Saturday, August 12, 2006

Future of Work/ Employment in India

I have been writing ("trying to write", would be a more accurate description;) a paper on Indian workforce and the interventions required to make it gainfully productive.

In the process, finally, I was able to compile those odd bits of information that I had been collecting over time from various sources. Just thought that this may be interesting to share the two contrasting scenarios, of "tremendous opportunity" and "hopeless inadequacy" about workforce/employment trends in India:
[Note: Since this a work-in-progress, I have still not compiled/linked the references... But if you are interested, you will find most of these facts-and-figures on the Net... Just "google"]

Scenario 1: Tremendous Opportunity:

During last few years, deregulation and technology have brought many new and fast-growing industries into Indian business scene. The growth of, and investments in, sectors such as ITES-BPO, telecom, and, more recently, retail have radically altered the Indian business landscape, and have created huge opportunities as well as challenges.

Consider, for instance:

  • In barely 6 years, the Indian ITES-BPO sector has created unique business and employment opportunities, with a turnover of $5.2bn (FY’05) and creating about 415,000 jobs (FY’06).

  • Overall, in 2005, the IT sector achieved a turnover of $28.4bn, and contributed to employment of more than 1.3mn knowledge-professionals. According to NASSCOM, “Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment.”

  • According to the Telecom Regulatory Authority of India (TRAI), the boom in the telecom sector resulted in direct employment of almost 430,000 people. In addition, the spillover effect in terms of PCOs and cyber-kiosks, have created more than 600,000 jobs.

  • According to a study by All India Management Association, “remote services” (ITES, e-learning, etc.) and “importing customers” (leisure and medical tourism, educational services, etc.) have the potential of creating between 20mn to 72mn jobs by 2020.

  • The more recently deregulateed retail sector is estimated to create approximately another 8mn jobs - directly, or through the value chain
    Etc…

    The optimism and buoyancy, however, fades if one looks at these opportunities, not merely in the context of the corporate business, but within the perspective of overall economy and state of the work-force. In contrast to these opportunities, the profile and trends of Indian work-force shows a widening gap in the availability of requisite skills to leverage on these opportunities. Consider, for instance:

    Scenario 2: Hopeless Inadequacy:

  • According to the National Sample Survey (2000), only 7-8% of the 401mn strong Indian employed workforce is in the organized sector. That is, 92-93% (or about 370mn) workers are in informal or unorganized sector. A majority, almost 80%, of them are in agricultural sector.

  • The SP Gupta Committee Report (2002) from Planning Commission suggests that the employment creation in organised sector became negative during mid-90s. During 1983-94, the employed workforce increased from 240mn to 316mn, while the unemployment had remained more or less constant at 20-21mn. In comparison, during 1994-2000, Indian economy created 21mn jobs; however during the same period, 27mn more people entered the workforce, thus increasing the unemployment by about 6mn. Moreover, 95% of the 21mn jobs created during this period were in the unorganized sector.

  • A majority of the Indian workforce does not possess marketable skills. According to a report by Ministry of Labour and Employment, in the urban area, only about 19.6% of male and 11.2% of female workers possess marketable skills. In the rural areas, the percentage of workforce with marketable skills was even lower: about 10% for male and 6.3% for female.

  • About 80% of job-seekers in employment exchange are without any professional skill.

  • While India boasts of a large young population, only 5% of the Indian labour force in the age category 20-24 have any vocational skills obtained through formal training (as compared to the industrialized countries, where the figure varies between 60% and 80% - in case of Korea, it is 94%).

  • According to one study, the total stock of graduates and post-graduates (in both general and professional education) was just slightly above 25mn in 2000. Extending the growth trends during 1990s, at present (2006), the most optimistic estimates would be merely around 30-32mn.

    So is this a source of real concern?

    ...well, yes, and no - depending on how one views it.

    Much of our policy, interventions and thrust is focused on the assumption that the "employment/job-creation" solution lies in "big business" (creation of SEZs, FDIs into sectors, incentives to big private sector players, etc.).

    Without underestimating the contribution of the "big" private corporate in the organised sector to growth of economy/GDP, etc., the fact still remains that the big, private players merely contributes to 2.5% of India's employment. Even if this sector grows by 30%/annum over the next 5 years, it will actually contibute to less than 1% growth to the employment!!
    (now before someone pounces on this statement, please let me clarify: "real" people in a society do not eat GDP figures or "feel-good" statistics - they need a gainful employment)

    The fact also remains that this is the trend world-over: the unorganised sector (sometimes overlapping with the SMEs - the small & medium enterprises) contributes to the huge chunk of employment generation, e.g.,:

  • In the USA, nearly half of the private workforce is employed in small firms, of which three-fifth have less than five employees.

  • In Japan, 78 per cent of jobs are generated by small and medium enterprises.

  • The SMEs in Korea account for 99 per cent of all manufacturing enterprises and 69 per cent of employment in this sector.

    Perhaps that is why the Planning Commission's Vision 2020 mentions:
    "Therefore, the unorganised sector, including small and medium enterprises, must play a central role in the country’s employment strategy. This will require modification of policies and programmes to level the playing field, improve availability of credit, increase productivity, raise quality consciousness and competitiveness, and enhance job quality.

    Recent experiences of different countries in the context of globalisation also demonstrate that SMEs are better insulated from the pressures generated by the volatility of world trade and capital markets. They are more resistant to the stresses, and more responsive to the demands of the fast-changing technologies...
    "

    And in India:... The "unorganised/informal sector" contributes to
  • 60% of Net Domestic Product
  • 68% of income
  • 60% of savings
  • 31% of agricultural exports
  • 41% of manufactured exports
  • ...and 92-93% of employment (or, livelihood for the about 2/3rd the population)

    And who constitute the bulk of this "unorganised/informal sector" in India?


    - the vendors and hawkers of vegetables, fruit, meat, fish, snack-foods and a myriad of non-perishable items ranging from locks and keys, soaps and detergents, clothing, vessels to books...

    - the owners of those numerous stalls and kiosks selling various things and services... as the road-side cobblers, barbers, tailors, book-binders, cycle mechanics... as the garbage collectors, rag-pickers... construction workers... Landless labours

    - the head-loaders, cart-pullers, camel/bullock/horse-cart drivers ferrying goods/passengers to other places... and of course, the rickshaw and auto rickshaw drivers... the truck drivers...

    - down the narrow crowded lanes, those who work in/own small workshops that repair bicycles and motorcycles, recycle scrap metal, make furniture and metal parts, tan leather and stitch shoes, weave, dye, and print cloth, polish diamonds and other gems, make and embroider garments, sort and sell cloth, paper, and metal waste... and more.

    - the ones who remain "invisible" and produce and sell from their homes/shanties (mostly women) as garment makers, embroiderers, incense stick rollers, bidi-rollers, paper bag makers, kite makers, hair band makers, pickle and papad-makers, and others.

    - the maids, domestic servants, chauffeurs, gardners... the person who comes to wash the car, to deliver newspaper, milk...


    So??...
    What are the options?!!


    Nopes! I don't know (not as yet)... I am still writing the paper!

    UPDATE (Sept 28,'06): The paper did finally get complete. Titled "From Corporate-Centric to Socially-Relevant HR: A Concept Note", can be downloaded (right click, save)

  • 9 comments:

    Astha said...

    Those are some mean statistics you've put together! Impressive research.

    I'm from the optimistic camp. I think there's immense opportunity in the unorganized sector. Perhaps along the lines of ITC's echoupal and DSCL's Hariyali initiatives.

    The Indian worker of the unorganized sector- might be devoid of training and marketable skills, but he/she is blessed with resilience and considerable eye for opportunity.

    Hopefully, we'll cease the moment- rather than let events and time take their course.

    Abrar said...

    Amazing research. With more deregulation and opening of the economy, this unorganzied sector is sure to become a rel force. Every country has gone through this transition. As economy grows and more opportunities are created, this sector will grow as well.

    Just to give you another statistic, my company, IBM, is planning to increase its workforce in India from 40,000 to 100,000 by 2010!! So the growth in India is quite visible to people outside. Kudos to your county's visionary leaders, namely Nehru!!

    ravi said...

    I am a researcher working on the re-location of garment units to rural India.Have trained over a few thousand women in garmenting and now working to set up cluster based production centers between Bangalore and Kolar.Any in-puts on rural training and employment ideas and data are most welocme.

    charles said...

    The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.


    www.onlineuniversalwork.com

    evision said...

    Work And Study

    Ashok Kumar said...

    India is One of the fast developed country in the World.In India,there are vast number of human resources are available.They were well efficient and hard worked people,and also they fit for all environment.So,most of the foreign countries are going for Outsourcing to India.This might be creating more job openings for graduates.It put steps towards India is a developed country in the future.There are more jobs in chennai in IT/non-IT side.

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