India is presently at its toughest crossroads! Similar to the situation in the US and Japan, a large chunk of the current workforce is now getting old and possible to retire in the next 5-10 years, however the millennials still aren’t getting the jobs they have been studying for! Where’s the problem?
The present Modi government (similar to every other central government of the past) has been promising job creation as per their mandate, but has failed to deliver. Why is there a dearth of jobs especially in a country of 1.2 billion people? Everybody can contribute in some way or the other to the country’s development, right? Sadly, that isn’t so.
In this article, we look at why India is so stingy at creating jobs for the youth, and also what the employment trends possibly might be in the next decade or so.
The alarming unemployment rate at present
According to research, every month, more than a million Indians (mostly millennials) become eligible (age-wise) to join India’s workforce. However, contrary to the claims of the government, unemployment has been on the rise even though our economy has never really gone through a very serious economic slowdown (despite the onslaught of demonetization and GST we didn’t falter).
MoS for Finance, Jayant Sinha mentions, “Employment creation will be one of our greatest challenges for the next decade”. This is funny because there are literally no jobs even now!
The United Nations International Labour Organisation’s (ILO) 2017 World Employment and Social Outlook report finds that job creation in India is not expected to pick up pace in 2017 and 2018 as unemployment rises slightly, representing a near stagnation in percentage terms. “Unemployment in India is projected to increase from 17.7 million last year to 17.8 million in 2017 and 18 million next year. In percentage terms, unemployment rate will remain at 3.4 per cent in 2017-18,” the report added.
Reasons for this anomaly
- India’s industrial growth is still very weak due to global slowdowns, crippled agriculture sector (drought-hit) and improper cost rationalizations in several sectors by the government.
- The government’s push on mechanizing industrial operations is also shrinking job opportunities each coming day! The increased use of robots will need 3.9 mn highly-skilled workers by 2022-2025, but there is still dearth of skill training for such jobs!
- Many employers now prefer contractualization of the production pipeline with an added want of value-addition (extra skills) from the workforce. This leads to inflexible hiring.
- According to the 27th Quarterly Employment Survey of eight core employment-intensive industries (textiles, leather, metals, automobiles, gems & jewelry, transport, IT/BPO and handloom/power-loom), there were 43,000 job losses in the first quarter of FY 2015-2016.
- The industries added 1.1 million jobs in 2010, but within the next 5 years, 1.5 million jobs were lost due to mechanization and slow growth of the economy.
- Export unit employment is also seeing job losses at a rapid rate. The automobile manufacturing sector saw 23,000 job losses in export units in comparison to the 26,000 job additions in FY 2017 second quarter.
- Big startups like TinyOwl, Zomato, etc. laid off many employees to keep their businesses running amid stiff competition.
- There are presently 30 million jobs in the organized sector and nearly 440 million in the unorganized sector! The Economic Survey for the period between 1989 and 2010 shows that only 3.7 million (35 per cent) jobs were created in the formal sector. That is a really low figure!
- Many MNCs are exiting or in the process of selling out of India (Goldman Sachs, Nomura, JP Morgan Asset Management, Lafarge) due to tax disputes with Indian authorities or weak demand. This is leading to massive job cuts in thousands at one go! The Larsen & Toubro (L&T) group has said that it will close down all businesses with revenues under Rs 1,000 crore and the Essar Group may sell-off its refinery or ports business to reduce steep debt.
Future employment trends for the next decade
Agriculture – Aggressive Reforms in the rural labor market and excessive farmer suicides are a hint that many farmers will have to make a transition to non-farm jobs to sustain livelihood. The transition is already happening. Many are pursuing degrees and jobs in IAS and defense to seek better pay scales.
Make in India – The government’s Make in India program is expected to kick into full swing when workers are skilled enough to fill in jobs that will be created by the Rs 15 lakh crore invested into this program by Indian and overseas investors. However, due to the advent of robotics, hiring in the manufacturing sector will not meet the 100 million additional job target proposed by economists.
Increased outsourcing of jobs – The employment rate is dropping by 12-13 per cent due to increased outsourcing and is expected to decline in the next decade as well. Furthermore, the aspiration of securing a white-collar job (read IAS, IPS, etc.) is what is hampering growth in the manufacturing sectors since a huge chunk of youth is always preparing for talent-based examinations!
BFSI offers some hopes – Thanks to RBI granting licenses to 10 new smaller banks and 11 payment banks since 2015, many new employment opportunities in the BFSI sector are coming up. Not only are these outlets offering traditional jobs, but also offer jobs in managing newer financial technologies due to the increase use of mobile apps in banking.
Medicare – Many new jobs will be coming up in senior care, ultra-early diagnosis and the development and manufacturing of artificial functional devices and organs to combat the mortality rate of the ageing population of India.
Manufacturing sectors – Thanks to many government policies like impounding 15-year old diesel vehicles and a target of introducing EV (electronic vehicles) in the next decade, many jobs in dealerships, spare part sellers, repair and training outlets will be expected.
Entrepreneurial sector – Many more jobs are expected to be created by online e-commerce portals like Flipkart, Snapdeal, etc. owing to rapid adoption of the buy-from-home concept by Indians.
Startups – Many more MSMEs are expected to come up in India. Nasscom estimates software startups will create up to 800,000 jobs by 2018-2019. Currently, 3-4 IT start-ups are born every day in India!
ITeS –Since more and more customers are seeking value-addition, AI (Artificial Intelligence) is one area where more jobs can be created in BPOs to hire data scientists, product managers, retail planners, etc. to offer better interactive voice response (IVR) technology.
More and more ITeS jobs will be created in Tier-2, Tier-3 cities and rural areas, but interpersonal and communication skills need to be given to aspiring job-seekers beforehand.
Education – Many entrepreneurs are stepping into providing online education in the healthcare, e-commerce and hospitality sectors to impart more information in an e-way.
Green Sector – More people are adopting solar and wind energy that will become the new job creators of the future. Digitization with manual work will help this sector seep into many untapped areas of employment in India.
Thanks to many new initiatives such as StartUP India, Make in India, Skill India and Digital India, India is slowly creating an ecosystem that promises massive job creation.
Many HR consultancies say that India may become a gig economy (one in which people do two or more jobs yearly based on skill and need) to cope with the massive push towards a digital era. Furthermore, due to increased domestic consumption, India might reduce regulatory hassles (like the concept of introducing GST) to help the labor force achieve more jobs.
This year’s Union Budget has made many specific provisions to push productive employment and also gave the rural economy many new cuts. However, we should not forget that we are in a slow economy and the global slowdown will last for some time.
For all you jobseekers out there, you should note that India is already part of digital revolution and things will be better for you if you start developing your skills right now to cope up with the massive digitization. Handlooms are being replaced by powerlooms which now renders handlooms almost obsolete – you should keep in mind that many old jobs might render obsolete in the future too!
The need of the hour for India is to leverage the power of youth below 35 (who comprise 65 per cent) of the population. A million young men and women are set to join the country’s labor force every month for the next 20 years – are you up for the challenge?