IIM Lucknow Study Proposes Strategies for Inclusive Job Growth

The short-term gig and platform economy are growing, expected to reach 23.5 million by 2030, according to NITI Aayog. These workers lack job security in the informal sector.

·        A conscious effort to identify labour-intensive manufacturing sector will help in accomplishing inclusive growth

·        The slowdown in employment rate is primarily due to sectors with good potential registering lower growth in employment

·        Despite an increase in the number of people that can work, economic growth has caused in net labour displacement

Lucknow, 14th February 2024: A study by Prof. D. Tripati Rao of Indian Institute of Management Lucknow, in collaboration with researchers from Birla Institute of Technology and Science, Pilani, and the Ministry of Agriculture & Farmers Welfare, reveals that despite India’s impressive economic growth from 2004-05 to 2017-18, employment generation has lagged the country’s growing working-age population.

Analysing data from the National Sample Survey Office (NSSO) Employment and Unemployment Survey, and Periodic Labour Force Survey Dashboard, the researchers found that the agricultural sector, though employing the most youth, contributed low value-added to the overall economy, resulting in significant employment challenges. Non-farm sectors, with greater economic potential, exhibited a lower inclination to hire, despite their capacity to uplift the economy.

The research, led by Prof. D. Tripati Rao, Senior Professor of Economics, Business Environment Area, IIM Lucknow, Dr. T. Triveni, Ministry of Agriculture & Farmers Welfare, Govt. of India, and Prof. Balakrushna Padhi, BITS Pilani, is published in the Indian Journal of Labour Economics.

Sharing his views on the research, Prof. D. Tripati Rao, Faculty of Economics in Business Environment, IIM Lucknow, opines, “Apparently, economic growth, rather than creating more jobs, has resulted in net labour displacement. Alongside the number of jobs created, it is equally important to examine the quality and decency of jobs, as there is a strong linkage between productivity and job decency.”

The study notes an employment decline starting in the 1990s, recovering in 2004–05, reaching near-stagnation in 2011–12. Despite a remarkable economic growth phase from 2004–05 to 2017-18, job creation remained lacking, leading to a period of ‘jobless growth,’ where workers remained underutilized despite the increased working-age population (ages 15 to 64).

Various reasons contribute to this, including a high percentage (55%) of self-employed workers in India compared to 33% in the US. Gender disparity in employment patterns persists, and unemployment is growing among highly educated youth.

Highlighting another key reason behind slow job generation, Prof. D. Tripati Rao adds, “The new employment structure relies on non-standard types like casual, contract, and fixed-term employment, intertwined with social hierarchy and discrimination, resulting in new forms of precariousness and extending general disparity in the labour market.”

The short-term gig and platform economy are growing, expected to reach 23.5 million by 2030, according to NITI Aayog. These workers lack job security in the informal sector.

The analysis suggests a key policy intervention: a conscious effort to make the manufacturing sector more labour-intensive for inclusive growth. This, the researchers argue, will create high linkage effects, uplifting various industries. There is also hope that recent improvements in health and education in India may positively influence the conversion of unemployed youth into a high-quality and skilled workforce.

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