Job creation challenge in india – The Core IAS

Job creation challenge in india

India is the fastest growing large economy in the world despite this fact job creation is   very low in the country.

The labour bureau data shows that job creation could be at the lowest in eight years.

According to Labour bureau statistics, job creation or job growth for 2015 and 2016 (April-December) stood at 1.55 lakh and 2.31 lakh in numbers respectively.

As also pointed out in the  India Exclusive Report 2016 of the Centre for Equity Studies, there are almost no jobs available in India’s high-growth economy

In India’s highly segmented labour market, there are three groups that are in urgent need of jobs:

Growing number of better educated youth

Uneducated agricultural workers who wish to leave agricultural distress behind and

Young women, who too are better educated than ever before.

Need for job creation in India:

Because of high unemployment rate

Female labour force participation is very low

Poverty rate is high as per the Tendulkar committee

Impact on socio-economic indicators like HDI, Gender Gap report

Consequences of not creating jobs:

Growth in the informal sector which would not be covered under the taxation and would lack job security.

Unfulfilled aspirations of the youth can quickly turn to frustration leading to violent outburst.

Lack of living income results in greater environment costs which undermines sustainable development.

Radicalization of Youth(Kerala and Kashmir case or Paris attack

Demographic Dividend turning into a Demographic Disaster


Uncontrolled Urbanization / De – urbanization both can be a possibility

Reasons for low job growth in India:

In the last year’s survey of the labour bureau, it found that in most of the eight biggest employment generation sectors – Textiles, leather, metals, automobiles, gems and jewellery, transport, information technology and the handloom sectors – jobs were shrinking.

A general trend of shrinking export in the last three years has led to loss of hundreds of jobs.

Domestic manufactures face high tariffs leading to higher raw material cost at home, emanating from the unfavourable inverted duty structure.

The automobiles sector in India faced no inverted duty structure, and thrived.

Electronics faced an inverted duty structure and slowly electronics manufacturing has grown.

There are a number of labour intensive manufacturing sectors in India such as food processing, leather, and footwear, wood manufacturers and furniture, textiles and apparels and garments.

The other labour intensive sectors have been ignored.

Indian economy: Since Indian economy jumps from Primary sector to tertiary sector.

Automation: Many small industries focus om automation to gain high productivity and profit. In Packing, Finishing and other such activity were required huge labor force

Low skills: All companies wants to book maximum profit in this competitive economy. They need upgraded skills person with multipurpose activity

Education System: The syllabus/curriculum is taught in higher education institute is not matched the required job industry skills.


There are three aspects to the job challenge that India faces:

On account of the increase in the working-age population. The Largest additions to the population of the young are going to come from some of the poorest regions, mainly the states in the northern and eastern belt, including Uttar Pradesh and Bihar.

India is going to witness a clear shift of its workforce away from agriculture. This shift will be due to both the “push” from a low value-adding agriculture and the “pull” of new opportunities in other sectors.

There has been a steady growth in the number of people enrolled in educational institutions from the 2000s, especially among females and in rural areas. Along with the growing demand for education, workers who join the labour force in rural India will also have greater expectations from their jobs.

What need to be done for job creation?

Industrial, trade policy:

An industrial and trade policy is needed.

The Department of Industrial Policy and Promotion (DIPP) is preparing an industrial policy.

For two decades after economic liberlisation in 1991 there was no National Manufacturing Policy and the policy, when came in 2011, was not even implemented.

It is essential that trade policy is consistent with such an industrial policy.

It is crucial to align policy across sectors and upgrade the country’s social infrastructure

Special packages are needed for labour-intensive industries to create jobs.

Cluster development:

There should be cluster development to support job creation in micro, small and medium enterprises (MSMEs).

Most of the unorganized sector employment is in MSMEs, which tend to be concentrated in specific geographic locations.

There are 1,350 modern industry clusters in India and an additional 4,000 traditional product clusters, like handloom, handicraft and other traditional single product group clusters.

There is a cluster development programme of the Ministry of MSMEs, which is poorly funded and could be better designed as well.

The Ministry’s total annual budget for all programmes, including cluster development, is grossly inadequate.

Spread over 6,000 clusters, it becomes even more inadequate to transform MSMEs located in clusters.

Align urban development with manufacturing clusters to create jobs.

The Ministry of Urban Development (MoUD) has a programme called AMRUT(Atal Mission for Rejuvenation and Urban Transformation) aimed at improving infrastructure for small towns.

An engagement between the Urban Development and MSME Ministries is necessary to ensure that this is happening. It will attract more investment to industrial clusters, which is where most non-agricultural jobs are.

Focus of Women:

Girls are losing out in jobs, or those with increasing education cannot find them , despite having gotten higher levels of education in the last one decade.

Secondary enrolment in the country rose from 58% to 85% in a matter of five years, with gender parity.

Skilling close to clusters, which is where the jobs are, is likely to be more successful.

The problem with skilling programmes has been low placement after skilling is complete.

The availability of jobs close to where the skilling is conducted will also enhance the demand for skilling.

Public investment in health:

Public investment in health, education, police and judiciary can create many government jobs.

Public investment in the health sector has remained even in the last three years at 11.15%of GDP, despite the creation of the national heath policy at the beginning of 2017.

The policy indicates that expenditure on health will rise to 2.5% of GDP only by 2025.

It is necessary that public expenditure on health is increased faster.

More government expenditure in health means more jobs in government and better health outcomes.

Revitalise schools:

The number of teachers required, at secondary and higher secondary levels, is very high, particularly in science and mathematics.

Many new government jobs can be provided if more young people could be trained specially to become teachers for science and mathematics at the secondary and higher secondary levels.

Police and judiciary:

The number of paramilitary personnel continues to grow; State governments are not filling even sanctioned posts in the policy and in the judiciary (at all levels there are vacancies).

More police and a larger judiciary can both reduce crime as well as speed up the process of justice for the ordinary citizen.

Government initiatives for job creation:

The  government has pushed several programs to catalyse employment opportunities including the ‘Make in India’

Start up India : This initiative helped new entrepreneurs to give shape to their ideas and help in creating more job avenues in form of start-ups.

Mudra loans : The facility of these loans to weaker and unserved sections of the society which aims to launch their business in form of small, micro and medium ventures. These will also help in serving the purpose for creating more jobs.

Skill India Mission: It deals with imparting skills to the unskilled labor force in India and as a result of this more skilled labor force at cheap cost will attract the foreign companies which will ultimately result in creation of jobs.

NITI Aayog has constituted an Expert Task Force to provide a major thrust to job creation by enhancing India’s exports. It will be headed by NITI Aayog Vice Chairman Dr Rajiv Kumar. The panel will give recommendations on sector-specific policy interventions in key employment sectors and measures to enhance trade in services with high employment potential. It will also propose a comprehensive plan of action to generate employment and alleviate under-employment in both goods and services sectors and low wages by boosting India’s exports in key labour-intensive industries.

The Department of Industrial Policy and Promotion (DIPP) under the Commerce and Industry Ministry is going to release a new industrial policy by October 2017. It is expected to replace National Manufacturing Policy (NMP) released in 2011. The new policy aims at making India a manufacturing hub by promoting ‘Make in India’ with focus on encouraging Indian branded products with higher value. Its objective is to create more jobs in India.


With the median age in the country less than 30 years along with new entrants entering the work force every year, the government needs to adopt a holistic action plan. The measures like running skilling and re-skilling programmes to increase employability and productivity; incentivizing SMEs that absorb a huge workforce; increasing the job creation by carrying out massive infrastructure upgrade etc. has to be taken immediately. Ultimately, creation of jobs should be made as the pivot for social and economic policy making in the country.