Making policy, or conducting analysis on it, in the absence of data is a bad idea and, to that extent, the government has done well set up a task force to look at solutions to ensure there is better quality data on India’s jobs situation. The Labour Bureau’s quarterly employment data, for instance, only covers eight sectors through a sample of a little over 2,000 units and excludes labour-intensive sectors like food processing. There are also large differences between what the Labour Bureau’s Economic Census and the NSS put out—while the former shows a jump in jobs growth between FY99-05 and FY06-14 in sync with rising GDP growth, the latter shows a flat trend. Data from provident fund show an entirely different trend—while the Economic Survey talked of a 1.6% per annum growth over the decade a few years ago as compared to economic growth of 7.9%, analysis by TV Mohandas Pai and Rajesh K Moorti using EPFO data showed a 7.4% annual growth. The fact that this task force also has Manish Sabharwal who heads TeamLease on it is good news—TeamLease is India’s biggest temping agency and, given the new nature of jobs, no discussion is possible without looking at this impermanent angle to jobs and the need to constantly retool the workforce.
But even without firm data, several broad conclusions can be drawn and policy steps taken. Apart from the impact of GDP growth slowing on creating new jobs, keep in mind the falling employment intensity in most sectors—also, as Crisil pointed out in its note on employment growth, during the boom years of FY05-12, India’s GDP growth was largely driven by less labour-intensive sectors like IT and financial services—these services contributed around a fifth to growth. In contrast, the more labour-dependent services sub-sectors like health, education and recreation services—they require nine people to produce Rs 1 million of real GDP—grew at a lower rate. Employment elasticity collapsed from 0.52% in FY00-05 to 0.38% in FY05-12 for the non-agriculture sector, that in industry fell from 0.78% to 0.57% due to factors like automation and that in services from 0.35% to 0.26% due to the nature of which services grew faster.
In such a situation, it is obvious India needs to try and stimulate growth in the textiles and apparel sector and that is why, last year, the government came out with an apparel package that brought in concepts like fixed-term employment and lowered the provident fund burden and targeted creation of one crore jobs over three years. While the last budget promised to extend this to employment-intensive sectors like leather and footwear, as FE has reported, there have been few takers for the apparel plan with bureaucratic delays dogging it—the anti-abattoir movement and the related gau-rakshak vigilantism, if it gains ground, will in fact result in job losses. Sectors like mobile phone manufacturing, similarly, offer large employment opportunities but, with the government unable to come up with a post-GST plan, this too could be in jeopardy. In short, getting better jobs data is critical but creating jobs requires a complete overhaul of India’s sclerotic labour and other laws—while there has been some progress in prime minister Narendra Modi’s three years, it hasn’t been enough to move the needle in a meaningful manner.