Demographic dividend is working more in favor of India than of other countries. And, within India, while the States with a greater number of factories employed more people, those with young population saw higher employment growth rates.  

More than 40 per cent of factory employment was in Tamil Nadu, Gujarat and Maharashtra. 

The highest employment growth between FY18 and FY22 was seen in States with a higher share of young population, including Chhattisgarh, Haryana and Uttar Pradesh, according to the Economic Survey 2023-24. 

New investments

This trend reflects the new investments that have come to the States other than Tamil Nadu and Maharashtra. Large factories have been deploying new technologies consistently, and as a result, the need for workers is going down. They have been reskilling their workers to operate machines with higher technology and deploying them internally. All these have been optimising the need of human beings on the factory floors, said Aditya Narayan Mishra, MD & CEO, CIEL HR. 

Demographic dividend is working for Bihar, UP, Haryana when compared with other States. Also, post Covid, many candidates are concerned about their health and wellbeing apart from their financial situation. Hence, they evaluate the pros and cons of an opportunity before picking it up, he said. 

Tamil Nadu, Gujarat, Maharashtra (cohort one) accounting for 38 per cent of the factories and 40 per cent of factory employment in India, added 4,862 factories and 4.65 lakh employees between FY18 and FY22. This translates to 5 per cent and 9 per cent growth in factory count and employee count respectively. 

Chhattisgarh, Haryana and UP (cohort two) with higher demographic dividend account for 12 per cent of India’s factory count and 14 per cent of factory employment. This cohort also registered a nearly same volume of net additions with 5,099 factories and 4.70 lakh during the same period. Due to the low base value, the growth percentage of this cohort during the period is 18 per cent on factories and 28 per cent on employees. 

As States with a comparatively lower spread of factory units, the second cohort of States has a statistically higher scope for growth with respective State government initiatives and incentives, says Anil Ethanur, Co-founder, Xpheno - a specialist staffing company. 

The local growth of the factory ecosystem in cohort two that’s creating jobs locally, can and will act in favor of local talent to find opportunities closer to home. With local opportunities opening, the driver to migrate to another State will hence primarily depend on the relative earning and saving potential. The compensation ask and the talent cost will hence be higher for other States that were earlier absorbing talent from these States, he said. 

And companies heavily dependent on young workers from the North are facing the heat. 

Sourcing of workers

Ayush Mukherjee, Managing Director, Boxit Packaging LLP, a corrugated box manufacturer, says sourcing young workers from States like UP is becoming tough since many factories have come up there. “Young workers who used to work at our place go back to their native places. When asked to return, they demand 30-50 per cent more in salary, because they have job opportunities in their places. We are forced to pay the additional wage,” he said. 

KT Srinivasa Raja, Managing Director, A2B, a restaurant chain, had a similar issue saying those who go back to their natives don’t return. Job opportunities in the north are improving, and they don’t want to return, he said. 

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