Published & Updated as on - 2010-07-02

The UPA government has announced an estimated 2.5 per cent annual growth in employment and a possibility of creating 570 million jobs over the next five years, if an economic growth rate of 9 per cent is maintained.

The present work force in the country is estimated to be 520 million.

The report on employment — a first in a series of annual reports promised by the Centre — is pitching for equity and inclusion of the majority of the workforce who are in the unorganised sector. It also seeks for an increase in the share of the organised sector in the total employment of India — particularly in the manufacturing and service sectors.

It has suggested labour reforms, parity in payment between regular and contract employees and creation of an urban employment guarantee programme along the lines of the rural employment programme that guarantees 100 days of work to all households in a year.

President Pratibha Patil in her inaugural speech of the present government had said that annual reports on labour, education, health, environment and infrastructure would be made available to the people.

The report by the Directorate General of Employment and Training, Ministry of Labour and Employment in its section on projections on labour force and work force examines growth trends in the labour market and says that since the economic growth was down to 6.7% per annum in 2008-09 as compared to 9% in 2007-08, employment growth had also decelerated significantly. Accordingly, based on the employment elasticity with respect to GDP, the employment for 2009-10 is estimated to be 506 million with an average annual growth rate of 1.97 per cent for the period 2004-05 to 2009-2010.

The labour force for 2009-10 is estimated to be 520 million.

“Further, projections for labour force and employment for the year 2009-10 were followed by a projection of the same for the period 2010-2015 on a yearly basis. This yielded the total magnitude of labour force increasing from 520 million in 2009-10 to 574 million in 2014-15 implying approximately 10 to 11 million additional number of persons joining the labour force each year during this period,” the report said.

For the estimated employment figures, three different scenarios have been considered: if employment grows at a) scenario I – 2 per cent per annum, b) scenario II – 2.25 per cent per annum and c) scenario III – 2.5 per cent per annum. The estimates indicate that employment must grow at least at 2.5 per cent per annum for the next five years so that most part of the open unemployment including the additions to the labour force may be taken care of by 2014-15 (see table).

It says the required economic growth needed to achieve the 2.5 per cent annual growth in employment would depend on the magnitude of employment elasticity likely to prevail in the future. Three different estimates have been presented to have an idea about the possible employment elasticity and the required economic growth for achieving the three different scenarios of employment growth.

The estimates indicate that 2.5 per cent growth in employment is achievable with an economic growth of approximately 9 per cent provided the average employment elasticity of 0.29 observed between 1993-94 and 2004-05 continues.

If employment elasticity falls to 0.25 the required economic growth will be 10 per cent per annum. Similarly, more than 12 per cent growth will be required if employment elasticity falls to 0.20. At 0.20 employment elasticity and 10 per cent economic growth, only 2 per cent growth in employment can be achieved.

Employment elasticity with respect to GDP growth, however, can be enhanced by promoting labour intensive technology and sectors of employment with high labour capital ratio, it says.

It goes on to examine sectors which have generated more jobs in the recent past. The report says recent studies have highlighted that manufacturing sectors such as sugar, food processing, industrial machinery, leather and leather products, jewellery, footwear, jute and mesta textiles, readymade garments, coir and furniture among others are labour-intensive sectors with an employment elasticity of more than 0.30.

Source: BS 3/7/10