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LATEST NEWS UPDATES | India faces rising labour force, inequality-Prashant K Nanda

India faces rising labour force, inequality-Prashant K Nanda

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published Published on Mar 16, 2012   modified Modified on Mar 16, 2012

Sounding a note of caution, the Economic Survey has stressed that for “growth to be inclusive” India must create adequate employment opportunities—a call that underlines existing inequality, including urban-rural income disparity, and concern that it may increase as more young people enter the job market. While India’s unemployment rate has dropped from 8.2% in 2004-05 to 6.6% in 2009-10, the number of jobless is still huge in absolute terms. The country added some 11.7 million people to the workforce between 2004-05 and 2009-10, and the labour pool, based on the 2009-10 national sample survey, is estimated at 428.9 million.

The pace of employment growth in the organized sector slowed in 2010 compared with 2009, according to the survey. While in 2009, 28.1 million were working in the organized sector—an increase of 2.3% from the previous year—in 2010, a total of 28.7 million were employed in the sector, making for a growth rate of 1.9%.
“The lower growth in the labour force is not expected to continue as educated youth are expected to join the labour force in increasing numbers during the 12th Plan (2012-17) and beyond. This means the pace of job creation must be greatly accelerated,” the survey said in its human development chapter.

The survey said income disparity was reflected in the urban-rural inequality in expenditure. The monthly per capita expenditure in urban India is Rs. 1,984, compared with Rs. 1,054 in rural India. At least 57% of the rural expenditure goes towards food.

The survey said seasonal and intermittent unemployment in rural India needs to be addressed through job schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act, which promises at least 100 days of work a year for every rural household, without hindering labour supply for agriculture.

In the organized sector, job growth is slowing because “manufacturing sector is not doing well as per the expectations and the concept of contract labour is growing even among the public sector units,” said Prabhat Chaturvedi, a former labour secretary in the central government.

There is a need to reduce the gap between the wages of regular and contract workers and give statutory effect to the national minimum wage guidelines, he added. The slowing pace of job creation in the organized sector is a direct outcome of slowing economic growth and reflects insufficient investment across sectors, said E. Balaji, president of staffing firm Ma Foi Randstad. The Indian economy is forecast to grow some 7% this fiscal, compared with 8.4% last year.

The survey added that to generate employment opportunities “there is need to give much greater freedom to both employers and employees to voluntarily sign contracts of different kinds and then have the state recognize the contract and help enforce it”.

Labour laws at present “really hurt the interests of labour more than any other category,” said Kaushik Basu, the chief economic adviser at the finance ministry.

The economic survey also stressed that India is passing through “unprecedented demographic change” and by 2020, the country will be one of the youngest nations in the world. The average Indian will be only 29 years old in 2020, the survey said, while the comparative figure for China and the US is 37 years, for Western Europe 45, and for Japan 48.

“...the proportion of working age population between 15-59 years may increase from approximately 58% in 2001 to more than 64% in 2021. In absolute numbers, there will be approximately 63.5 million new entrants to the working age group between 2011-16”, the survey said.

Live Mint, 15 March, 2012, http://www.livemint.com/2012/03/15230039/India-faces-rising-labour-forc.html?h=B


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