ExplainSpeaking: What’s the link between GDP growth and employment in India

Source: The post is based on the article “ExplainSpeaking: What’s the link between GDP growth and employment in India” published in “Indian express” on 26th September 2023.

Syllabus: GS3- Economy- growth, development and employment.

News: The article discusses the concern that India’s focus on growing GDP isn’t leading to enough job creation, particularly quality jobs. It mentions the SWI 2023 report, showing that high GDP growth hasn’t equated to substantial employment growth, especially for women, and quality jobs are lacking. Policymakers are advised to prioritize employment-focused strategies, including potentially exploring green manufacturing, to ensure more Indians secure stable, well-paying jobs.

About the State of Working India (SWI 2023) report:

Conducted by: Azim Premji University’s Centre for Sustainable Employment.

Data Utilized: Uses official employment and unemployment data, including Periodic Labour Force Surveys (PLFS), National Family Health Surveys (NFHS), Census 2011, and Economic Census 2013, among others.

Focus: Analyses the long-run relationship between GDP growth and employment in India, assessing impacts on different social identities: caste, gender, and religion.

What does the State of Working India (SWI 2023) report say?

Weak Relationship Between Growth and Employment: The SWI 2023 report indicates that the connection between GDP growth and employment in India is weak. Growth in GDP doesn’t assure proportional job creation.

Employment Elasticity Declined: The report shows employment elasticity has consistently decreased between 1983 and 2017, meaning a 1% rise in GDP results in less than a 1% increase in employment.

Shift to Self-Employment (2017-2021): This period witnessed a surge in self-employment, often a result of inadequate hiring opportunities. In 2020-21, regular wage employment reduced by 2.2 million, while formal employment grew by 3 million and informal employment dropped by 5.2 million.

Impact on Different Groups: The employment benefits of growth aren’t equally shared among genders, castes, or religions. Notably, women have been majorly disadvantaged in recent times.

How can job creation in India be improved?

Enhance Labour-Intensive Manufacturing: Some argue that India should intensify efforts in labour-intensive manufacturing to spur job creation, even if initially just for domestic consumption.

Pursue Diverse Growth Strategies: The report suggests that India needs diversified growth strategies that focus not just on GDP growth but also on creating quality jobs and addressing employment elasticity.

National Employment Policy: The development of a National Employment Policy, as outlined in the previous SWI report, can address both the demand and supply of labour and improve the quantity and quality of employment in India.

Explore “Green” Manufacturing: There’s a discussion about exploring opportunities in green manufacturing, allowing India to redo its industrial evolution.

Address Structural Issues: Addressing structural issues in the economy related to caste, gender, and religion is crucial for equitable distribution of growth benefits.