Economic Survey on Employment

• According to Economic survey 2016-17, in order to exploit the demographic dividend and meet the growing aspiration of those entering the labor force, India's economy needs to create enough good jobs - jobs that are safe and pay well, and encourage firms and workers to improve skills and productivity.

Important highlights :

• It may be noted that of the 10.5 million new jobs created between 1989 and 2010, only 3.7 million-about 35 percent - were in the formal sector. Thus, the challenge of creating the good jobs of India could be seen as a challenge of creating more formal sector jobs which also guarantee workers protection.
• The survey has suggested that productivity in the apparel sector can be substantially improved by relocating capital from less productive to more productive firms. Incidentally formal apparel sector firms in India are about 15 times more productive than there informal sector counterparts.
• However, India's apparel sector is dominated by informal firms where approximately 2.0 million establishments employing about 3.3 million workers, dwarfing the formal apparel sector's 2800 firms which employ 330,000 workers. Apparently this sector is now in process of relocating its units in second and third tier towns and cities.
• This business model of moving factories to workers has a number of commercial and social advantages-it involves spreading economic development to underdeveloped areas, reduces spatial mismatch in the labour market and can improve competitiveness by raising firms' access to lower cost labour. Moreover, about 70 per cent of the employees of India's larges apparel exporter are women.
• Recent studies have estimated that India's GDP would grow by an additional 1.4 per cent every year if women were to participate as much as men in the economy.
• To boost economy the centre has to ensure that labour regulation is worker-centric, by expanding workers choice and reducing mandatory taxes on formal sector employment
• The survey has also suggested to improve the function of EPFO (Employees Provident Fund Organization).
• Policymaker should consider whether lower earners should be offered the same choice- of whether to contribute part of their salaries to the EPF- which the rich have.
• This would both introduce competition in the market for savings, which may improve EPFO's service standards, and allow the poor-some of whom may be liquidity constrained- to optimize as per their own personal requirements

By: Vishal