The document discusses jobless growth in India after economic liberalization. It summarizes employment growth and GDP growth from 1956 to 2012, showing that while GDP growth increased after 1994, employment growth declined. Several reasons for jobless growth are provided: higher productivity growth through technology outpacing labor productivity increases; increasing real wages and falling costs of capital making technology replacement of labor more viable; lower labor productivity in India; service sector-led growth rather than growth in manufacturing; and unequal geographical growth benefiting some states more than others. Proposed solutions to promote job creation include focusing on skill development, labor law reforms, promoting labor-intensive sectors, supporting MSMEs and free movement of labor.

1. Job Less Growth in India after
Liberalization
Suryakant
Ashwani Vohra
Sachin Gupta
Amit Pal

2. Contents
 Introduction
 Job growth scenario from 1956 to 2012
 Reasons of Jobless Growth
 Proposed Solution
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3. What is Jobless Growth ?
A jobless recovery or jobless growth is an economic
phenomenon in which a macroeconomic
experiences growth while maintaining or decreasing
its level of employment. The first documented use
of the term was in the New York Times in 1935
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4. Is Job Less Growth Exist in India ?
 Earlier (FY73 ~FY94) GDP growth sub 5% employment generation is above 2%
 Post liberalization GPD growth is 6 .0 % but employment generation is 1.1%
 During FY05 to FY10 Growth is 8.7 % & employment growth is 0.1%
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Year
Employment Growth
CAGR
GDP Growth
CAGR
Employment Elasticity
FY 73 - FY 78 2.6 4.6 0.57
FY 78– FY 83 2.1 3.9 0.54
FY 83 –FY 87 1.7 4.0 0.42
FY 87- FY 94 2.4 5.6 0.43
FY 94- FY 00 1.0 6.8 0.15
FY 00- FY 05 2.8 5.7 0.50
FY05 - FY 10 0.1 8.7 0.01
FY 10 –FY12 1.4 7.4 0.18
FY94 –FY12 1.1 6.0 0.18

5. Contents
 Introduction
 Job growth scenario from 1956 to 2012
 Reasons of Jobless Growth
 Proposed Solution
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6. Higher Productivity Growth by Technology
 Productivity growth by technology outpaced 3 times than Increase in Labour
productivity
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Broad Sector
Real
value
added
growth
Contribution
of Labour
persons
(A)
Contribution
of Labour
quality
(B)
Contribution
of Capital
services
(C)
TFP growth
(A+B+C)
Agriculture 3.03 0.37 0.15 0.99* 1.52
Mining & Quarrying 4.75 0.68 0.38 3.93 –0.24
Manufacturing 7.22 0.68 0.44 5.37 0.73
Electricity, Gas &
Water Supply 7.44 0.66 0.34 3.49 2.96
Construction 3.48 5.21 0.21 1.37 –3.31
Services 7.11 1.73 0.53 3.00 1.84
Total Economy 5.82 0.84 0.69 2.89* 1.40
Table 2-Trend Growth Rate in Real Value Added and Contribution of Factor Inputs and TFP to GVA growth by Broad
Sectors, 1980 to 2008

7. Contents
 Introduction
 Job growth scenario from 1956 to 2012
 Reasons of Jobless Growth
 Proposed Solution
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8. Increasing Real Wages & Falling Cost of Capital
Technology is relatively became cheaper in last 30 year & Ratio is increasing
exponentially so it is prudent to replace man power with equipment
 Ratio increased at much faster pace in manufacturing sector than other area
Source: http://www.ideasforindia.in/article.aspx?article_id=280
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9. Lower Labour productivity of Indian Labour
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 Labour productivity in India is one of lowest in developing countries so it is
relatively cheaper to use Technology

10. Service Sector Led Growth
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 Abnormal growth pattern of economy . Normally countries goes Primary
sector to Secondary Sector but India directly switched to Tertiary Sector
0
10
20
30
40
50
60
1950-51
1953-54
1973-74
1967-68
1968-69
1964-65
1974-75
1959-60
1960-61
1957-58
1971-72
1965-66
1955-56
1980-81
1978-79
1983-84
1979-80
1984-85
1988-89
1989-90
1987-88
1994-95
1993-94
1995-96
1998-99
2000-01
2007-08
2004-05
2002-03
2008-09
2010-11
2012-13
Share of GDP by Sector
Agriculture Industry Ser vice
Source: http://statisticstimes.com/economy/sectorwise-gdp-contribution-of-india.php

11. Higher Productivity Growth in Service Sector
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Source: https://rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=785
 Higher productivity growth in service sector after 1990 lead to less Job
creation for same GDP growth

12. Unequal Geographical Growth
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 GDP growth
benefitted only to some
part of India i.e.
Maharashtra ,Gujarat
,Haryana
 Most populous state
i.e. Bihar , West Bengal ,
U.P. , M.P. lagged behind
 Growth Centre are Far
away from Man power
central, makes
Manpower costly

13. Free Transferability of Cheap Foreign Capital
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 Due to liberalization, there is a Free transferability of
capital/technology but labor movement is subject to
restriction (VISA).
 Cheap funding of capital for Technology up gradation
by developed world (USA/JAPAN /IMF) to India.
 Investment in technology is capital expenditure & One
time cost so there is more certainty of expenses .Wages
are revenue expenditure & repetitive in nature .It is
inflationary in nature .So expenses are uncertain .
Businessman reduce uncertainty by replacing man with
equipment.

14. Old Labour Law & Poor Product Quality
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 Indian Labour law & Industry regulation are decade
long .These law promotes Red-Tapism , Corruption &
unnecessary delay in processes . These law makes
Hire & Fire of Labour makes difficult So Industry is
avoiding Man power with Machines /Automation
 Out put from manual Labour is non standardized &
poor quality. We get standardized output & superior
quality by Machine. This encourage usage of
technology in place of man power .

15. Contents
 Introduction
 Job growth scenario from 1956 to 2012
 Reasons of Jobless Growth
 Proposed Solution
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16. Proposed Solutions for Job Creation
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 Focus on Skill Development –Skill development
improved productivity & makes export of our goods &
services competitive in international & domestic
market
 Reform Old Labour Law –Indian Labour laws are
decade old .These laws hinder Employment Growth
 Promote Labour Intensive Sector –Promote Labour
intensive sector (Manufacturing ,Construction ,
Tourism).

17. 17
 Focus on MSME Sector–MSME sector has a
tremendous potential of employment generation .
Sector doesn’t focus on state of technology .
 Set up industry in Populous state – Provide tax
incentive to setup industry in most populous state (U.P.
, Bihar ,Bengal )
 Support for free movement of Labour –Developed
countries advocating for Free Trade So third world
countries to jointly support for Free movement of
Labour
Proposed Solutions for Job Creation

18. 18
 Linking MANREGA to capacity creation- Government
should link MANREGA to create capacity & to boost
future growth potential of economy .
 Diverting Saving to Financial Asset– Currently people
are investing their saving into Real Estate & Gold .By
diverting these saving to Financial asset, we can
increase GDP growth & Employment
 Circular Economy Concept -Industry should think of
circular economy .If people don’t have Job. There will
be no demand for Goods so business man must create
Job for their own Growth.
Proposed Solutions for Job Creation

19. 19
 Stable Policy Regime –Provide stable Rules, Regulations
& Policy Regime for FII/FDI investment .In past few
years there were lot of problems i.e. Retrospective Tax ,
Court ruling in Telecom & Coal . These cases affected
the investment friendly image of the country .
 Make In India Initiative
Proposed Solutions for Job Creation

20. Thanks!
Suggestions are Most Welcome...
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