Daily Answer Writing And Mentorship Program
Q: Discuss the main factors responsible for jobless growth in the Indian economy. How can these factors be addressed to promote inclusive and sustainable employment opportunities? (15 Marks, 250 Words)
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Jobless growth is defined as a phenomenon where the increase in employment opportunities and
job creation takes place at a slower rate than that of economic growth. It is a situation characterized as low employment elasticity. It encompasses both the quantitative and qualitative aspect of employment where qualitative aspect refers to segregation into formal and casual work based on the terms of employment and
• India experienced job growth of 3% p.a in the 70s at a time when our economy grew at 3-3.5% p.a but over the last 3 decades our economy grew at over 5-8% p.a but our job growth has been close to 1% p.a.
• Employment elasticity has fallen from close to unity in the 70s to 0.4 in the 90s to less than 0.1 today. Hence, the phenomenon of India’s jobless growth.
Causes of Jobless Growth:
- Focus on Capital Intensive Industries such as steel, automobiles, and inadequate focus on Labor Intensive Industries such as Textiles, Leather and footwear, apparel, handicrafts, sports goods, Agri/Food Processing, wood, and Furniture.
- Technological Advancements and Automation: As the Indian economy modernizes and adopts new technologies, certain sectors may witness job displacement due to automation. Traditional labor-intensive industries, such as agriculture and manufacturing, might see reduced employment opportunities as technology takes over certain tasks.
- Skill Mismatch: The education and skill development system in India often fail to keep pace with the changing demands of the job market. As a result, there is a significant gap between the skills possessed by the labor force and the skills required by industries, leading to unemployment or underemployment.
- Informal Sector Dominance: Most India’s labor force is engaged in the informal sector, which lacks job security, social security benefits, and access to formal channels of finance. The informal sector is less likely to contribute to inclusive growth and may not experience the same level of expansion as the formal sector.
- Slow Industrial Growth: Although India has experienced growth in various sectors, it has not seen substantial expansion in labor-intensive industries, which could generate more jobs. The slow growth in such sectors limits employment opportunities.
To address the issue of jobless growth and promote inclusive and sustainable employment opportunities, several measures can be taken:
- Skill Development and Education Reforms: Focusing on vocational training and skill development programs that align with industry needs can help bridge the skill gap. Reforms in the education system should emphasize practical knowledge and provide relevant skills to students.
- Promoting Labor-Intensive Industries: Encouraging investment in labor-intensive sectors, such as textiles, agro-processing, and construction, can lead to job creation. Special incentives and support can be provided to these industries to boost their growth.
- Supporting MSMEs: Micro, Small, and Medium Enterprises (MSMEs) are significant job creators in India. Facilitating easier access to credit, providing infrastructure support, and simplifying regulatory processes for MSMEs can help them thrive and generate more employment.
- Encouraging Entrepreneurship: Promoting entrepreneurship through various schemes and initiatives can lead to the creation of new businesses and job opportunities.
- Rural Development and Agriculture: Strengthening the agricultural sector and rural development can reduce the pressure on urban employment and promote inclusive growth.
- Investment and Infrastructure: Improving the investment climate by reducing bureaucratic hurdles and investing in infrastructure projects can attract more investments, leading to job creation.
Addressing jobless growth in the Indian economy requires a multi-faceted approach, involving cooperation between the government, private sector, and civil society. Sustainable and inclusive employment opportunities can be fostered by a combination of policy initiatives, investment strategies, and human capital development.