Our acute jobs challenge is linked to enterprise creation
About 13 million young people join the workforce in India every year. Even assuming only half of them seek jobs, we still need 6-7 million new jobs every year.These are in addition to the churn among existing job holders,which add to the count of total job seekers.Except for a few thousand, most new jobs are not created by large corporates,public or private but by Small,Medium and Tiny one-person enterprises.Hence, our clarion call for job creation should be accompanied by a stirring call to create enterprises.
Most youngsters among the large mass entering the workforce are ill-prepared to become entrepreneurs.Bulk of them take up casual jobs in the informal sector,with lives of insecurity.In a recent paper in the Indian Journal of Labour Economics,economist Amit Basole points to a vicious cycle that is a structural feature of employment dynamics.It goes thus.Labour moving out of low-productivity subsistence agriculture moves to cities with low-paying precarious employment in the formal sector.The latter has an in-built bias for high-capital intensity,made worse by cheap capital.The vicious loop closes since low paying jobs do not create sufficient purchasing power to generate demand for formal sector's output. We have the phenomenon of jobless growth.India's growth elasticity of employment has remained low for more than a decade.This situation has aggravated by a low-labour force participation rate(for females it has fallen to 20%),implying a discouraged workforce.
Small startups do most of the hiring and we should enable many more new ventures to thrive.Unemployment rates vary across India,with wide regional variations in employment dynamics. But job creation at a massive scale remains India's topmost priority. It faces huge structural impediments and is linked to enterprise creation,the ease of doing business,skill formation and curriculum reform,among other things. To let this challenge fester is to invite dire social consequences.To tackle the problem of Job scarcity, Government should focus on creating newer enterprises and supporting the existing ones.
Source: An article by Ajit Ranade from the Views section of The Mint Newspaper
