Job Creation in Urban India: A Note for discussion

K.V.RamaswamyIndira Gandhi Institute of

Development Research, Mumbai

Importance of Urban India

• Urban population grew by 2.76 percent per annum in the decade 2001-2011.

• Its share in total population increased to 31.1 percent in 2011 from 27.8 percent in 2001

• Little less than 50 percent of the jobs created in India is accounted for by urban India over the period 1999-2009.

• More than 85 percent of the jobs created in business services and more than 80 percent in manufacturing were in the urban sector

26/03/2013 2Berkeley-Bengaluru

Who is creating jobs in Urban India?

• Construction is the fastest growing sector with a share of 10 percent of total urban employment

• Transport, Communications and Other business services together take the second place

• Manufacturing occupies the third place in terms of jobs growth. Its share in total urban employment is 23 percent

• Other business services include real estate, financial services, IT and IT enabled services and social and community services

26/03/2013 3Berkeley-Bengaluru

What type of urban jobs?

• Nearly 80 percent of all urban workers are in

informal employment broadly defined to include

both self employment and wage employment

(casual wage + regular wage)

• Manufacturing, non-trade services and

construction dominate urban informal

employment 26/03/2013 4Berkeley-Bengaluru

Education-skill composition?

• Services sector has greater proportion (61%) of workers with secondary education and above

• Manufacturing 54 % of the workers were having below secondary education

• Construction is dominated by casual workers with below primary education. It is expected to create highest incremental casual employment up to 2022

26/03/2013 5Berkeley-Bengaluru

Development of skilled workforce

• Construction industry requires a large number of carpenters, masons, plumbers and construction machine operators

• Manufacturing requires a wide variety of industry specific skills and technicians in garments, textiles and auto-component industries etc

• Services face of shortage of skilled professionals

26/03/2013 6Berkeley-Bengaluru

Current State of Vocational Education (VET)

• In the age-group 15-29 the proportion of population having formal vocational education has declined to 2% in 2009 from 2.4% in 2004

• Proportion with non-formal VET has declined to 4.8% in 2009 from 7.7% in 2009

• It has declined in absolute terms as well

26/03/2013 7Berkeley-Bengaluru

Unemployment among VET

• Unemployment rate among persons with formal vocational training is 24%

• Whether the vocational training was ever helpful in getting a job? (NNS 66th round)

• 29% of the individuals said they have not benefitted from training

• Is there a mismatch?• VET for informal sector?

26/03/2013 8Berkeley-Bengaluru

26/03/2013 9Berkeley-Bengaluru

26/03/2013 10Berkeley-Bengaluru

Incentive for firms to hire apprentices/trainees?

• The Apprentice Act, enacted in 1961, regulates the program of training apprentices in the industry

• Labor Ministry initially suggested that companies should absorb 50% of the trainees that they hire later backtracked to suggest preference should be given to them

26/03/2013 11Berkeley-Bengaluru

Flawed VET system?

• VET for informal sector workers?• Entry barriers?• Minimum secondary school education (class

VIII and Class X) is a prerequisite for enrolling in craft and apprenticeship schemes for construction-related training..

• Duration….• Issue of private participation..

26/03/2013 12Berkeley-Bengaluru

References

• Ramaswamy and Agrawal (2012):Chapter-8, India Development Report, M.Dev(Ed)

• Ruchi Hajela (2012): “Shortage of skilled workers: a Paradox of the Indian Economy”, SKOPE research paper No.111

• Tushar Agrawal (forthcoming):Skill development in India: an examination”, Journal of education and work

26/03/2013 Berkely-Bengaluru 13

Thank you

26/03/2013 Berkely-Bengaluru 14