Employment onus on India

India will need to generate at least 5.5 crore additional jobs by 2015 if it wants to maintain the current ratio of employed people to total population, a study done by Crisil Research said today.

The study, Employment in India ' Uneven and Weak, said this number of 5.5 crore would be twice the number of jobs created during 2005-10 and that creating these jobs would pose a challenge without adequate policy support. While the current ratio of employed people to the total population stands at 39 per cent, the number of 5.5 crore also comes after accounting for many people employed today either retiring or losing their jobs.

According to the study, despite higher economic growth in the second half of 2000s, the country has been unable to generate sufficient number of jobs in manufacturing and services. For instance, the GDP growth increased to 8.6 per cent during 2005-10 from 6 per cent during 2000-05, but the net addition to jobs remained almost flat at around 2.7 crore during these two periods.

"While net additions to jobs during the second half of the 2000 decade have been higher than the much-discussed two million number, this is clearly not enough to ensure inclusive growth," it said.

Crisil said if the country wanted a solution in this regard, it should look at other countries, including China. The study noted large scale labour-intensive manufacturing units are a rarity in India, since the real cost of employing labour is high.

Moreover, it is also virtually impossible for a manufacturing company with more than 100 employees to fire any employee even if it is facing bankruptcy. Therefore, demand for labour has not increased fast enough in manufacturing.

However, in the service sector, particularly in high-skilled services such as financial intermediation and business services, there is a shortage of skilled labour that is constraining job creation.