A recent study shows that India is by far the highest new jobs creator in the world. It may be celebration time for Indians, but is this also the right time to reflect on aspects that could bring the party crashing down?
Well, India’s economic success story is official now. India has created the maximum jobs in the world during the period 2000-2005. Paris-based Organization for Economic Cooperation and Development (OECD) has claimed in its recently released Employment Outlook 2007 report that India generated 11.3 million net new jobs per year on an average. During the same period, China created 7 million net new jobs while Brazil and Russia created 2.7 million and 0.7 million net new jobs respectively. India’s unemployment rate of 6% in 2005 also compares favorably with other BRIC countries whose unemployment rates were hovering around the 8-9% mark at the same time.
Comparing to rest of the world, the BRIC countries together created more than 5 times new jobs than the OECD area as a whole. OECD, comprising 30 developed countries including the US, UK, France, Germany and Japan created 3.7 million net new jobs a year compared to the 22 million created in the BRIC countries.
Despite the buoyant job market, there are a few things that India needs to sort out on a priority basis. One, women and youth are grossly under-represented in the workforce. Two, most new jobs are in the services sector. Manufacturing and agriculture related industries are fading into oblivion making for a lop-sided economic growth. Three, supply of skilled manpower is not matching up to the demand. There is a shortfall in the number of qualified engineers for the technology sector and trained graduates for the booming BPO sector. Same is the case for organized retail, an industry still in its infancy in India but growing exponentially by the day. The difference in this demand and supply is pushing up salary levels, destroying the economic viability of several businesses. Further, unhealthy poaching of talent from competition is vitiating the business environment.
The private sector is taking it upon itself to train youngsters to meet specific needs of their respective industries. NASSCOM, India’s association of IT and ITES companies, is starting programs to convert raw engineering talent into polished technology professionals. Reliance, India’s largest private sector company, is planning the same with high school grads trained to manage retail outlets. But, do individual companies have the wherewithal to bring about nation-wide changes? Or is this time for some affirmative action from the government to prevent the Indian economy from outgrowing itself?
Anupam Mukerji • Bangalore, India • www.mmi-india.com