Service sector to be the most prolific employer

A FICCI panel discussion with participants such as Dr. Bibek Debroy, Member, Niti Aayog and others, brought out that informal sector would in future offer jobs to lakhs of Indians


New Delhi: Speaking at the Panel Discussion on Economy of Jobs, Dr. Bibek Debroy, Member, Niti Aayog, highlighted that the employment situation in India has not changed substantially since the launch of the book ‘Economy of Jobs’ at FICCI’s 89th AGM in December 2016. He informed that India is a largely informal and an unorganised economy with about 90 percent of the people employed in the informal sector. He stressed that a very large degree of self-employment exists in the country, even outside agriculture. Dr. Debroy mentioned that out of a total workforce of around 500 million people, the organised sector accounted for just 100 million people at best.

While acknowledging the government’s recent initiative to set up a taskforce to address issues in labour and employment, Dr. Debroy stressed upon the limited availability of reliable and effective data on employment. “The only credible way to get data on employment is by using household survey over and above the enterprise survey,” he added. Highlighting the issues in creating jobs in the manufacturing segment, Dr Debroy indicated that the Indian manufacturing sector has shifted more to capital intensive approach owing to labour laws arising from tighter laws especially in 1977-78 and 1984-85. However, he stressed that even post 1991, when the labour laws were not as restrictive, manufacturing witnessed a more capital intensive approach. He attributed this to faster decline in price of capital relative to the price of labour.

“Prospects of manufacturing creating direct jobs is thus not much. Primarily growth in jobs would, therefore, come from services sector such as transportation, logistics,” said Dr. Debroy. Dr. Debroy suggested that markets should match supply and demand of labour and cited two issues that hinder market equilibrium. First, regional intermediation between demand and supply are inefficient which is also linked to the fact that education is not equivalent to skills. Second, people are unwilling to settle for jobs that fails to give a salary that matches the investment in attaining education.

Commenting on the situation of jobs in the country, Arun Maira, Former Member, Planning Commission, stressed upon the need to change the mindset and look at drivers of jobs from a different point of view. He called for greater nurturing of the informal sector and simultaneously addressing the issues faced by them. “There is a need to improve the delivery mechanism of skills by creating an enabling environment, with the help of technology to achieve the target of skilled workforce” added Maira.

On the rising unemployment challenge in India, Mohandas Pai, Chairman, Manipal Global Education Services, mentioned that as companies are becoming more competitive; automation and artificial intelligence will impact job creation in our country in a major way going forward. He further pointed out that by 2025 there will be 200 million young people in the age group of 21-41 with no or less jobs. With rising income divergence in the society, the disparity between people in agriculture and services will widen which could have significant ramifications for our society.

“India is amongst the bright spots in the world economy today, with the highest growth amongst all large economies. Yet, the pace of growth in jobs is nowhere near the overall economic growth. One of the obvious reasons is the rapid rise in the use of technology and machines, which have increased efficiency and lowered the reliance on manual work. Most of the organisations have started going lean and are reducing the non-productive job roles with the help of technology”, said Harshavardhan Neotia, Immediate Past President, FICCI. Dr. A Didar Singh, Secretary General, FICCI, while elaborating on the need for skills, said that a tremendous mismatch existed between skills, education, geography and jobs. He highlighted that even the most educated youth are not adequately equipped with skills needed by the industry. Alluding to the changing technological environment, he added that the market is responding differently to the mismatch in skills and we must allow them to do so. “Policymakers and employers are still looking at a framework which is not very relevant. There is a need to start looking at the idea of work rather than job and set up a framework of how to provide safety, security, welfare,” said Pranjal Sharma, Economic Analyst and Writer.


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