Hiring industry officials told TOI, every year, 2-3 lakh jobs get created in the formal sector. However, the total number of additional people entering the job market every year is 12-13 million, they said. The country’s GDP growth declined 2% to 5.7% in the June quarter of 2017 compared to 7.9% in the corresponding quarter of the previous year. If the GDP growth declines further, it could add to the burden.
As a rule of thumb, the industry believes any rise in GDP growth spurs job creation. And it’s true the other way around as well, they said.
Notionally, some believe, one percentage point rise in GDP growth has the potential to create a million jobs over a period of time. Aditya Birla Group chief economist Ajit Ranade said, “It is absolutely without a doubt that the GDP has a correlation with employment and livelihood. When GDP growth rises, there would be a certain amount of job creation, and vice versa. One can debate as to what would be the exact impact on job creation, but the number of around a million jobs per 1% of GDP growth looks reasonable given that 12-13 million people enter the workforce every year.”
It’s not quite music to the ears of placement firms. Adecco India country manager & MD Priyanshu Singh said, “We have had a great run of 15-20 years with mass employers like IT/BPOs. Now they have hit a wall. We are sitting on this ‘demographic dividend’ with around a million people joining the workforce every month. How will you provide these guys jobs? Every month we add a million people wanting jobs. Compared to the total number of jobs created in a year, it’s a big mismatch.”
Singh believes the GDP will pick up again, but the challenge is to create jobs fast enough and economic growth alone is not enough. “We also need to reskill our people and ensure there is empathy and dignity of labour so that not everyone wants to become an engineer or an MBA. Things have to be redone otherwise this ‘dividend’ is mostly a disaster. Can we turn it around? For sure. May be it’s a minor disaster (which can be averted),” said Singh.
Kelly Services India MD Thammaiah B N said while he has not seen the decline in GDP impacting the firm at present, “it may do so in the near future if past trends of GDP to job relation are to be followed”.
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