Indian economy has been growing at a rapid clip in the recent past. However, this has not been accompanied by an equally favourable rate of job creation. Global slowdown, enhanced productivity, increased automation, etc. are just some of the reasons attributed for the slow growth in jobs. Irrespective of the underlying reasons, limited growth in job creation is a definite cause for concern.
Objectively, we have to look at this problem in two parts – to start with, are we really measuring job creation in the right way in India and if yes, what we can do to create a sustainable, long-lasting stream of jobs.
Measuring job creation
Measuring Job Creation
The coverage as well as the effectiveness of our labour statistics needs to be evaluated. For example, India opened its private sector for banking around 20 years ago. But even today, if we were to question the number of jobs created by the banking sector, directly and indirectly, we would not be able to put down a number to it as it is not measured. We can do some basic calculations, maybe by counting the number of employees in every bank, but there is no ready indicator to show exactly how many jobs are added annually in the banking sector.
Job creation metric should be created by regulators, to set a common framework to gauge the jobs being created in respective domain areas
Not just in banking, the problem is in other sectors as well, insurance for instance. There is no way to assess the figures which are being reported both in terms of quantity and quality of jobs being created in India. As per some estimates, there are 22 lakh agents in the insurance sector, but no more than three lakh are productive or active. In-fact, 90% of insurance premium is sold by only 10,000 agents currently. Unfortunately, we do not have any official estimates of such numbers.
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
Challenges involved: At the national level, there are several sources of data on employment and unemployment. While the National Sample Survey Office (NSSO) conducts surveys, the labour bureau has over the last few years started conducting annual employment-unemployment surveys. Additionally, labour statistics are also being collected through various administrative returns required to be furnished by enterprises by law. Very often, there is vast difference in the estimates from different sources, which raises questions on the reliability of data.
At present, job creation is more of an incidental outcome and not the central objective of policies
What can be done: Data aggregation on employment across states, sectors, etc. may look like a mammoth task but if the government can implement initiatives such as Aadhar or Jan Dhan Yojana, measuring job creation is also not a difficult exercise. We could start with an approach that focuses on collecting data agency by agency for respective sectors. A job creation metric should be created by the regulators to set a common framework to gauge the jobs being created in their respective domain areas. This standard framework can then be followed by each agency to facilitate overall aggregation.
The International Labour Organisation (ILO) has done an assessment of the labour statistics system in India and identified that one of the key issues with data collection in India is the lack of statistical support available with labour departments in most states. They have recommended strengthening the statistical machinery at the state level, especially in their labour department and also suggested digitisation of all data. Recently, the Ministry of Labour & Employment has developed a single unified web portal for online registration of units, reporting of inspections and submissions of annual returns, etc. The state governments are also expected to join this unified portal gradually. It is hoped that this integration of data would help in frequent and regular availability of employment data in the near future.
If we take the case of financial sector, even though we do not have exact estimates of jobs created over the last two decades, it can be easily said that as the sector has expanded rapidly, a significant number of jobs have been created during this period. However, in the last five years, there has been contraction of jobs in the sector, due to slow growth. At the same time, a noticeable shift towards automation in this sector has led to job contraction. For instance, in case of financial services, the job which was earlier being done by 20 people in a back office, is now being done by 8 people.
Once the growth returns, job opportunities will also rise. However, the dynamics of job creation will also change with the change in technology, innovation and global developments. Various policy decisions should thus take into account not only the growth aspects but also job creation.
Rashesh Shah, Senior Vice-President, FICCI and Chairman & CEO, Edelweiss Financial Services writes this piece for FICCI publication “Economy of Jobs”. Post continues on Page 2.