A few years ago, the London-based Economist rang the alarm bells on what they called the disquieting “arc of unemployment” raging through Europe, Africa and the Middle East to South Asia. Succinctly, this looming catastrophe was referred to as one “where the rich world’s recession met the poor world’s youth quake”. It is today profoundly tragic that the number of young people out of work globally almost equals the population of the United States.
The prospect that millions of youth will face an increasingly uncertain and hopeless future is, to say the least, a disaster of epic proportions. It is now well acknowledged that such disillusioned, despairing and desperate unemployed youth are extremely prone to be drawn into a life of criminal and violent activity or even radicalised by exploitative groups. The risk to civil society is unprecedented. Such instability can have dire consequences on economic growth and future progress. They negate society’s advancement and mire the world in conflict and uncertainty. Very recently, a report commissioned by Lloyds has warned that a “pandemic” of global civil unrest could go viral, threatening international stability. The signs are unfortunately already visible in the world-wide uprisings, unrest, terrorist activity, the refugee-crisis, et al.
With just 2-3 million jobs being generated annually, there is a crying need to find newer avenues for sustainable livelihoods
The paradox of jobless growth
India’s challenges are no less daunting. Home to nearly one-third of the world’s poor, almost 300 million people need critical support to move out of poverty and live a life of dignity. Compounding the challenge is the need to find gainful employment for the twelve million youth who join the workforce every year. With just 2-3 million jobs being generated annually, there is a crying need to find newer avenues for sustainable livelihoods. Undoubtedly, the Prime Minister’s clarion call to Make in India, together with initiatives like Skill India, Digital India, Jan Dhan Yojana and others, will help create the foundation for scaling up jobs in the future. India’s young population, with 75% below 35 years of age, is at once its greatest strength and its toughest challenge. It is only when meaningful livelihood opportunities can be created at scale that the country will be able to reap its rich demographic dividend. The challenge before the Nation, therefore, is not only to achieve sustained higher rates of growth but to ensure that such growth is equitable and can create large scale livelihood opportunities.
This article is a part of FICCI publication “Economy of Jobs” that was released during our 89th AGM in December 2016. It presents essays from India’s leading business leaders and eminent thought leaders who share views and suggestions on job creation. The articles cover varied issues: demographics, education, skill development, entrepreneurship, impact of technology, labour laws, and as well as specific issues across sectors.
More articles from this series can be viewed here at: Economy of Jobs
That brings us to a paradox and to an issue of utmost importance. Today, India is the 3rd largest economy in the world in PPP terms with consumption expenditure in the domestic market in excess of a trillion dollars. The country has been one of the fastest growing large economies in the world, and has sustained high growth rates for a long period of time. Yet, jobs are woefully inadequate to meet the demands of a burgeoning young population and not commensurate with the growth rates achieved over the years. A closer introspection reveals that one of the crucial reasons for the paradox of jobless growth is the fact that the country is unable to capture the full potential of the value created from economic activities, which escapes overseas to owners of intellectual capital and trademarks. Consequently, despite the increasing spends in the economy, the relatively lower value-capture results in abysmally fewer jobs being created, fueling far-reaching social ramifications.
To my mind, topmost priority needs to be accorded today to ensure that far larger value is captured in the domestic economy so that economic growth can stimulate job creation of a significantly higher order. I will, therefore, take this opportunity to elaborate on a few issues which are mission critical in creating, capturing and retaining value in India.
Y C Deveshwar, Chairman, ITC Limited writes this piece for FICCI publication “Economy of Jobs”. Post continues on Page 2.