Barack Obama, the 44th President of the United States of America, won his re-election earlier this month. Many experts say he was helped by providence when the monthly announcement on unemployment in October by the Department of Labor showed a slight dip. This downward trend translated into a significant upward trend in his support just before the voting. Employment statistics are a big deal in the US, having the power to not just move stock market indices but also help or hinder elections of the presidents of one of the richest countries in the world with high employment levels. Jobs created or lost are precious and celebrated as a sign of an improving or a stagnating economy.
India needs to create 200 million jobs in the next 15 years to reduce the high rate of unemployment (or under-employment). Many of these jobs have to be in the manufacturing sector in order to absorb the migration of lower skilled people coming out of the agriculture sector. As a developing country, job creation is the only sustainable route to improving the well-being of the citizens and should be our top-most national priority. However, in India, new jobs created or lost are neither tracked closely nor make the headlines of our national media. Politicians perhaps do not believe they lose or win their elections on this score. That is why no one seriously questions why we have jobless growth, or why jobs that are getting created are mostly in the unorganised sector or for contract workers. We have also become immune to repeated stories of large job-creating investments stalled for one reason or the other. No one mourns these lost jobs. Perhaps because the number of new jobs required is so large that any progress made or not made pales in comparison.
Clearly, the US has internalised the importance of job creation, making it the top priority of its leaders despite being a highly developed economy with a level of unemployment much lower than that of a developing country like India. Analysts follow it diligently and cut and dice the employment numbers every which way to see what patterns are emerging. Their leaders talk about bringing back jobs lost to low-cost manufacturing hubs abroad, and emphasise the importance of good old-fashioned industrial policy to turn this into reality. Their states compete with each other to attract investments. They offer the building blocks—developed land, sufficient power and skilled labour—to attract these investments. For jobs created they provide fiscal incentives. The ‘single window’ clearances work.
Why is it so different in India, even though our need for new jobs is so much more than that of the US? Someone explained to me recently, based on his painful experience in trying to scale up a skill-development organisation, there is a big gap between need and demand in India. We have the need, acknowledge it and even pay lip service to it, but fail to convert it into demand. I read the recent headlines in the business newspapers on the revised provisions in the Land Acquisition Bill with a sense of déjà vu. An example of another policy that many in the industry believe will make it more difficult for them to buy large tracts of land required for setting up automotive, steel or cement plants. Clearly, the government believes that the onus of getting land for large-scale manufacturing should be that of the industry and not theirs.
Many experts and industry associations have made sensible recommendations that balance the rights of the landowners with the need for land for industrial development. These include clear-zoning of land for long-term industrial and other usage, setting up state government-owned ‘land development’ companies which would buy the land based on the zoning plans, paying a fair price for it and developing and leasing/selling them to the industry. This avoids any accusation of unfair gains by private buyers who can stick to their core of setting up and running manufacturing plants. Land is only one of the factors of production, albeit an important one. We face similar issues with other building blocks of industry, be it labour, power or raw materials, and are struggling to find equitable solutions for problems facing them.
This raises several simple questions in my mind. Isn’t job creation our top-most national priority? If yes, then shouldn’t industrial development to create manufacturing jobs be a part of this national priority and any proposed policy affecting the factors of production or its application (e.g. business regulations) be measured for effectiveness against this criteria? Finally, who should be the ‘owner’ of this agenda? If, for example, the industry players fail to get sufficient land they need either because the price was high or because 80% of the affected families as proposed in the new land Bill as per media reports did not agree to sell, does it mean we will go without industrial development in this country?
Perhaps the questions are too simplistic and do not deserve an answer. But the country does deserve an answer as to who is responsible for the failure to create more new jobs. In the US, the buck stops with the President. In India, this is still an open question.
The author is managing director, the Boston Consulting Group, India.
http://www.financialexpress.com/news/column-no-jobs-please-we-re-indian/1037831/0
India needs to create 200 million jobs in the next 15 years to reduce the high rate of unemployment (or under-employment). Many of these jobs have to be in the manufacturing sector in order to absorb the migration of lower skilled people coming out of the agriculture sector. As a developing country, job creation is the only sustainable route to improving the well-being of the citizens and should be our top-most national priority. However, in India, new jobs created or lost are neither tracked closely nor make the headlines of our national media. Politicians perhaps do not believe they lose or win their elections on this score. That is why no one seriously questions why we have jobless growth, or why jobs that are getting created are mostly in the unorganised sector or for contract workers. We have also become immune to repeated stories of large job-creating investments stalled for one reason or the other. No one mourns these lost jobs. Perhaps because the number of new jobs required is so large that any progress made or not made pales in comparison.
Clearly, the US has internalised the importance of job creation, making it the top priority of its leaders despite being a highly developed economy with a level of unemployment much lower than that of a developing country like India. Analysts follow it diligently and cut and dice the employment numbers every which way to see what patterns are emerging. Their leaders talk about bringing back jobs lost to low-cost manufacturing hubs abroad, and emphasise the importance of good old-fashioned industrial policy to turn this into reality. Their states compete with each other to attract investments. They offer the building blocks—developed land, sufficient power and skilled labour—to attract these investments. For jobs created they provide fiscal incentives. The ‘single window’ clearances work.
Why is it so different in India, even though our need for new jobs is so much more than that of the US? Someone explained to me recently, based on his painful experience in trying to scale up a skill-development organisation, there is a big gap between need and demand in India. We have the need, acknowledge it and even pay lip service to it, but fail to convert it into demand. I read the recent headlines in the business newspapers on the revised provisions in the Land Acquisition Bill with a sense of déjà vu. An example of another policy that many in the industry believe will make it more difficult for them to buy large tracts of land required for setting up automotive, steel or cement plants. Clearly, the government believes that the onus of getting land for large-scale manufacturing should be that of the industry and not theirs.
Many experts and industry associations have made sensible recommendations that balance the rights of the landowners with the need for land for industrial development. These include clear-zoning of land for long-term industrial and other usage, setting up state government-owned ‘land development’ companies which would buy the land based on the zoning plans, paying a fair price for it and developing and leasing/selling them to the industry. This avoids any accusation of unfair gains by private buyers who can stick to their core of setting up and running manufacturing plants. Land is only one of the factors of production, albeit an important one. We face similar issues with other building blocks of industry, be it labour, power or raw materials, and are struggling to find equitable solutions for problems facing them.
This raises several simple questions in my mind. Isn’t job creation our top-most national priority? If yes, then shouldn’t industrial development to create manufacturing jobs be a part of this national priority and any proposed policy affecting the factors of production or its application (e.g. business regulations) be measured for effectiveness against this criteria? Finally, who should be the ‘owner’ of this agenda? If, for example, the industry players fail to get sufficient land they need either because the price was high or because 80% of the affected families as proposed in the new land Bill as per media reports did not agree to sell, does it mean we will go without industrial development in this country?
Perhaps the questions are too simplistic and do not deserve an answer. But the country does deserve an answer as to who is responsible for the failure to create more new jobs. In the US, the buck stops with the President. In India, this is still an open question.
The author is managing director, the Boston Consulting Group, India.
http://www.financialexpress.com/news/column-no-jobs-please-we-re-indian/1037831/0
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