The Hindu Business Line : Good job, but not enough

IN AN ECONOMY where success stories have been so few and far between, the news that the country's Information Technology and the IT enabled services sector employ over a million people is without doubt a significant achievement. With the industry growing at 25-30 per cent, the prospect of doubling the headcount by 2008, as envisaged in the Nasscom-McKinsey report too, should be well within its scope. The industry and those who pioneered its development can justifiably be proud of the milestone that has been reached. But even as the industry basks in the glow of success it is also the time for reflecting on the challenges ahead. For instance, that the industry needs to rapidly move up the value chain in software services or the fact that the IT enabled services must find innovative ways of sustaining employee motivation and, above all, the challenge of stretching the low-wage cost advantage against competition from countries with similar human resource endowments; these aspects have also been highlighted in policy discussions on the IT sector.

No doubt, the growth of the IT sector has brightened the prospects of employment for engineering graduates churned out by the country's higher technical education system. And to a certain extent it may have also opened up ancillary employment opportunities in a variety of service and manufacturing sectors catering to the needs of those engaged in the IT sector. But given the pronounced export focus, the scope for significant forward and backward linkages to other sectors must of necessity be limited. Thus, any perception that in the IT sector lies the salvation to the country's unemployment problem would seem short-sighted. The scale of the unemployment problem makes this so. The one million additional jobs that may be created in this sector over the next three-four years has to be seen in the context of the current official statistics on unemployment, which is estimated at approximately 30 million. If we take into account the vast numbers engaged in gainful economic activity that offers only an income below the subsistence level, the magnitude of the problem can easily be imagined.

Unfortunately, the principal sectors of employment suffer from certain fundamental structural deficiencies. The agricultural sector has been struggling to retain the existing workforce leave alone absorbing the additional numbers cropping up in the hinterland. The organised manufacturing sector too has been shedding jobs as units have gone through a painful process of restructuring of their operations in line with the new demands of the market place. To compound matters, there is no relief in sight from demographics, which has seen the population in the age group 18-60 recording one of the highest rates of growth. The euphoria over the success of this sector, however well merited, should not obscure us to the larger reality of a problem that has defied solution over the years.

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