India is among the fastest growing economies across the glove, but the benefits of the growth does not reach to the masses. The biggest problem facing the Indian Government, is the low rate of employment generation. New job creation in April 2017 was 10.9% lower than April 2016. Job creation continues to be a major problem in the Country. The Government has initiated various incentives that enable the generation of jobs, but the numbers show a different picture. The overall index for April 2017 was lower than that of April 2016, this means that the new job creation has declined in a year.
Compared to April 2015, the job creation index has increased by minor 1.8%, indicating the slow pace of job creation. The worst hit sector in the county was the information technology industry, which saw a major drop in hiring and an increased number of layoffs. Apart from the strict employment norms abroad, automation has also impacted the new job creation. Other sectors include construction and business process outsourcing/IT enabled services, there was a drop of 10% and 12% respectively on a year on year basis. Automation has not only impacted the IT industry, it has also had a huge impact on the manufacturing sector. Since manufacturing is also choosing automation in order to remain cost effective, the job creation has subdued.
It is expected that some level of job creation may happen in the future, but not enough to match the number of people entering the job market. Construction has always been a key employment generator for the economy, with the lull in the real estate sector, employment has seen a big downfall. The permanent job creation across the industry has gone down across every industry. With the increasing layoffs across the IT sector as well as startups, the employment generation shows a bleak future. The employment generation across different sectors like pharma, gems and jewelry and automobile will depend on the exports.
Meanwhile, a comparison between cities reflected that six out of eight metros saw a decline in hiring activities. Kolkata and Ahmedabad saw an increase in hiring whereas Delhi, Mumbai, Chennai and Bengaluru saw a decline in the hiring index. With the rollout of GST, the demand for accounting professionals will increase,but there will not be any major impact on the other sectors. In order for an increase in job creation, the GDP has to continuously accelerate.
The lack of job creation is not a short term problem. It has been recorded that the employment elasticity across India has been low and the long term solution is twofold- to endow people with skills that will help them find jobs and to have a housing boom that will lead to the generation of jobs at many different levels. It will be interesting to see the impact of GST on job creation, although it might take a few months for the different sectors to gear up for GST as well as the real estate sector to gain its velocity, until then, the job market will have to face difficult times ahead.
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