New Delhi: On the heels of a move to reform labour laws, the National Democratic Alliance (NDA) government has taken the first step to put in place a national employment policy that is “responsive to the aspiration of youth and in synergy with the economic growth”.
To begin with, the labour ministry has sought suggestions from industries, trade unions, company associations and the public on the proposed national policy. A background note prepared by the ministry said that despite better economic growth in the past 10 years of the Congress-led United Progressive Alliance (UPA) government, job creation was below 1%.
“In the last decade, the growth of economy at an annual rate of around 8% was accompanied by a dismal growth in jobs at below 1%,” said the ministry note, a copy of which has been reviewed by Mint.
The proportion of people in the labour force declined from 43% in 2004-05 to 39.5% in 2011-12, with a sharp drop in female participation rate from 29% to 22.5%, it underlined.
“India has the significant advantage of a young population and a declining dependency ratio, offering huge potential for a demographic dividend. There are, however, serious challenges which need to be addressed for fully reaping this unique dividend in the global scenario,” said the labour ministry, almost reiterating what the Bharatiya Janata Party (BJP) had said in its 2014 general election campaign.
In its poll manifesto, the BJP had said it considers youth as the most productive asset of the nation, who have played a key role in taking the country to a near double digit growth. Under the broader economic revival, the BJP will accord high priority to job creation and opportunities for entrepreneurship, the manifesto had said.
The ministry said that although the overall unemployment rate is at 2.2%, the unemployment rates for youth in the age group 15-29 years and particularly those possessing secondary level of education and above are much higher. It did not give the exact unemployment rate for this age group. More than 52% of the workers are engaged in self-employment and a significant proportion of women workers are primarily home-based, it said.
To be sure, the proposal to bring in a national employment policy was first proposed in 2008. An inter-ministerial group during the United Progressive Alliance regime had examined the proposal but nothing concrete emerged, a ministry official said, declined to be named. However, keeping in view the dimension of the challenges involved, this is to seek wider consultations in the matter before moving fast, the official said.
The ministry has already made the first move in reforming labour laws like the factories law.
“Reforming labour laws and creating a national policy on employment should not be seen differently,” the official said. “In both cases, the aim is job creation.”
While seeking suggestions, the ministry is looking to structure the feedback into three segments.
From trade unions, institutions, associations and the public, it had sought suggestions on employment generation, enhancing productivity, reform in labour laws, increasing participation of youth and women in workforce and increasing entrepreneurship.
In the case of ministries and departments, it wants feedback on key schemes and programmes on employment—achievement in the last five years and projection for the next five years. It also wants information on social security measures for workers and their achievements and target for next five years. It has sought suggestions on transforming informal skills into formal skills, a topic which is close to Prime Minister Narendra Modi, who has emphasized the need for a skilled India several times in recent weeks.
Finally, it has sought suggestions on target for job creations, memorandum of understanding and bilateral or multilateral arrangements for improving labour productivity, among other things.
India’s labour productivity is $10,080 a year compared with $107,551 in the US and $23,888 in Brazil, the ministry’s background note said. “Scaling of productivity levels would require development of human capital and entrepreneurship, technological advancement and innovation, along with enabling macro-economic policies, infrastructure and concerted action,” it said.
Industry needs to accommodate a high degree of flexibility in its operations in order to respond effectively to the changing markets and business environment. The focus is still leaning toward job protection of those already employed rather than job creation for the millions of unemployed, Confederation of Indian Industry, a lobby group, has said in its recommendations to the labour ministry.
“We need a national policy. But government should give broad macro-level guidelines rather dwelling too deep or managing the nitty-gritty. Each sector can then devise their detailed outlines,” said Amit Khurana, a former executive vice-president of human resources at Yes Bank Ltd and managing director of Corporate Access, a human resource company. “After broad guidelines, it needs to be an observor.”