Ease of Doing Business for MSMEs: Micro and small enterprises have the potential to resolve India’s unemployment crisis provided the constraints impeding the growth of the sector are resolved, says the State of India’s Livelihoods (SOIL) report by the NGO ACCESS Development Services.
Launched by the MSME Ministry’s Secretary, BB Swain, the report noted that the employment potential of small businesses can help the country overcome its rural and urban divide offering youth opportunities across its geographical spread and in labour-intensive trades such as in local and craft-based markets.
According to Annual MSME Report 2021-22, over 90 per cent of India’s 6.3 crore MSMEs are in the micro-segment. Within the micro sector, 62 per cent firms are self-employments which no workers, another 32 per cent have two or three workers and just 6-7 per cent have four workers or above (up to 19).
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The report highlights that due to the small size of micro-businesses, the workers get a complete view of how the business is run and are able to work closer to their homes. They also can get higher education simultaneously and enjoy better living conditions.
“From the perspective of ecology and adjustment, as well as the viewpoint of women in need of work close to home, this is an exciting perspective which upends many of our assumptions about how jobs are created,” says Orlanda Ruthven, one of the authors’ of the report.
However, she cautions that of the assumptions among the youth is that larger firms trains their workers well. She says, “that may have been the case when the only large firms in our midst were the public sector units and the blue-chip nation builders like Tata and Bajaj. But it is no longer the case. The proportion of casually- or TPA-hired workers in formal companies is growing. Which employers are fit to train youth is a question we need to ask and research.”
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Since the 1980s, India’s GDP has been growing in the range of 4-8%, but over the same period, the employment generated by this growth has been shrinking largely due to automation. The report states that if India has to meet its current job requirement, it will have to grow at 18 per cent.
The main reason for the jobless growth, the report says, is that there was the presumption that Indian youth will move from agriculture to highly productive jobs in the manufacturing sector. However, what is happening is that while there is a shift from agriculture, the youth are moving to the construction and services sector in low-wage jobs such as in retail, small eateries, domestic help, sanitation, security staffing, and transport.