Improving India’s job creation ranking

Live Mint, November 15, 2016


Fewer jobs are being created which can match the existing skill level of the vast majority.

This is the season of rankings. In the past few months, several reputed international organizations have assessed, compared and ranked the performance of countries on different indicators on issues like competitiveness, ease of doing business, hunger, youth development, gender gap, press freedom and consumer confidence. Alas, there is none specifically on job creation.

India has exceeded expectations on some, and has performed not so well on others. For instance, the World Economic Forum (WEF) ranked India at the 39th position on the Global Competitiveness Index, an impressive jump of 16 places in a year. Despite such a jump, WEF cautions that India’s performance is low by global standards, and huge challenges lie ahead on the path to prosperity. This is reflected in the high average tariff that India is maintaining on its imports, low level of factor accumulation, and relatively high incremental capital-output ratio.

Among other factors, this is also due to a less than optimal domestic regulatory environment and near absence of regulatory harmonization. This is one of the reasons why India moved up by only one notch on the World Bank’s recent ease of doing business ranking. However, the bank has recognized the government’s efforts towards a better business growth environment.

Also, India’s performance on social, education and health-related indices has been abysmal. The WEF report on global gender gap reveals that on the indicator of women’s health, India is third last. Similarly, on the global hunger index, India lies among the bottom group of countries, even below neighbours like Nepal, Myanmar and Bangladesh.

Let us now view India’s performance on different indicators in the context of one of the most critical challenges it is facing: job creation. The number of jobs created in 2015 is much less than what it was a few years ago. As mechanization of agriculture and manufacturing is moving at a faster pace and the services sector is becoming more skill-oriented, fewer jobs are being created which can match the existing skill level of the vast majority.

Consequently, it is not difficult to surmise that while India’s gross domestic product (GDP) is growing, such growth is increasingly becoming exclusionary. Enough jobs are not being created for the poor, for whom affording one square meal a day is becoming challenging. Much of India’s growth is emanating from services, and taking place in sectors which require middle- to high-level skills.

Pradeep S Mehta is secretary general of CUTS International.

Amol Kulkarni of CUTS also contributed to this article.

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