A key focus of the Union Budget 2024 was employment-linked schemes. Here is my take on the jobs crisis in India and the possible solutions to it.
The data on job holders is all over the place; an estimated 500 million are unemployed in India. We need to create 100 million more jobs quickly. This seems daunting as the unemployment rate is about 9.2 per cent, and 29 per cent of graduates are unemployed.
Let’s start by ruling out the constituents who cannot help meet the 100-million jobs target. The government, between the Centre and the states, employs about 14 million people. At best it can add about one million jobs a year. The 40,000 MNCs in India can add 200,000 jobs, mostly through global capability centres (GCC). But MNCs are also downsizing globally on account of AI usage and to step up productivity.
So, where can 100 million new jobs come from?
Focus areas
Women, agriculture job shift, and youth — or WAY — should be accorded priority in job generation.
Women are grossly under-represented at 38 per cent of the employed pool. For the WAY segment, we need to create low-skill, high-scale industry jobs like apparel manufacturing. This may seem incongruous in a world driven by high technology, but it’s needed. India was big in apparel exports but fell back in recent years. Footwear, light manufacturing, and value-added logistics are the other potential industries, each of which must be supported to become globally relevant.
About 42 per cent of the workforce is in agriculture and the numbers have risen since the pandemic outbreak. The challenges include fragmented and unviable farm holdings, and ballooning farm loans. We need to rethink agri policies if we are to attract private investment. There is no option but to privatise some parts of farm activity and add technology to bring in more efficiency. This may appear unthinkable at first, but so did the now successful projects like Aadhaar ID card, Open Network for Digital Commerce (ONDC), Goods and Services Tax (GST), Unified Payments Interface (UPI), and privatisation of public sector companies. We should also incentivise companies to invest in value-added agriculture, as this will help create more women-oriented jobs.
Hiring changes
The youth, who are the future, are looking for steady jobs. A big change we need to make, and quickly too, is prioritising skill-based hiring over degree-based hiring. The government can nudge companies in this direction. This will call for investment in skill building at the educational level. AI will be an enabler and India should use it.
What should we focus on? The World Economic Forum lists complex problem-solving, creativity, and critical thinking as essential skills now. We need to pivot accordingly.
Micro, small and medium enterprises (MSME) account for 25 per cent of jobs and a third of our gross domestic product (GDP). We have 64 million MSMEs employing about 128 million people. We need to simplify rules and provide a safety net for MSMEs; additionally we must push the ‘India for India’ agenda alongside our focus on exports. MSMEs, with the right incentives, can create 50 million jobs quickly. It’s a worthy bet.
Nature of new jobs
We label jobs as blue collar or white collar. With evolving technology we are seeing the emergence of ‘grey-collar jobs’. The railway engine driver of old was literally a blue-collar worker, but with technology and digitisation aiding her work, she is now a grey-collar worker. I feel more jobs will go this way. So, how can we identify the blue-collar jobs with potential to transform with technology into higher value-added jobs? Car and two-wheeler mechanics, lab technicians, and nursing are some ready examples of future grey-collar jobs.
GDP growth, which we celebrate, cannot happen without investment in education and skills, including from the private sector. Our education spend is less than 4 per cent of GDP. Until we raise that figure, we may not be able to create jobs. Our demographic dividend cannot last beyond 10 years. We must go in all the WAY.
(Shiv Shivakumar was former chairperson, Pepsico India, and former MD, Nokia India)