Job generation in India fails to keep pace with GDP expansion: Care Ratings

31 Oct 2017 Evaluate

Confirming worries of jobless growth in India, Credit rating agency Care Ratings in its latest report has stated that employment generation in the country has failed to keep pace with the gross domestic product (GDP) expansion in recent years. It also termed it as a ‘major concern’ and noted that such a scenario calls for proactive measures from government and the recent infrastructure building efforts will help. It added that the Union labour ministry had also conceded and set up a task force to compile figures of jobs generated in the last three years.

From a sectoral basis, the rating agency has said that the services sector had extended some respite but manufacturing had failed to create jobs in recent times. It also pointed out that banks, IT, retailing and healthcare continue to create jobs, while mining, power and telecom saw reduction in employees. It further highlighted that banking is the highest among sectors when it comes to generating employment, with a 21.3% share and is followed by IT, mining, healthcare and textiles. It also mentioned that sectors which witnessed a fall in employment in FY17 from the previous fiscal included fast-moving consumer goods, media and entertainment and paper. It also noted that crude oil, infrastructure, trading, automobiles and ancillaries, finance and hospitality, which had recorded negative growth in employment in FY16, also witnessed growth in FY17.

Adding further, Credit rating did a study of employment in the corporate sector for last five years and asked for the findings to be taken with caution because the unorganized sector and smaller businesses account for a large share in employment generation. However, it believed that these numbers are broadly indicative of the trends witnessed in the last two years. It further highlighted that aggregate employees in 1,473 companies grew to 5.18 million in FY17 from 5.01 million in FY15, a rise of a little over 1% per year compared to over nearly 7% economic growth. From a cost of employment perspective, it indicated that the average salary has risen for a sample of 1,473 firms to Rs 8.35 lakh in FY17 from Rs 7.13 lakh in FY15.

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