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Monday, Feb 03, 2003

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SSI sector generating fewer jobs

G.K. Nair

Despite significant thrust on promotion, there is a significant mismatch between available skills and those skills that are in demand, such as the skills needed for the IT sector.

KOCHI, Feb. 2

THE process of economic reforms currently under way in Kerala, and the signals it offers to finance capital, will have significant implications for the labour market.

The question that arises now is whether the changes will be in favour of a `low-road' or a 'high-road', according to Dr P.M. Mathew, Director, Institute of Small Enterprises Development (ISED).

He said that a `low-road' pattern would imply greater drudgery and fewer career prospects for labour.

On the other hand, a `high-road' of innovation, developing new skills and offering good career opportunities would mean significant improvement in the quality of life of the people and the tempo of industrial development.

The scenario of small industry in India, in the context of globalisation has not received adequate academic attention, he said.

"Even available studies have arrived at broad conclusions based on the potential adverse economic impact arising from changes in the trade. The impact of it on Kerala is likely to be more circuitous."

According to official figures brought out by the Government, Kerala is one among the five States that have recorded significant growth of the SSI sector in terms of the number of units registered.

However, an analysis of data for the period between 1984 and 2002 indicates a significant decline in employment generated per unit from 7.5 to 3.1.

In the absence of any conclusive evidences relating to major technological changes in the SSI sector, this reflects a process of organisational skewing, i.e, individual entrepreneurs prefer to have minimum-sized units rather than progressively expand their employment and firm size.

The same phenomenon is also reflected in the area of inter firm co-operation.

Some of the indicators in this regard are the weaknesses of sectoral and product-wise SSI association and the inability of State-level associations to influence public policy.

While the former phenomenon is a reflection of inadequate trust, the latter reflects poor information and lobbying skills.

Mr Mathew said that a reservoir of skills, including tacit knowledge, should be useful for the development of industrial districts in the Marshallian pattern.

Kerala has a reservoir of skills, or more precisely formal skills.

However, despite significant thrust on promotion of such skills, there is also a significant mismatch between available skills and those skills that are in demand such as the skills needed for the IT sector.

People at every level are used to solving problems so that firms can upgrade and workers learn transferable skills.

This requires much design, innovation and creative work at the local level.

Kerala's score in this regard is not satisfactory.

The perception of innovation in the State is generally interpreted in terms of new technical skills and processes.

Product innovation and organisational innovation (management, marketing and R&D) are very rare.

Diffused power rather than total dependence on big firms is crucial.

Vertical disintegration should also mean, focus on core competencies.

Multiple initiatives and some form of networking are crucial in the current context of globalisation.

Kerala has had a reasonably successful decentralisation of governance.

However, an anachronistic situation of economic centralisation virtually kills the latent potential in this area.

For instance, the experience relating to decentralised industrial initiatives at the level of panchayati raj institutions as well as self-dependent economic entities such as co-operatives and self-help groups (SHGs), are far from satisfactory.

While the public sector in Kerala has been accused of inefficiency, the private sector was never allowed to gain its full potential.

Capacity building among the local actors is vital. Promotion of linkages needs activating the change agents themselves, Mr Mathew said.

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