India Today - Job Famines

5/8/2016
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SIMPLYDELHI
Cover Story
Where are the jobs?

Why is an economy apparently on the upswing not being able to generate enough new
jobs? Welcome to jobless growth.
Shweta Punj | MG Arun
April 20, 2016| UPDATED18:20 IST
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At 8 pm every day, 200 young technicians at pathology giant Thyrocare Technologies begin
work at its automated clinical chemistry laboratory at Turbhe in Navi Mumbai. For the next
12 hours, they operate a range of state-of-the-art diagnostic equipment, which can process
up to 200,000 investigations a night for thyroid, kidney and liver diseases, testing nearly
45,000 samples own in from 1,300 collection centres in India. What would have taken
several days of investigation by at least 1,000 technicians a decade ago is now being done
by a workforce a fth the size in less than a day. "Many job-seekers are qualied for the job,
but not skilled," says A. Velumani, the company's CEO, who ensures freshers are given
specialised training. The new challenges are exciting and even lighten the manual load, but
that's for a lucky few. For the majority of jobseekers in the healthcare segment, the
prospects are grim, with little job security and salaries roughly half what large diagnostic
chains may offer.
Every month, a million Indians become age-eligible to join the workforce, but the growth in
jobs has not kept pace with the rising number of aspirants. The result: unemployment has
been on the rise, despite India supposedly being one of the brighter spots in a slowing
global economy. Thirty-three-year-old Ratna Shankar Choubey, a father of two, in Bihar
recently lost his job for resisting a change from being a permanent to temporary in the
company. "Employment creation will be one of our greatest challenges for the next decade,"
says Jayant Sinha, minister of state for nance. India's unemployment rate grew from 6.8 per
cent in 2001 to 9.6 per cent in 2011, according to Census 2011 data.
The big picture
The situation has only worsened since, thanks to weak industrial growth, a struggling
agriculture sector with widespread drought, cost rationalisations in several sectors and the
knock-on effect of a global slowdown. Also, traditionally labour-intensive industries are
beginning to increasingly mechanise their operations. While it makes them more productive
and protable, it also shrinks job opportunities.
According to the labour ministry's 27th Quarterly Employment Survey of eight employmentintensive industries- textiles, leather, metals, automobiles, gems & jewellery, transport,
IT/BPO and handloom/powerloom)- there were 43,000 job losses in the rst quarter of FY
2015-2016. The second quarter was better, with 134,000 new jobs, but even then the 91,000
net new jobs created in the rst half of FY 2015-16 look desultory.
At their peak, these sectors had added 1.1 million jobs in 2010. In the following ve years,
however, 1.5 million jobs were lost. FY 2014-15 saw a spurt, with 500,000 new jobs added
as compared to 300,000 the year before, but it was still half the peak gure. There have
been no signs of recovery in FY 2016; in fact, there is a decline.
http://indiatoday.intoday.in/story/employmentscenariojobcrunchjoblessgrowtheconomy/1/647573.html
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One reason for the decline in jobs could be a reduction in contract workers (nearly 70,000 of
them were retrenched in the rst half of FY 2016, compared to 161,000 additions in the rst
half of FY 2015). Says labour and employment secretary Shankar Aggarwal:
"Contractualisation is a universal phenomenon. The system of production of goods and
services is different. Value addition is happening across the world and, depending on the
circumstances, people decide where to go. We are witnessing a decline in growth across the
world. To get jobs, we need exibility in hiring."
Employment in export units, reeling under shrunken global demand, also saw a sharp
decline. There were only 5,000 job additions in the rst half of FY 2016 compared with
271,000 in the corresponding period of FY 2015. In the automobile sector, for instance, there
were 23,000 job losses in export units compared to the 26,000 job additions in the other
seven labour-intensive sectors in the second quarter of FY 2016.
Downsizing pain
Large manufacturers are trimming operations, throwing many jobs into jeopardy. Nokia,
locked in a tax dispute with Indian authorities, shut down its handset-making factory in
Chennai in November 2014, rendering 8,000 workers jobless. For Microsoft, the new owner
of the Nokia handset brand, making smartphones in China and Vietnam was cheaper.
Meanwhile, some MNCs in the nancial sector have also recently exited India, after nding
the domestic competition tougher than they had bargained for. Following on the heels of
Goldman Sachs and Nomura, JP Morgan Asset Management of the US exited its onshore
India-based mutual funds business, selling out to Edelweiss Asset Management, the
seventh foreign-sponsored fund house to exit the Indian MF business in the past three
years. Cement major Lafarge is also planning an exit, after selling its 11 mt business here.
Hardly a surprise as the global cement industry is beset by overcapacity and weak demand.
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"We've only been downsizing in the last few years, especially in infrastructure," says Sunil
Kanoria, president, Assocham, and also vice-chairman, SREI Infrastructure Finance Ltd. "The
nancial situation is so bad, companies are struggling to get more resources."
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Avantha Group rm Crompton Greaves is reportedly divesting its consumer business for Rs
2,800 crore. A.M. Naik, chairman, Larsen & Toubro (L&T), has gone on record saying the
engineering and construction giant will exit all businesses with revenues under Rs 1,000
crore, even if it means closing some without nding buyers. The $35 billion Essar Group is
reported to be in talks to sell part of its renery business as well as a portion of its ports
business to pare its steep debt.
Even some celebrated start-ups, touted as the next big thing, have found themselves in a
tight corner. TinyOwl, a two-year-old Mumbai-based food ordering software start-up, is still
in dire straits, even after it red hundreds. Zomato, yet another food tech company, laid off
300 employees, or 10 per cent of its workforce, last year as the business went through a
squeeze.
Growth without jobs
Many wonder why an economy supposedly growing at a rate of over 7 per cent is not
creating enough jobs. Economists say this is because more work is now being done with
fewer employees. "The economy is generating less jobs per unit of GDP," says D.K. Joshi,
chief economist at ratings and research rm Crisil. Illustratively, in manufacturing, if 11
people were needed to execute a piece of work that generated Rs 1 million worth of
industrial GDP a decade ago, today only six are needed. Joshi's verdict: "The economy has
become less labour-absorbent."
Other corporate analysts offer similarly sobering opinions. "India's 7.5 per cent growth is
based on the gross value added methodology, which is being debated, and the growth could
be closer to 5 per cent," says Ajit Ranade, chief economic advisor with the $40 billion Aditya
Birla Group. "Moreover, this growth is capital-intensive, not labour-intensive." D.K.
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Shrivastava, policy advisor at consulting rm EY, explains, "Whatever growth there is does
not seem to be translating into jobs. Either the growth is in sectors that are not employmentintensive, or overall growth is overstated."
This year's Budget had specic provisions to expand productive employment, while also
giving a push to certain sectors of the rural economy and infrastructure that would create
jobs. The move to encourage small and medium enterprises to hire more workers while the
state pitches in with provident fund contributions, and the emphasis on roads and other
infrastructure are all good measures. However, it will take a lot-particularly signicantly
increased investments by both private business and the state-before real benets appear.
As things stand, private investments have been static, and with the government rm on its
scal consolidation targets, public spending too is somewhat constrained.
Ajit Gulabchand, chairman of the $650 million Hindustan Construction Company in Mumbai,
laments: "New job creation is poor because the investment cycle has not kickstarted. We
are in a slow economy and the global slowdown is not helping." The government could
incentivise job creation by giving infrastructure a push, nding a way to lower interest rates
and improve ease of doing business, he says. In his assessment, "the economy will take 2-3
years to get into the fast mode of growth."
Others blame higher levels of automation for the job squeeze. "The growth rate in jobs has
distinctly slowed down with signicant improvements in automation and productivity," says
Rajeev Dubey, group president, HR & Corporate Services, of the $17 billion Mahindra &
Mahindra. CII president Naushad Forbes attributes the job squeeze to the slow pace of
labour reforms. "It has dissuaded companies from creating formal employment, and
incentivised investments in automation."
NASSCOM says software start-ups will create 800,000 jobs by 2017. Photo: Getty Images
The India Exclusion Report 2013-14 by the Delhi-based Centre for Equity Studies, an
autonomous research and social justice advocacy institution, says only 27 million jobs were
added in the supposedly high-growth period of 2004-2010 compared with over 60 million
between 1999 and 2004. The BJP, in its election campaign, highlighted the previous
government's failure to create jobs, reiterating that while the UPA could create only about
1.5 million jobs a year on average in the 10 years it was in power, the earlier NDA regime had
created over 10 million a year. Accordingly, one promise the BJP made in the run-up to the
2014 election was that it would create 10 million jobs a year, leveraging the power of youth
below 35, who comprise 65 per cent of the population-the much talked about 'demographic
dividend'.
The government's Make in India jamboree held in Mumbai this February saw investment
commitments of Rs 15 lakh crore from Indian and overseas investors, but those projects are
still largely on paper. The programme aims to increase the share of manufacturing in GDP
from the current 16 per cent to 25 per cent by 2022, and create 100 million additional jobs
by then. But experts say this may not be an opportune time for a manufacturing-led model
of the sort that created 64 million jobs in China between 2011 and 2016. "Creating
manufacturing jobs will be tough with the advent of robotics," says Ranade.
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Manufacturing blues
Currently, the manufacturing sector has an overall employment share of 12-13 per cent.
While this share has been growing, even if gradually, in the past decade, the number of
workers per factory has been dropping in the past 3-4 decades due to increased
outsourcing. Moreover, the growth has not been consistent across the country and is
primarily in mid-sized factories and through informal employment.
In the infrastructure and manufacturing sector, getting good talent at the leadership level,
especially to handle prot and loss responsibilities with requisite commercial skills, is not
an easy task, says Yogi Sriram, vice-president, corporate HR, L&T. What the country requires,
he says, is youth oriented to working on the shop oor. The 'dignity of labour' remains an
exotic concept in India. "Shufing papers is seen as more dignied as compared to holding
a torque wrench," he observes. The manufacturing sector has been losing people to the
services sector, which is seen as more glamorous, and betterpaid. It's also much easier to
switch jobs and gain international exposure here.
The services story
Yet, there are some areas that still stand out when it comes to job creation, notably the
nancial services and the nancial technology sectors. For example, ever since the RBI
granted licences to 10 new small banks and 11 payment banks in 2015, employment
opportunities have been growing. The traditional banks have been opening new branches
and hiring personnel to augment their services in the face of intense competition from the
new players. Similarly, in nancial technologies, the entry of outts such as PayTM that
combine technology with nancial services is also giving a new impetus to job creation.
Click here to Enlarge
The other upbeat sector is e-commerce, which is ush with funds and investing heavily in
logistics and lastmile delivery. "Broadly, supply chain, logistics and distribution-related jobs
do well when there is economic growth and a pick-up in manufacturing," says E. Balaji,
president, People Services, at TVS Logistics. "Logistics services grow at almost three times
the rate of GDP growth, globally speaking."
Jobs below the radar?

Some skilling and data experts such as Mohandas Pai, chairman, Manipal Global Education
Services, and Dilip Chenoy, former CEO, National Skill Development Corporation, argue that
the data does not fully capture the movement in the economy. "When you talk of highest
coal production or power generation or maximum roads built... these have not been
achieved without creating jobs," says Chenoy.
Also, in India, the informal sector accounts for the larger chunk of jobs created. India has
only about 30 million jobs in the organised sector and nearly 440 million in the unorganised
sector. The Economic Survey 2015-16 highlights this conundrum: of the 10.5 million new
manufacturing jobs created in India between 1989 and 2010, only 3.7 million, or about 35
per cent, were in the formal sector, where proper job contracts are signed between
employers and staff, salaries are xed and contributions to Employees' Provident Fund
5/11
5/8/2016
guaranteed under government labour laws.
Jobs here will emerge in ultra-early diagnosis, senior care and treatment, articial functional devices and organs.
Photo: Danesh Jassawala
The total number of establishments, according to the Survey, increased by 4.2 million
between 1989 and 2010, but the formal sector accounted for just 1.2 per cent of this
growth. The year 2000 marks an inection point, when informal sector growth plateaus and
employment falls even as formal sector employment picks up. However, the Survey states
the informal sector could be credited with creating jobs and keeping unemployment low.
Industry leaders agree with this hypothesis. "Economists and policymakers seem to
underestimate the contributions of the informal sector in creating employment," says R.C.
Bhargava, chairman, Maruti Suzuki, India's largest carmaker. The company has not been
making any substantial additions to its workforce, of late. However, when it rolls out 1.5
million cars a year, it also creates anywhere between 800,000 and a million jobs, Bhargava
estimates. These jobs are in driver training, repairs, spare parts shops, insurance,
dealerships etc. "This applies to a whole lot of other industries as well, where informal jobs
are created in the thousands in the downstream sector," he adds.
Government data too does not capture this trend in informal jobs. "Organised sector
employment captures only one side of it," says Jayant Sinha. "The entrepreneurial sector is
very poorly tracked. Many of the jobs in the economy are created by the Flipkarts, Myntras
and Snapdeals of the world, and these jobs are not picked up by the numbers. We are also
focusing on traditional economy jobs like sheries, embroidery etc."
The labour department is cognisant of the limitation of its data and is working towards
expanding the scope of the survey. From July this year, it will include 10,000 establishments,
up from the current 2,000-2,500 and expand to 18 sectors from the current eight.
Start-ups, the increased focus on medium and small enterprises and greater selfemployment too do not get accounted for in the data. According to IT industry body
Nasscom, 3-4 IT start-ups are born every day in India. In calendar 2015, 1,200 start-ups were
launched in the tech space alone, a 40 per cent rise from 2014. India has the third highest
number of start-ups in the world at 4,200, behind the US and Britain, but ahead of China and
Israel. Nasscom estimates software start-ups will create 800,000 jobs by 2017.
Changing it winds
Meanwhile, the traditional IT sector is experiencing big change that will impact job proles
and opportunities. Automation, self-service portals, costsharing are all dampeners on job
creation in the ITeS segment.
Customers are seeking more productivity and value addition. While this will require a higher
level of skill, it will not result in more new job opportunities. The model of companies going
to engineering colleges to recruit staff is changing. Disruptive technologies, such as social,
mobility, analytics and cloud are offering new avenues of growth across verticals for IT
companies. Articial Intelligence (AI) is another upcoming area. Positions likely to be
demand in the coming years include data scientists, retail planners, product managers and
digital marketers. In certain instances, the advent of new technology will require more
specialised skill sets. For example, interactive voice response (IVR) can easily manage a
BPO unit of 500 professionals now, but we will still need technology professionals to ensure
6/11
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correct delivery of information through IVR.

The other interesting trend is the shift of ITeS jobs to Tier-2, Tier-3 cities and rural areas-a
trend that may owe to simple cost effectiveness, but which will require higher emphasis on
interpersonal and communication skills. The earlier euphoria over call centre jobs has all but
vanished. Here, India seems to be losing out to countries like the Philippines and Malaysia
which have staff trained in non-voice analytics and accounting work.
Hope on the horizon
Nonetheless, there are those who still see a glimmer of hope on the employment horizon.
"India is among the few countries in the world that has a reason to be optimistic," says N.S.
Rajan, member, Group Executive Council, and Group Chief Human Resources Ofcer at the
$100 billion Tata Group. "This could be due to the favourable structural growth story or the
presence of a huge demographic dividend or the stability that is provided by democracy."
However, even these assets can only be redeemed if the requisite skills and capabilities and
the right kinds of jobs are available, he concedes.
For all the turbulence, the signicance of new economy enterprises should not be
underestimated. These could be in education, healthcare, e-commerce and hospitality. More
than half the companies that raised money through IPOs in the equity markets in 2015-16
were from these sectors. As Sebi chairman U.K. Sinha told India Today in December 2015,
"This gives a signal that there is a shift happening in economic activity-new entrepreneurial
energy is betting on new areas. The traditional sectors such as power and steel have not
raised much in scal 2016."
This new economy-which is more digital and technology driven and is slowly but denitely
changing how we live-from technology interventions in rural areas (the 'JAM' trinity of Jan
Dhan Yojana, Aadhaar and mobile connectivity for targeted subsidies) to buying groceries
online. India is on the cusp of a second-generation digital revolution, which will spread
across the economic spectrum, from agriculture, rural, healthcare, education, retail, other
services, manufacturing, and create a new set of jobs and render some existing ones
obsolete.
The government, on its part, seems to have grasped this change: new 'thrust areas'-such as
Digital India, Skill India, StartUP India and Make in India-all focus on creating an ecosystem
that will generate jobs.
Pankaj Bansal, co-founder and CEO, Peoplestrong, an HR consultancy rm, talks about the
rise of a 'gig economy'- one in which people will work on a skill- and need-based basis, doing
two or more jobs in a year. HR consultants anticipate a digital divide in the country where
the digital economy will demand very different skills, though some real economy vocations
such as plumbing or carpentry will survive.
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Nearly half India's farm labour will have to move to other sectors
India's skill development minister, Rajiv Pratap Rudy, hopes to address the challenge through
Industrial Training Institutes, but he also believes one needs to focus on the bottom of the
pyramid, as "the volumes there are higher". "We need to understand that skill development in
the country is being carried out by 22 ministries through more than 70 schemes," Rudy told
India Today. While saying his ministry's mandate is not to create jobs, he agrees there are
skills that have either been lost or are in decline because of the introduction of new
technologies. "However, we need to understand there will always be a trade-off between
technology and the workforce previously performing that task," he says.
S. Ramadorai, chairman, National Skills Development Council and advisor to the prime
minister, speaks of the need to create skills portable across borders. "Green sectors such as
solar energy and wind, besides defence and aerospace industry, construction, education
and healthcare will be the new job creators," he says. Job proles too will change.
Mechanical engineers who can build robots will be in demand. "Look at the transformation
in passport kendras. Too much manual work leads to inefciencies. Digitisation is the
solution," says Ramadorai.
It's evident India has missed the manufacturing export opportunity China had in the 1970s.
Job creation will be a consequence of increased domestic consumption, which requires
macroeconomic stability (low ination and interest rates), reduced regulatory hassles,
further decentralisation and an aggressive skilling campaign. Teamlease's Manish
Sabharwal doesn't believe India will ever get to a situation like China's where 34 per cent of
its labour force will be involved in manufacturing, up from the current 11 per cent, equivalent
to post-industrial United States. However, getting to 20 per cent is possible and that would
account for another 100 million jobs. "The good news is, policy moves are accelerating the
ve labour market transitions that are journeys to higher productivity-farm to non-farm, rural
to urban, subsistence self-employment to decent wage employment, informal to formal, and
school to work," says Sabharwal. Reforms in the labour market and a greater emphasis on
labourintensive industries such as textiles are needed to boost formal employment and
sustain urban demand growth. "The skilling challenge is across the board," he adds. Nearly
50 per cent of India's labour force on farms needs to transition to non-farm jobs, but often
does not have the skills. "A million young men and women will join the labour force every
month for the next 20 years, and many of them will have degrees but will be unemployable,"
he says. Not a pretty picture.
Also read:
On hire ground
8/11
5/8/2016
with Amitabh Srivastava
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13 comments
ME
What is your opinion?
Name
Post
Sanjeev
true story. educated but unemployed or underemployed. We need to think on low cost
entrpeneurship
11 days ago
SS
Email
(0)
(0) reply(0)
Sandeep Srivastava
The story can't be more pertinent and critical - just that the reasons are all misplaced, as is
expected given the middle-calss background of the authors of the story. The middle-calss
has comprehensively supplemented its way through education system - tuition, coaching,
mentoring, foreign education (more to get away than going to the best institutions in the
world), internships etc.
Jobs are aplenty in all sectors - India was never this thriving with global reach and
9/11
5/8/2016
Jobs are aplenty in all sectors - India was never this thriving with global reach and
confidence - but there are no people with real education, only degreed people! Everyone is
seeking people-less growth and business growth is hugely stunted for all Enterprises.
Quality of manpower is stopping us all from growing.
Fix education system. Fix schools.
(2)
NareshEUp Voted
12 days ago
(0) reply(0)
Guest
Unfortunately the services sector like tourism which has the capability to create many
times more jobs as compared to white collar or manufacturing jobs is tragically ignored by
the Government. This is because of the socialism type of thinking prevalent in the
government
12 days ago
(1)
(0) reply(0)
NareshUp Voted
PC
555
P Chandra
Why are we not talking about population explosion? No country can provide jobs to such a
huge population.
(2)
(2) reply(0)
ElangoNareshUp Voted
12 days ago
aSNBHDown Voted
KG
540
Kamal Gaur
Government should give a farming land to all jobless people, some money to dig a well and
buy tools to do farming. They should be able sell this land for next 50 years, then you see
unemployment will be reduced and nation will be able to export, food, fruit, and other agro
and related product. Aer giving land, if the un-employed youth is not able to prove, that,
he has not done anything on land to cultivate it, then, land should be taken back and given
to another needy.
12 days ago
(1)
(0) reply(0)
aUp Voted
KG
540
Kamal Gaur
I oer 10000 a month, plus stay and food for watering plants and trees at Nirvana beach
Gokarna, still even unskilled people run away from work, reason, every young one is
dreaming of money, bike latest mobile, without working. Jobs are plenty, young people
should take any job till the, they get a job of there choice.
12 days ago
(1)
(1) reply(0)
ElangoUp Voted
aDown Voted
Vipul
ALL the students and jobless should go to poor farmers of india and help
them farming, this way they will there lives as well as others....this is the only
solution to joblessness.
(2)
aNareshUp Voted
13 days ago
(0) reply(0)
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5/8/2016

Where are the jobs?

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