Employment slows down in manufacturing

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Despite the government advertising ‘Make in India’ as a success, the manufacturing sector has created few new jobs. According to International Labour Organisation, the share of industry — which consists of both manufacturing and construction — stood at 31.3 per cent of GDP in 2015-16, more or less stagnant since 2013-14.

This was mainly because the share of manufacturing in gross value added (GVA) stood at 17.3 per cent in 2015-16, unchanged since 2013-14, data showed. The Indian economy is dominated by the services sector, which accounted for 53.4 per cent of GVA in 2015-16.

In a recent update on the Indian labour market, the ILO observed that in terms of employment, manufacturing has not been a major long-term driver of job creation in India, pointing out that the sector’s share in jobs came down to 10.7 per cent in 2012-13 from 12.5 per cent in 2011-12.

During his campaign ahead of the 2014 general elections, Narendra Modi had promised to create more than One crore jobs a year. Raising the share of manufacturing in India’s GDP to 25 per cent by 2022 from the level of 16-17 per cent was part of his strategy to achieve the goal. Towards this end, the prime minister launched ‘Make in India’ in September 2014.

The focus of the ‘Make in India’ campaign is to boost local manufacturing in more than two dozen sectors identified under the scheme, among them electronics, textiles and garments, food processing, construction and defence manufacturing. According to the Indian government’s data, manufacturing grew at 9.3 per cent in 2015-16 but it shrank by 0.3 per cent in the current fiscal up to October.

Changes in employment status are linked to the process of structural transformation, as resources (capital and workers) move from low to high-productivity sectors. Although this has been a characteristic feature of the development processes of other parts of East and South-East Asia, in India, the shift from agriculture to manufacturing has not yet taken place to the same extent. The same trend prevails in other South Asian countries too.

The year 2015 saw the lowest pace of job creation since 2009 in eight labour-intensive sectors closely monitored by the Labour Bureau. In fact, 20,000 jobs were lost during October-December 2015. During the quarter, IT and BPO sector reported the highest loss of 14,000 jobs, followed by 13,000 in automobile, 12,000 in metal, 8,000 in gems and jewellery, 7,000 in leather industry, 2,000 in power loom and handloom and 1,000 in the transport sector. Textiles and apparel was the only sector that reported creation of 37,000 new jobs during October-December 2015.

noor.mohammad@mydigitalfc.com

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