Prime Minister Narendra Modi recently in the Parliament said that youths in ‘New India’ are not job-seekers and aspire to become entrepreneurs, but the World Bank has said that with an ever-increasing number of the working population, the need of the hour is regular salaried jobs. It said that the public sector, the largest provider of good jobs, employs only 5% of workers.
The job deficit in the country has the turn the demographic potential into a demographic curse, World Bank said in a draft Systematic Country Diagnostic (SCD) for India, adding that in India regular jobs are “urgent priority”. According to data, between 2005 and 2012, over 13 million population entered the working age, while only 3 million jobs were created.
“In a society with wide inequalities creating productive, regular jobs are perhaps the most urgent priority. The issue is not just the number of jobs but also the type of jobs. A transition into the middle class calls for the creation of salaried jobs,” the World Bank said.
“A growth strategy that focuses on productivity-led economic growth and good jobs will ensure not only that growth is inclusive but that growth is sustainable,” it added. The World Bank said that salaried jobs are “rare privilege” and only 20% of the total working population has salaried employment.
Regular and salaried jobs are also required to retain women in the workforce. “As skills expand, worker productivity rises, enabling wages high enough to lift many more Indians into the middle class, likely lowering inequality… Advances into the middle class are at risk, however, for India faces a growing jobs deficit. Economic growth has failed to generate enough jobs for its burgeoning working-age population.”
Narendra Modi last month poked the bear while defending government’s policies for employment generation, asking whether a pakoda-seller earning Rs 200 per day will be considered employed or not. He made the comment in reference to schemes such as MUDRA which helps in micro-finance small businesses at lower interest rates.
On more entrepreneurs and start-ups, the World Bank said that the most Indian firms start small and grow old, but remain stunted through their lives, shackled with a surprisingly thick “tail of low-productivity” employing less than
“Though much progress has been made to stimulate investment, Indian firms remain burdened by regulations that make it safer to remain small and inconspicuous and more profitable to lobby for privileges,” said the World Bank, which recently upgraded India to top 100 on its ‘Ease of Doing Business’ index.
The World Bank argues that it is not the just the number of jobs but types of jobs as well. It said that while agriculture is still home to nearly half the workforce, output-per-worker is than half of the economy’s average. It also pointed out that in sectors like construction and retail, job creation was higher but output-per-worker and labour-productivity are low.
Job creation was an important concern raised by a group of economists last month when government’s think tank NITI Aayog organised a brainstorming session with Narendra Modi. Economists said that more than 20% educated youths were unemployed and that the government needed to target only job growth and economic expansion for generating more employment.
NITI Aayog’s Vice Chairman, however, said that India did not have a good data on jobs and a task force will very soon release high-frequency data on job creation. Economic Advisory Council to the Prime Minister (PMEAC) member Bibek Debroy also reiterated that India lacked good data on jobs and a significant amount of self-employment in an informal sector not being included in surveys.