do the work that needs to be done.
From Between 2000 and 2012, jobs grew by a mere 2% per year, Subodh Varma,TNN | Feb 9, 2014:
…Between 2000 and 2012, jobs have increased at an abysmal rate of just 2.2% per year. Agricultural employment, the mainstay for over two thirds of the people, has practically not grown in these thirteen years. Manufacturing jobs have grown by just 4% per annum as industry languishes.
The one sector showing big growth is services, but as recently released survey findings from the NSSO show, the bulk of it is in retail trade, construction and personal services, and these are transitory, low-paying and tough jobs.
Brief excerpts from ‘Absence Of Enough Jobs Means India Is Losing Its Demographic Dividend’, an interview of CMIE’s MD Mahesh Vyas:
…
Out of 1.3 billion people in India, just a billion matter [in the context of] labour markets. These are people aged 15 years or more. We don’t count those below 15 years of age as being in the labour markets, [which leaves] about a billion people. A fairly large proportion of this billion choose not to work for profit, or for wages. So the number of people who come to the labour market to find a job–to work for somebody else for wages, plus the self-employed who work for themselves for profit–becomes your labour force. That labour force in India has been in the vicinity of around 430-450 million. Thus, of a billion people who are more than 15 years old, about 44-45% are offering themselves to work for wages or for profit.
Those who are working at home, just taking care of themselves, their household, family, their kids, the elderly, are not a part of the labour force, per convention. Only those who intend to go out to work for wages or for profits are counted as part of the labour force. So that’s some 430-440 million.
Of these, about 30-40 million don’t find jobs. Thus, the country is able to offer jobs only to around 400 million people. That’s the number of people who are employed in the country.
…
This (430m-440m) number hasn’t grown much. And if you look at the proportion of people aged above 15 years who are offering themselves in the labour market, that proportion has been falling. It used to be around 44-45%; it’s now down to 39%. The proportion matters a lot. The proportion of people more than 15 years old offering themselves for work is called the labour force participation rate. That participation rate has fallen.
Q: “….. you’re also saying that, since 2016, the aggregate labour force has remained at 430 million. Are we seeing this consistent figure because people are not offering themselves in the job market? And if they were, then the number of unemployed would have been much higher?
A: That’s right, the number of unemployed would have been much higher. The reason why [the aggregate labour force] has remained as stable as it has, is because people get dejected. They come to the labour markets, they don’t find enough jobs, can’t hang around there for too long and finally say that they’re not looking for a job. This is happening particularly in the case of women. They feel that getting jobs is so difficult, it’s not even worth offering services in the labour market
….
Q: What proportion of the 420-430 million employed are in the organised sector versus unorganised, and government versus non-government?
A: Organised is about 20% and the rest is unorganised. I don’t have the number for government share readily available, but if organised is 20%, obviously the government is a significant proportion of that.