Mains Paper 3: Economy | Development & Employment
From UPSC perspective, the following things are important:
Prelims level: NITI Aayog Action Agenda
Mains level: The newscard highlights dangers of low job growth and job displacement on the onset of new technologies like AI.
Demographic Dividend – a benefit or bane?
- The issue of jobs has come into focus with forthcoming general elections.
- While economic growth has been impressive over the last couple of decades, job creation has been relatively slow.
- The increase in the share of young adults in the total population often called India’s “demographic dividend”, has turned out to be a problem rather than an asset.
- Whether or not job creation has slowed down in recent years has been debated vigorously, primarily owing to the poor quality of jobs data.
Jobs scenario in India
- Multiple data sources clearly show that job opportunities in India are, at present, limited, with the average annual addition to regular jobs during 2012-16 falling to 1.5 million from 2.5 million in 2004-12.
- Besides, job creation in India’s organized manufacturing sector experienced a sharp fall in 2012, later recovering only to a level considerably below any prior year during 2006-12.
- Furthermore, the share of regular workers with any form of social security has declined from 45% in 2011-12 to 38% in 2016.
Where the real problem lies- finds NITI Aayog
- NITI Aayog’s Action Agenda (AA), published over a year ago, attempted to find the issue.
- According to the AA, underemployment and poor job quality have been the real problems.
- No formula for the unemployment rate differs in India’s low labour force participation rate—the proportion of working-age people looking for jobs or working.
- It stands at its lowest in two decades, at 54%, compared to 62% in the late 1990s (it is currently around 70% in Brazil, China and Indonesia).
Find outs of NITI Aayog’s AA
- The AA has provided several good ideas for job creation, including labour law reforms at the state level, recognizing the difficult national political landscape as well as the wide cross-state variation in the nature of political constraints.
- Recent progress in this regard includes raising the minimum firm-level employment threshold for the application of the Industrial Disputes Act (that puts severe constraints on the hiring and firing of workers) from 100 to 300 workers.
- The AA has also identified labour-intensive sectors, such as apparel, electronics, food processing, gems and jewellery, financial services, and tourism, where employment needs to be encouraged.
- Furthermore, the report emphasizes the role of exports in job creation and recommends establishing coastal employment zones (CEZs), similar to China’s special economic zones (SEZs)
Health and Education- facing the real shortage
- There are some real imbalances across the economy, with some key sectors facing a shortage of skills and personnel. Such shortages are primarily in social services like health and education.
- The quality of these services, especially those available to low-income, remote and rural households, is shockingly low owing to the scarcity of quality doctors, nurses and teachers.
Automation and AI – filling the gap
- Another recently released NITI Aayog document, titled “National Strategy For Artificial Intelligence #AIforall”, proposes a strategy based exactly on such a principle of filling up the skill gap.
- For example, specialized software can be used to diagnose diseases (and prescribing appropriate medications) or grading students’ written work and providing feedback, thereby enabling large-scale online education.
- India’s information technology (IT) sector, until recently, had been able to create a number of high-skilled jobs due to a significant amount of offshore outsourcing by developed countries.
- In future, the support and maintenance services for AI, rather than IT, may be in demand, given that IT support itself is being robotized.
Way Forward: Countering Jobs- Skills Mismatch
- The new NITI document provides some specifics in this regard. However this document does not take seriously any job displacement threats from AI.
- For its future growth, India’s IT (and AI) sector needs to reinvent and position itself in a more innovative role, which will require considerable capacity building.
- Thus, there are serious imbalances, varying across sectors, between the availability of jobs and the supply of skills and workers.
- While good ideas to deal with them exist both within and outside the government, implementation is key. This is where the government often does not perform well.
NITI Aayog Action Agenda
- The draft “Three Year Action Agenda” of the NITI Aayog been released in 2017 for 2017-18 to 2019-20.
- It focuses on seven key areas that include revenue and expenditure, economic transformation in major sectors, regional development, growth enablers, and reforms in governance, social sectors and sustainability.
- It is said to be a phasing out of Five Year Plan as a concept.