Context:

Recently, a study titled “India’s Employment Prospects: Pathways to Jobs”, released by the National Council of Applied Economic Research (NCAER), highlighted that skilling and productivity enhancement of small enterprises are central to addressing India’s employment challenge.

Key Findings of the Report:

• • Nature of Employment Growth in India:
    • Recent employment growth has been driven primarily by self-employment, rather than by the expansion of wage employment.
      • Self-employment in India is largely a result of economic necessity, not entrepreneurial innovation.
      • Most unincorporated household enterprises operate at subsistence levels, characterised by:
      o Low capital intensity
      o Low productivity
      o Limited adoption of technology
  • Role of Skills and Workforce Quality:
    • The transition to a skilled workforce has been slow, despite India’s demographic advantage.
      • Medium-skilled jobs account for much of the employment growth, particularly in services, while manufacturing remains largely low-skill intensive.
      • The report estimates that:
      o Increasing the share of skilled workers by 12 percentage points could raise employment in labour-intensive sectors by over 13% by 2030.
      o A 9 percentage point increase in skilled workers could generate approximately 9.3 million jobs by 2030.
  • Small Enterprises, Credit, and Technology
    • The productivity of small enterprises is identified as the core determinant of India’s employment trajectory.
      • Adoption of digital technologies significantly improves hiring capacity:
      o Enterprises using digital tools hire 78% more workers than non-users.
      • Access to institutional credit has a strong employment multiplier effect:
      o Even a 1% increase in access to credit raises the expected number of hired workers by 45%.
  • Sectoral Employment Potential
    • Strengthening employment in labour-intensive manufacturing and services can sustain GDP growth of around 8%, in line with the vision of Viksit Bharat.
      • Key employment-generating sectors include:
      o Manufacturing: textiles, garments, footwear, food processing
      o Services: trade, hotels, tourism, education, and health
  • Inter-Sectoral Multipliers:
    • Moderate growth in gross output of labour-intensive sub-sectors can lead to multi-fold job creation by 2030, including:
      o A 53% increase in employment in textiles, garments, and allied manufacturing
      o A 79% increase in employment in trade, hotels, and related services
  • Policy Recommendations:
    • Reorient Production-Linked Incentive (PLI) schemes towards labour-intensive industries.
    • Expand formal skilling and upskilling, particularly in emerging technologies and artificial intelligence.
    • Improve access to credit for micro and small enterprises.
    • Promote digital adoption among small firms.
    • Strengthen policy support for tourism, education, and health services to generate inclusive employment.

Significance for India:

• • India is projected to become the world’s third-largest economy, yet its low per capita GDP rank (128) underscores the urgency of employment-led growth.
  • The report places India in a global comparative context, identifying priority areas for structural reform and productivity enhancement.

Conclusion:

The NCAER report underscores that India’s employment challenge is fundamentally a productivity challenge. Enhancing skills, improving access to credit and boosting the productivity of small enterprises, particularly in labour intensive manufacturing and services can unlock large-scale job creation while sustaining high economic growth.