Industry’s hiring again PDF Print E-mail
Wednesday, 23 February 2011 00:00
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Given its commitment to creating employment, the government is almost certain to hike the allocations for the employment guarantee scheme next Monday. While critics differ on its efficacy, with the estimates ranging from 30% to 60% of the promised jobs getting created, the official numbers are impressive. President Pratibha Patil’s address to Parliament said a total of 5.3 crore households got jobs under MGNREGA in 2009-10—at an average of 50 days a year, that’s 265 crore man-days of employment. What’s worth keeping in mind while raising MGNREGA funding, however, is that after years of stagnation, industrial employment is finally looking up, and significantly at that. Data from the Annual Survey of Industries shows that while industrial employment rose from 8.3 mn in 1991-92 to 10.1 mn in 1997-98, it fell steadily to 7.9 mn by 2002-03—between 2005-06 and 2008-09, however, it rose to 11.3 mn, or around 7-8 lakh new jobs got created in each of the last three years. According to Professor Bishwanath Goldar at the Institute of Economic Growth, real value added in organised manufacturing grew at around 12% per annum in 2003-04 to 2007-08 and employment rose 7.5%; between 1992-93 and 1996-97, value added rose 13% and employment just 2.8%; earlier still, between 1980-81 and 1989-90, value added rose 8.6% and employment just 0.3% per annum.


If things have changed, what made them change? Goldar’s explanation is that with state governments allowing some flexibility in hiring and firing labour, jobs growth has picked up—for the top 5 states in terms of labour reforms, he estimates employment grew 7.5% per annum between 2003-04 and 2008-09 while it grew just 3.7% in the bottom 5 states in terms of labour reforms. Goldar quotes a World Bank study that says rigid application of labour laws ensured Indian industry created 3 mn less jobs in the formal sector. What’s interesting is, Goldar points out, the share of large units (employing 1,000-1,999 persons) in total organised sector employment has risen by 2 percentage points between 2002-03 and 2008-09. Also, the share of employment in traditionally employment-intensive industries like food products and textiles has fallen; the share of low employment-intensive industries like motor vehicles has risen.

In other words, the paradigm for industrial employment has shifted, and shifted hugely. Whether the government chooses to raise MGNREGA funding in the Budget or not, it would be foolish to ignore the significant potential employment that industry can generate if the government is willing to be more flexible on employment.


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