Where are the jobs in India?
Compared to April 2015, Naukri.com’s Job Speak Index rose a mere 1.8% in April 2017 indicating the glacial pace of job creation and a persistent unemployment problem
India may be the world’s fastest growing major economy, but the benefits of that growth do not seem to be percolating down to the masses. Job creation continues to be a major problem, if Naukri.com’s Job Speak Index is any guide.
Cast your eyes on the accompanying chart. The overall index for April 2017 was 10.9% lower than a year ago. That means new job creation in the month was 10.9% lower than April 2016. What’s more, the overall index for April 2017 was lower than where it was in July 2015.
Compared to April 2015, the index is up a mere 1.8%, indicating the glacial pace of job creation.
Among sectors, the worst hit was the information technology (IT)-software industry, which saw a 24% year-on-year drop in hiring. Apart from stricter employment norms abroad, automation too has impacted new job creation. Other key industries like construction and business process outsourcing/IT enabled services too saw a 10% and 12% decline in hiring, respectively, showed the index.
The problem of automation leading to fewer jobs is not limited to IT-software alone. A sector like manufacturing is also opting for automation to remain cost- effective. With not much capacity addition happening, job creation is expected to remain subdued.
Will the long-awaited revival in private sector investment aid massive job creation? Economists are sceptical. Some level of job creation may happen, but not sufficient to match the number of people arriving in the job market, they said.
Construction too is a key employment generator for the economy and the lull in real-estate demand has hit employment there. “Road construction activity by the government may have gone up, but that creates jobs for unskilled labour and that too on contract basis, the nature of employment is not permanent,” said Madan Sabnavis, chief economist at CARE Ratings.
Employment generation in sectors like automobile, pharmaceutical, and gems and jewellery would partly depend on how buoyant exports are.
Meanwhile, city-wise, six out of eight metros saw a decline in hiring activity in April compared to a year ago. The hiring index for Delhi/National Capital Region, Mumbai, Chennai and Bengaluru saw a dip of 28%, 18%, 29% and 28%, respectively. On the other hand, Kolkata and Ahmedabad saw an increase of 10% and 19%, respectively, year-on-year, showed the index.
What will be the impact of the goods and services tax (GST)? “With GST, demand for accounting professionals might go up, but that is about it. Media reports state that with GST and removal of octroi, number of toll points will reduce, which means loss of jobs. Our GDP (gross domestic product) growth has been hovering around 6-7% and for large job creation, the GDP has to continuously accelerate,” added Sabnavis.
Hopes now rest on consumption demand. Aditi Nayar, principal economist at Icra Ltd, is of the view that the anticipated healthy consumption demand in fiscal year 2018 would drive some capacity expansion and job creation towards the latter part of the year. Simplification of labour laws would create a conducive atmosphere for job growth, she added.
But the lack of good jobs is not just a short-term problem. ‘The Naukri.com numbers bear out anecdotal evidence as well as the fact that employment elasticity in India has been low,” said Gaurav Kapur, chief economist at IndusInd Bank Ltd. The long-term solution is twofold—to endow people with skills and to have a housing boom that will lead to employment generation at many levels, from labourers to carpenters to architects, he added.
Unless more jobs are created, India’s demographic dividend will turn into a nightmare.