Summary: Creating meaningful employment is crucial for boosting per capita income and improving living standards in India. However, a mismatch exists between the country’s growing human resources and the limited demand for work. This challenge is compounded by geographic and resource limitations, as well as the country’s relationship with suppliers and buyers. While increasing employment participation is essential, it doesn’t guarantee value creation or income generation. The trickle-down approach may help, with many individuals engaging in freelancing and skill acquisition to improve their income capacity. However, India faces an intellectual crunch, particularly in research and development, to compete globally. The traditional link between economic growth and job creation in India has weakened significantly over time. In the 1990s, a 1% rise in GDP resulted in a 0.4% increase in employment, but now this figure has fallen to 0.2%. This means India requires higher GDP growth to generate the same level of job creation it once did. Additionally, the substitution of labor with capital and automation, driven by surplus global capital and restrictive labor laws, further reduces employment opportunities. The focus should shift from solely worrying about GDP growth to prioritizing job creation, as jobs will, in turn, support economic growth.
Case Problem
Creating Employment in India, Indeed a Value Employment
Opinion
Employment seems to be a tempting term whenever the economy and its associating term plays into picture first.
But why the employment is important, Simple answer to grow the country’s per capita income for a better living. Now the term per capita defines the higher affordability of a better living. It may be on lower side but as we said, affordability will be then on a low-side, which in generally an aspect of individual’s satisfaction.
Why a country is not able to match the per capita income/or say simple the employment/better employment to its citizens at par with the good one’s doers.
The answer is simple again, first may be due to comparatively high supply of human resources as compared to work generated i.e., demand. Second is due to a country’s geographic limitations/resources scarcefulness/relations with the supplier/buyers to create a working mechanism. The second part is inherently the subset/elaborative of former one.
Now for creating the work cycle (keeping apart the quality / valued-instinct of employment first), to increase involvement in work cycle/funnel but does it guarantees the value creation against income generation. The answer is maybe not. The probable option may be the trickle down approach of wealth. Not 100%, but a considerable segment of population attempts to engage in freelancing activities and acquire a number of specific skillsets to operate a huge number of work operations to strengthening his/her income capacity. Why not 100%, it may supposedly come the Intellect-Crunch which is crucial in the field of R&D and to compete the market and Economics at Global Level Forum.
The former approach is indeed a separate whole front of research on how to efficiently implement that type of work cycle to engage the active participation among audiences.
Now Technically Stating,
The old link between growth and jobs is now much weaker than before. In the 1990s, the employment elasticity in India was nearly 0.4. This number measures how much a given rise in growth impacts jobs. At 0.4, a one per cent rise in GDP growth gives us a 0.4% rise in employment; 5% growth gives jobs a 2% boost. Now, this elasticity is down to 0.2 or lower. This means, for every percentage rise in growth, we get only a 0.2% impact on employment. Put another way, we need a minimum of 10% GDP growth to give us the kind of jobs kick we used to get in the 1990s.
Secondly, this falling employment elasticity is partly the result of the large-scale substitution of labor with capital and automation. This is easy in a world with surplus capital, and especially in a country with restrictive labor laws. It is a no-brainer for promoters to use capital and automation when labor is going to be heavily regulated. For some time now, the world has been spewing capital surpluses like nobody’s business.
If we put these two factors together, huge surpluses of global capital, and the economy’s declining ability to create jobs given a certain rate of growth, we can begin to understand the real challenges of job creation not only in India but anywhere. This should lead us to another simple conclusion: don’t worry too much about GDP growth, worry about jobs. If we focus on jobs, GDP will take care of itself.
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Disclaimer : The above stated Case Problem and Opinion are subject to personal views and approach from a Layman’s point of view and may not stands pragmatic in real world scenario and thus may differ from person to person in their way of solving it. Enjoy the joy of writing and a stimuli of brain to it.
Happy Reading.
Thanks and Regards
Deepak Sharma
BSc. Physical Sciences (DU), MA Economics (IGNOU), PGC Strategy (IIMB)
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