The Economic Survey said the centre will focus on labour reforms, increase infrastructure spending, create an enabling environment for labour-intensive sectors
New Delhi: The Economic Survey said the government will push ahead with labour reforms, increase spending on infrastructure and create an enabling environment for labour-intensive sectors to boost job creation, which it termed as a pressing medium-term challenge.
The Survey reiterated the government’s commitment to consolidate a plethora of labour laws into four broad pieces of legislation and adopt technology to ease compliance norms for companies.
With generation of adequate jobs becoming a major political issue ahead of general elections due in 2019, the government said creation of employment opportunities for the youth is one of its three areas of policy focus in the medium term, the other two being education and agriculture.
“Over the medium term, three areas of policy focus stand out: Employment: finding good jobs for the young and burgeoning workforce, especially for women. Education: (for) creating an educated and healthy labour force. Agriculture: raising farm productivity while strengthening agricultural resilience," the Survey said.
“Jobs will remain a pressing medium-term challenge," it said, adding, an “effective response will encompass multiple levers and strategies, above all creating a climate for rapid economic growth on the strength of the only two truly sustainable engines—private investment and exports".
Around 12 million people enter the Indian labour market every year. The Survey says that India’s formal workforce strength may be greater than estimated. In the absence of comprehensive jobs data, it indicates that formal employment may be estimated in at least two ways—via social security benefits and via firms that are part of the tax net.
From the social security perspective, formal employment is equivalent to 31% of the non-agricultural workforce and from a tax perspective, formal employment may constitute 54% of the non-agricultural workforce. The survey has taken 2011 as the base year for the total non-agriculture employment (which was 24 crore) to arrive at the 31% and 54% formal employment figures.
“Of course, not all firms that pay GST are formal, in the common-use sense of the term...notwithstanding the caveats regarding the specific numbers, the broad conclusion is...formal payrolls may be considerably greater than currently believed," the Survey said.
The Survey also advocated improving women’s participation in the workforce and reducing male-female pay disparity. It said the gender gap in median earnings for full-time workers is more than 50%. This is much worse than in countries such as South Africa, Brazil, and Chile.
According to the Survey, the female labour force participation rate has declined to 24% in 2015-16 from 36% in 2005-06.
“The survey, in a way, presents government’s labour market strategy that it will adopt in the near future. On the one hand, it is talking about aiding the infra, construction and export sectors and on the other, it is talking about bettering women participation," said K.R. Shyam Sundar, a labour economist and professor at business school XLRI, Jamshedpur.
“While the first set of sectors along with MSME (micro, small and medium enterprises) will help create jobs and the modern service sectors including IT, e-commerce etc, can help reduce gender pay gap in the country. The key, however, will be translating intention to action," Sundar added.
According to the survey, the government is promoting inclusive employment-intensive industry and building resilient infrastructure which are vital factors for economic growth and development.
The survey also mentioned leather, textiles, gems and jewelry, MSME and logistics industries as some of the key drivers of jobs growth.
Commenting on the outcome of a Rs6,000 crore financial package for the textiles sector, the survey said “since its implementation in June 2016, the package had a positive impact on the exports of ready-made garments (RMG) of man-made fibres while it did not have a statistically significant impact on the RMG of other natural fibres, except wool".
Ashwaq Masoodi in New Delhi contributed to the story.
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