Employment Trends In India: Addressing Challenges and Solutions for Job Creation

Context

India faces a significant challenge in creating enough jobs to sustain its burgeoning population.

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Employment Trends In India: Introduction

• India’s Economic Growth: India’s economy is poised to ascend to the position of the world’s third-largest, marked by robust expansion, a youthful demographic, widespread smartphone adoption, and the emergence of a wealthy elite amidst ongoing poverty. 
• Employment Disparity Hindering Economic Dynamism: However, despite these promising signs, merely 46.6% of the working-age populace is engaged in active employment, thereby diminishing the economy’s overall dynamism contrasting with other developing markets boasting employment rates nearing 70%.

Job Creation Challenges in India

• Skills Deficit in the Workforce: Despite India’s large workforce of approximately 950 million, there is a notable skills deficit hindering employment opportunities.
  • The 2024 India Skills Report revealed that only half of young Indians are considered employable, indicating a gap between the skills possessed by the workforce and those demanded by employers.
• Lack of Job Creation: Skill deficit not only affects high-end services sectors but also impacts the availability of skilled labor across various industries, constraining economic growth and job creation efforts.
• Reliance on Low-Skilled Services: With limited opportunities for skilled employment, many individuals are forced to seek work in low-skilled service sectors.
  • Construction, street vending, domestic labor, and similar occupations serve as the primary sources of employment for a significant portion of the population.
  • However, these roles often offer minimal wages and lack opportunities for upward mobility, perpetuating cycles of poverty and income inequality.
• Crisis in Service Sector: India’s economic development strategy has largely focused on services rather than traditional manufacturing-led growth. However it has contributed to jobless growth.
• • The IT sector, once a pillar of India’s services economy, is experiencing its first contraction in 25 years, attributed to automation and artificial intelligence displacing traditional roles and slowing demand for new hires.

How India Can Promote Job Creation?

• Growth Potential of Global Capability Centres (GCCs): GCCs provide a range of services to multinational corporations (MNCs) and present significant growth opportunities, with the potential to employ millions by 2030 and stimulate demand for lower-skilled services.
  • Global Capability Centres provide services to the parent that range from finance, legal and HR to high-tech innovation clusters in cyber, analytics and AI.
  • There are already over 1,500 GCCs employing 1.6 million people, expected to grow to 4.5 million by 2030.
• High-End Services Exports: Services out of such centers could become one of India’s biggest exports, generating incomes and demand for even more services from lower-skilled tiers.
• Tech Startups: Despite recent setbacks, India’s tech startups offer potential for job creation, particularly in industries like AI, Software as a Service (SaaS), defence, and green technology.
• Green Transition: India’s commitment to renewable energy presents an opportunity to create millions of new jobs in the Green economy, including roles in renewable energy production, hydrogen production, and emissions reduction.
  • The World Economic Forum projects 50 million net new “green economy” jobs in India.
• Reviving Manufacturing: Small and medium-sized manufacturers should be supported to become reliable job creators
  • Small and medium manufacturers are likely to be less automation-intensive and more reliable labour absorbers.
• Leveraging India’s Digital Public Infrastructure: India’s digital public infrastructure , Open Network for Digital Commerce that connects market players on a single protocol can be leveraged for access to credit, resources, logistics, warehousing and customers.
  • This can help small-and-medium manufacturers replicate the benefits of larger players.

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Conclusion

India’s economic future is dependent on its capacity to handle the urgent need for job creation through a diversified approach that includes promoting high-end service exports, nurturing tech entrepreneurs, embracing the green transition, and revitalizing the manufacturing sector.

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