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As growth slows in Asia’s third largest economy, non-farm employment will drop by a fourth between FY 2013-19, according to estimates by credit ratings agency Crisil.
The country will add only 38 million workers in its manufacturing and services sector in the period till FY 2019, compared with 52 million it added between FY 2005-12.
If the projections come true, it will be potentially disturbing in an economy that is grappling with slow growth and struggling to put its increasing work-force to productive use.
Crisil has estimated that the economic growth will slow to 6 per cent per year between FY 2013-19 from 8.5 per cent growth per year between FY 2005-12.
It said that the ability of sectors such as manufacturing to absorb labour has diminished considerably in the face of rising automation and complicated labour laws.
Also, the growth achieved by the economy is made possible by services sector like financial services and information technology sector that relies more on technology and less on labour.
In FY 2012, Crisil said, services sector like financial, real-estate and business services contributed 19 per cent to GDP but employed only three people for every 100 people working in the country.
REVERSE MIGRATION
The loss of jobs in manufacturing and services is likely to lead to a reverse migration trend in the country, with people once again flocking to agriculture over the next six years.
The large scale migration of labour had pulled away 37 million people from farms in the period between FY 2005-12, Crisil said. The current slowdown and subsequent loss of job opportunities will mean that 12 million workers will go back to farms over the next six years.
Economists and analysts have argued that there is a need to bring people out of low-paying farm jobs and create employment in the manufacturing sector.
Mukesh Agarwal, President of Crisil Research said, "It is desirable to pull more and more people out of agriculture since it is a low-productivity sector, with only a 14 per cent share in GDP, but around 49 per cent share in employment. The old trend of migration from agriculture will reverse with fewer non-farm job opportunities coming in the way of achieving this".
RECOMMENDATIONS
Crisil said that there is a need to create jobs in manufacturing by simplifying labour laws, skilling workers in different jobs and by focusing on the health and education sector.
"Apart from GDP growth, India needs to raise the demand for labour, especially in the manufacturing sector, by simplifying labour laws and debottlenecking labour-intensive industries such as textiles, gems and jewellery and leather. Policymakers should also focus on expanding the health, education, construction sectors. This will not only raise India’s growth potential, but also generate a significant number of jobs," added Agarwal.
satyanarayan.iyer@thehindu.co.in
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