This needs infrastructure growth to revive
Given that just 16 million new jobs got created between FY05 and FY12 versus 61 million between FY00 and FY05, it is not surprising that a large part of the political discourse is on jobs versus dole. What is interesting, however, is the areas in which the jobs are getting created and lessons this holds for the next five years, never mind which political formation comes to power. Data just released from the NSS’s latest survey, for FY12, underline the macro nature of the problem. From a labour force participation rate—the number of people working per thousand population—of 555 for rural males in FY05, the number fell to 553 in FY12, for rural women it fell from 333 to 253. While this decline is generally attributed to more rural women getting educated, this may be exaggerated since there are big falls in the 20-29 year age group which are not natural targets for schooling.
What is worrying is the relative stagnation in manufacturing employment where, for rural men, just 82 persons of every 1,000 were employed here in FY12, up just marginally from 80 in FY05; for urban men, the number was down from 236 to 224 while it was up a bit for all women. In the case of trade/hotels/restaurants, similarly, there was a small fall for rural males and a sharp one for urban males. In sharp contrast, there was a sharp jump in construction employment—from 69 per 1,000 to 131 in the case of rural males, 17 to 51 for rural women, 93 to 107 for urban men and a slight fall for urban women. Indeed, analysis by ratings firm Crisil shows the only sector which has shown increasing employment elasticity between FY05 and FY12 is construction.
All of which means if jobs have to return in the immediate short run, the only way this can happen is by spurring infrastructure development. The bad news here is that the construction sector has plummeted in FY13 and FY14, suggesting the jobs data when it is out, will be a lot worse than in FY12. From a growth of nearly 11% in FY12, in constant prices, construction growth plummeted to just 1% in FY13. In the medium term, the government simply has to work on restoring the competitiveness of traditionally high employment-intensity sectors like readymade garments. That means resolving issues like inflexible labour laws, too many clearances required for even routine functioning of SMEs as well as access to low-cost credit. And if manufacturing has to remain competitive—at 82 jobs for every 1,000 rural men, it is the largest jobs creator after agriculture and construction—more skilling and education are critical since this is the only way to raise productivity. If this is not tackled on a war footing, India’s jobs situation is going to deteriorate rather dramatically. As a recent Crisil analysis projects, the manufacturing/services sector will not be able to create the number of jobs required in the next seven years, as a result of which, while 37 million people managed to leave agriculture in FY05-FY12, around 12 million people will have to go back to agriculture in the FY12 to FY19 period.