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India’s workforce boom is a mixed blessing: experts

India’s workforce boom is a mixed blessing: experts
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First Published: Sun, Dec 05 2010. 12 28 PM IST
Updated: Sun, Dec 05 2010. 12 28 PM IST
New Delhi: An explosion of working-age people in India could serve as an engine of economic growth — or bring social turmoil, experts say.
Over the next two decades, India’s working-age population will increase by 240 million — four times the entire population of Britain — according to investment house Deutsche Bank.
But without education, this “demographic dividend can easily become a demographic curse,” Rajat Nag, managing director of the Asian Development Bank, warned at a recent conference of international investors in New Delhi.
The seeds of conflict can already be seen, with 800 million people living on under Rs 20 (45 cents) a day, according to official data, and a growing Maoist revolt in poor areas shut out from the nation’s economic boom.
“Superpower dreams cannot be sustained on empty stomachs. India has a long way to go to reach the levels of income that would guarantee all its citizens a prosperous lifestyle,” Bajaj Auto chairman Rahul Bajaj told the same forum.
Under a best-case scenario, India’s burgeoning youth population will boost earnings, savings, productivity and economic growth by reducing the so-called “dependency ratio” — referring to people outside the working ages of 15 to 65.
But “social cohesion may well be affected if economic gains are not more inclusive and provide jobs and raise living standards,” said Deepak Lalwani, a veteran Indian analyst, who heads his own consultancy.
India is reaching a “tipping point” where the huge number of young workers entering the labour force could unleash major economic gains by boosting savings and investment, experts say.
China made a great economic leap forward when it reached that point in the early 1980s.
Already, over half of India’s population of 1.2 billion is below 25.
By 2020, the average age of an Indian is expected to be 29 years, compared with 37 for China, whose working-age population will peak just five years from now and then gradually decline, partly as a result of its one-child policy.
By 2035, India’s potential “youth bounty” will be even more striking, with its total population set to hit 1.5 billion -- outdistancing China’s -- and 65 percent of them of working age.
This would give India the largest working population in the world.
But for India to benefit, its workers must be skilled, said Nag.
The challenges of educating India’s young population are vast, and critics say the country is falling far short.
Government in April passed a right to education act for children aged six to 14, but schools and teachers are not in place to implement the law.
The country has a literacy rate of just 65%, lagging far behind many other developing countries. Neighbouring China’s literacy rate is 90.9%, while Kenya’s is 85.1%.
The government says it needs 1.2 million teachers to meet the requirements of the education legislation. But at the moment it only has 700,000 teachers and a teacher absenteeism rate of 25 percent.
Among those students who are enrolled, 39% drop out by the age of 10. Among 15 to 19 year olds, only 2% have received job training, a World Bank report says.
“Our biggest challenge lies at the school level — dropout rates are huge,” said Haria Bhartia, president of the Confederation of Indian Industry.
For those who get through high school, there is cut-throat competition for college and university places. For instance, there are nearly 300,000 hopefuls for 1,700 places each year at the elite Indian Institutes of Management.
Minister for educationa and human resource Minister Kapil Sabil says he wants to increase the number of high school graduates who enrol in higher education to 30% by 2020 from 12% now, but that means building hundreds more colleges and universities.
To meet the demands of university-age students, the government has drafted legislation to allow foreign universities to set up their own campuses with undergraduate and graduate degree programmes.
India’s top mobile phone firm Bharti Airtel employs 30,000 people worldwide, many of them young, and its chairman Sunil Bharti Mittal knows he will rely on a skilled and educated labour pool in India in the decades ahead.
“If India gets it right, it will benefit from its demographic dividend with a young, productive workforce that will propel economic growth for decades,” he said.
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First Published: Sun, Dec 05 2010. 12 28 PM IST
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