1. Employment in India: Why skilling, reskilling the labour force has to be pushed forward

Employment in India: Why skilling, reskilling the labour force has to be pushed forward

With farming becoming less attractive and migration being the result, the demand for employment is increasing disproportionately at lower levels. Clearly, the effort on skilling and reskilling the labour force has to be pushed forward in all areas.

By: | New Delhi | Published: June 19, 2017 5:34 AM
employment, employment in India, skilling The gains from lower headcount would be offset by these incremental payouts. PSBs and PSEs have also been looking towards enhancing efficiency which is labour displacing at the lower levels though higher skills are still required.

A comment often made is that while growth has taken place in the economy, there has not been commensurate growth in the jobs created. If this were so, it is a worry because growth without employment is not desirable as it cannot be sustained and the fabled demographic dividend that we speak of can become a demographic liability.

Data on employment is sparse and hence it is hard to arrive at absolute numbers, though there are some disparate pockets where such information is available. The concept is nebulous because while it is possible to get information from the organised sector, it is not easy for the unorganised segment where different concepts exist such as usual status, weekly status and so on.

Agriculture is typified by excess labour (disguised unemployment) which can migrate to the cities between two harvests and get counted as employed labour in construction. Employment exchanges provide some data, but often those registered would already be employed and would be seeking better opportunities. The same holds for all the web portals for jobs.

The government sector is, however, more transparent and this is where one can look for such trends. The public sector had an objective of job creation when India got independence and hence an entire retinue of staff was created that segmented labour across various categories of Class I-IV. Post-reforms, the idea was to cut down on staff so as to improve efficiency, and the influx of technology made labour redundant. Hence, even within the public sector, there was a focus on reduction of employment. While this has been pervasive, often the headcount is reduced and re-enters from the back-door through outsourcing models that do not get captured in the direct employment numbers. Various state governments have outsourced such labour in the areas of security or other menial jobs, or have not replaced the retired gentry in certain categories.

How do some of these numbers stack up? From the Union Budget documents, the total headcount can be ascertained for the central government and the numbers have varied over time. From a peak of 33.28 lakh in 2013-14, the headcount is down to 32.84 lakh in 2015-16. The economies have presumably been invoked in the lower categories where a combination of retirement schemes and non-replacement of such staff have been combined. Within this group, railways have a dominant share and witnessed a marginal decline from 13.34 lakh to 13.31 lakh.

In case of central PSEs, the picture is similar. From a peak of 14.90 lakh in 2009-10, the staff strength has come down to 14.04 lakh in 2012-13 and further declined to 12.33 lakh in 2015-16. Hence, there has been a fall of almost 2.5 lakh over this period, which is quite a sharp change of 17.2% in a segment that is largely unionised.

Public sector banks present a different picture, given the topography. Here, the staff size has been increasing from 7.27 lakh in 2009-10 to 8.67 lakh in 2011-12. But it came down to 8.27 lakh in 2015-16. The officer category increased from 2.78 lakh in 2009-10 to 3.26 lakh in 2011-12, and further to 3.76 lakh in 2015-16. With volumes of business increasing, it does appear that the non-officer grade of staff has come down quite sharply. This may be attributed to two factors—the first is that technology has led to labour redundancy in basic operations like visiting a branch, and the second is that the retiring staff is not replaced at this level as the requirements have come down.

Another institution that heralds the public sector is RBI, where there has been a major rationalisation of staff, with the number coming down from 19,207 in 2010 to 15,854 in 2015 (December). This is sharp fall in headcount for an institution that was a significant employer.

At the industry level, which includes the private sector, the Annual Survey of Industries provides some date on progress in employment generation up to 2014-15. Here, too, the picture is not very exciting. For the quinquennium ending 2014-15, the growth in employee stock increased by an annual average of 3.4% compared with 6.9% for the preceding quinquennium. In fact, for the period 2012-13 to 2014-15, GDP growth averaged 6.5% while employment growth was just 1.2%. Hence, at the industry level, growth in employment has been lacklustre, notwithstanding steady growth in GDP.

Employment, hence, has become a major issue for the country and, as has been seen, even the public sector is moving towards rationalisation in a bid to improve efficiency. The central government has the added pressure of making allowances for the Pay Commission, which leads to higher payouts, which, in turn, puts pressure on budgetary numbers. The gains from lower headcount would be offset by these incremental payouts. PSBs and PSEs have also been looking towards enhancing efficiency which is labour displacing at the lower levels though higher skills are still required.

Therefore, the issue is of the ability of the economy to provide employment to people with differential skills. Automation and proliferation of technology—which can see driverless cars or drone delivery, making several skills redundant—has been witnessed in most manufacturing processes. The private sector, guided by the objective of maximising shareholder value, will be working on minimising fixed costs, which is labour, and hence will move more towards higher skilled labour force. The public sector, too, is turning more towards the market ethic and is progressively answerable to the public. Thus, employment is the least important objective for government-related organisations. What then happens to those at the lower level?

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The answer is to ensure that the working population is well-equipped with the higher level of skills, which today is not accessible to all, as once we move up the ladder, the quality matters. The government has spoken about honing skills, but this would be more at the lower level. But for organised professions, plain vanilla qualifications like being a 12th standard student or a graduate is inadequate as there are even more qualified personnel competing for a fixed set of jobs which is not increasing at the required pace. This will be a challenge going forward as incomes need to increase to keep the growth process ticking, and with saturation setting at the higher echelons, reverse gravity has to be exerted from below by this class. With farming becoming less attractive and migration being the result, the demand for employment is increasing disproportionately at lower levels. Quite clearly, the effort on skilling and reskilling the labour force has to be pushed forward in all areas.

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