Tuesday, October 1, 2013

India's labor market concern of the day

From Jayan Jose Thomas in Livemint,
Of the net increase of 48 million new non-agricultural jobs in India between 2004-05 and 2011-12, 24 million or half of the total increase was on account of jobs in construction, which were largely in rural areas and likely to be of poor quality. On the other hand, the manufacturing sector generated just five million new jobs during this period.
Specifically, there are three concerns. One, the construction jobs are not sustainable, especially given the cyclical nature of the sector. Now that the economy is on a trough, not only will a significant proportion of these jobs disappear but also the pace of new job creation will decline sharply. Two, manufacturing is clearly anemic, having created just 0.6 m jobs in the eight years. At a fundamental level, given the structural and demographic transitions that India is undergoing, this should be the biggest worry for the Indian economy. Three, the dominance of construction, taken together with the weakness of manufacturing, raises questions about whether there is a resource mis-allocation problem. My speculation is that crony capitalism, fueled by construction intensive infrastructure, doubtless played an important role.  


neerubhai said...

Does it include NREGA?

gulzar said...

No it does not include the NREGA figures.