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Widely available data on India\'s GDP growth, employment growth and elasticity of employment with respect to GDP indicates that -
· GDP growth has steadily increased from 4.5% during 1970s to 9% during 2005 - 2012 periods.
· The elasticity of employment with respect to GDP declined continuously from 0.52 in the 1970s to 0.02 in the second half of 2000s.
· Employment growth and elasticity have declined for the primary sector (which is needed). However, it is declining in manufacturing sector also. Similarly, the elasticity of tertiary sector has also declined.
This captures the paradox of growth that does not create employment, a phenomenon called "Jobless Growth" . An adequate number of jobs is not being created despite economic growth accelerating to 6.9 per cent in 2013-14. In other words, growth is not employment-intensive enough, as evidenced by the fact that the state government of Uttar Pradesh recently received 2.3 million applications for 368 job openings as peons. What\'s more, these job seekers included 250 PhD candidates, 25,000 post graduates and 152,000 graduates. In Chhattisgarh, 75,000 people applied for 30 job openings as peons, some of whom were post graduates and engineers. These bleak employment prospects are observed in other states as well.
CAUSES: Economists are still divided about the causes and cures of a jobless recovery: some argue that increased productivity through automation has allowed economic growth without reducing unemployment . ] Other economists state that blaming automation is an example of the Luddite fallacy and that jobless recoveries stem from structural changes in the labor market, leading to unemployment as workers change jobs or industries.
AUTOMATION : The use or introduction of automatic equipment in a manufacturing or other process or facility.
The Luddite fallacy is the simple observation that new technology does not lead to higher overall unemployment in the economy. New technology doesn\'t destroy jobs - it only changes the composition of jobs in the economy.
Policy options for revival : Tackling jobless growth cannot be done through quick fixes. It is not only about labour reform. It is not possible to address the problem without developing skills that industry wants. India presents a paradox of skill shortages despite a situation of labour surplus. Around 15 percent of India\'s trucks are idle due to a shortage of drivers. The steel industry is short of metallurgists. The healthcare sector is short of paramedics and technicians. The booming construction sector has a shortage of civil engineers. These skill mismatches must be met by stepping up enrolment in industrial training, vocational institutes and public-funded institutions of higher learning.
Manufacturing and Service Sector: The answer to jobless growth lies in policy initiatives that will promote manufacturing and services sector. Manufacturing and services must become the engine of employment growth. Reforms in labour laws, provision of infrastructure, encouragement of small scale industries and promotion of export-oriented light industries that are manpower intensive are some of the policy initiatives that are required. The experiences of developed countries have demonstrated that the growth of smaller businesses can drive employment generation.
Few policy changes that can be brought are:
Targeted temporary job creation credits.
Better education/training to improve workers\' ability to adjust to change.
Public or private wage "insurance" for workers.
Restore confidence in corporate governance, accounting and business environment.
Conclusion: The study admits, despite the negligible growth in jobs, poverty went down slightly faster in the post-reform period, at 3.8% every year in rural India from 0.3% during the pre-reform period. Urban India fared much better. From a rise of 0.7% in the number of poor people, poverty reduction increased to 2.2% in the nineties.
The study, however, does not explain whether this happened because of a rise in self- employment or other reasons.
Another positive outcome in rural India was a strong growth in real wages for casual agricultural laborers and workers in rural informal employment, indicating fewer farm and rural workers are available in India\'s villages. This could be a result of more potential workers spending time in school. The phenomenon of jobless recovery is self debated. Growth without employment is necessary during a period of recession and after recovery employment aided growth is absolute.
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Employment, Economic growth, Jobless recovery, Unemployment, Elasticity
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