Indian jobhunters such as Mohit Goswami and Sujay Kumar Patwari have discovered an alarming peculiarity about India’s briskly expanding economy: it is creating barely any formal employment, and certainly not the 10m or so jobs needed annually to absorb new entrants to the labour force as the population grows.
Mr Goswami, 24, an economics graduate, has been hunting without success for a job in a state bank for more than three years. “The competition is so tough and there are so many people in our country,” he says. “I must get something soon.” He is just one man in a working-age Indian population that is set to rise from 749m to 962m in the two decades to 2030,according to the Federation of Indian Chambers of Commerce and Industry.
Mr Patwari is 39 and has a bachelor of commerce degree and benefits from 14 years of experience as a logistics manager, but even he is struggling to find work in an emerging economy where trade can hardly fail to grow in the years ahead.
“It’s not easy,” he says in fluent English. “The economy is down and companies are thinking ‘Why should I hire 10 extra people?’.” He lost his job three months ago when his employer, a manufacturer near Delhi that exported furniture to Europe and the US, shut its doors.
Among most economists, there is no secret as to the causes of India’s emerging labour crisis. The first problem is one of demand: employers are so wary of the country’s outdated and worker-friendly labour laws – including the Workmen’s Compensation Act, dating to 1923, and the Payment of Gratuity Act from 1972 – that they are reluctant to hire permanent employees.
“All evidence indicates extreme and even increasing reluctance of Indian entrepreneurs to employ unskilled workers,” write economists Jagdish Bhagwati and Arvind Panagariya in their new, pro-reform book, India’s Tryst with Destiny…
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