intensity, GDP growth now creates far fewer jobs in the industry including manufacturing, construction, mining, utilities and the services sector than it used to a decade ago,” Crisil said.
Some economists, however, do not believe there would be workforce migration from the industry to the farm sector in response to the slowing down growth rate in non-farm job creation. “I agree that in manufacturing sector, jobs growth has come down because of industrial slowdown in the last three years. But I don’t think that there will be reverse migration from industry to agriculture. Rather, the surplus labour in manufacturing will move to services sector,” said Care Ratings chief economist Madan Sabnavis.
According to him, some of the services sectors such as retail trade will be absorbing huge amount of labour in the coming years. “Also remember, half of the services sector is in the unorganised sector, which has been absorbing most of the unskilled labour migrating from farm sector,” said Sabnavis.
DK Joshi, chief economist at Crisil said: “We expect he Indian economy to expand at slower pace of 6% per year in FY 2013-19 from 8.5% in FY 2005-12. Further, GDP growth is increasingly driven by less labour-intensive services such as financial, real estate and business services (including IT-ITES).”
Gurudas Dasgupta, member of Parliament and senior leader of CPI said, “”It shows how bad the job situation is in the organised sector. It’s a reflection of economic crisis, decline in investment and job creation.”
Experts say the way to counter the falling rate of job creation in the industry is to reform labour laws and encouraging sectors like textiles, gems and jewellery and leather that employs large number of people. This has to be complemented by higher investments in health, education and infrastructure.
In fact, construction sector, being the most labor-dependent industry, is the only major sector where employment elasticity rose during 2004-05 to 2011-12 compared with the preceding five years. This sector requires more than 12 people to produce Rs 1 million of real output. A fast-growing construction sector can therefore create significant job opportunities, said Crisil.