[Answered] There is a dichotomy between the rising share of industry and services in national income and the increase in employment. Do you agree? Also, suggest measures required to increase the employment level in India.

Changes in the structural composition of output and the workforce is one of the 2 main aspects of structural transformation in any economy. Other one is the rate of economic growth in a country.  

There is a steady increase in the share of non-agriculture output i.e., manufacturing and services in total economic output. However, the employment rate has not been increasing at the same pace.  

As per PLFS data, the share of industry and services in total employment is not increasing. The sectoral composition of the workforce shows that 45.6% of the workers in India are still engaged in agriculture and allied activities, 30.8% in services, and 23.7% in industry. 

This is because the industry and services sectors are preferring capital-intensive and, labor-displacing technologies and production strategies. 

Modern technologies like Artificial Intelligence and Internet of Things are further reducing the avenues for employment. 

Lack of skilled man force is another reason behind lack of work opportunities. New technologies require new skillset and majority of the workforce is lacking those skills.  

Incentives have been given for formalising jobs through subsidies on social security contributions. Which does not ensure new jobs creation, mostly it results in a mere transfer from informal to formal jobs.  

However, it doesn’t mean that employment is not at all increasing. Following are some observations by PLFS data that proves increase in employment rate: 

Worker to Population (WPR) Ratio has increased from 34.7% in 2017-18 to 38.2% in 2019-20. The change implies that employment has increased at a much faster rate than the growth in population. 

Gap between the male and female worker participation rate is narrowing down. 

Suggestions to improve employment rate  

1) Changes in labour laws which discourage industry to adopt labour-intensive production  

2) Employment-linked production incentives  

3) Working on the information flows about jobs and skilling to people looking for jobs. Centre for Monitoring Indian Economy (CMIE) and other organisations can generate such data.  

4) Special assistance for labor-intensive economic activities. 

5) Skill development measures such as National Skill Development Mission, should be aligned to present job technical requirements 

Technological and efficiency development is the key to success for industries, more workforce should be trained for these changes. Government must focus on developing industries which require low level skills and are labor intensive for low skilled workforce, so that maximum efficiency can be gained in the economy.