Cerebral Capsules #009 In the 1960s and 1970s, the booming populations of states like Bihar were seen as a curse. In the 1990s, though, economic liberalisers evoked the experiences of East Asia and the demographic dividend it benefited from when previously high fertility rates began to decline. Working-age populations rose at the same time as the ratio of dependants to workers fell. An associated rise in the rate of saving allowed more investment, helping pay for the vast expansion in manufacturing that employed those workers and lifted hundreds of millions of people out of poverty. In the mid2000s the prospect of a similar dividend in India, where the fertility rate had dropped a lot in the 1980s and 1990s, was a key reason for investors’ optimism. The timing was particularly encouraging: India’s labour force was due to soar as China’s began to decline. India now, seems to be squandering this demographic opportunity. Growth is at 4.5%, half the rate at the peak in the mid-2000s. Industry is 27% of output, compared with 40-47% in other big developing Asian economies. High inflation has prompted households to store ever more of their savings in physical assets rather than the financial system. With few manufacturing exports, India has a chronic balance-of-payments problem. And India has created too few formal jobs in the past decade. The working-age Indian population, aged between 15 and 64, will rise by 125m over the coming decade, and by a further 103m over the following decade. Not everyone of working age will be in the job market. presently only about a third work, a low level by Asian standards. But India still needs to create about 100m net new jobs in the next decade. The most recent survey showed no net new jobs were created between 2004-05 and 2009-10, a dramatic slowdown on the previous five years, when 60m jobs were created. The problem lies not just in the quantity of jobs, though; quality matters too. About 85% of India’s jobs are with “informal” enterprises—those organisations with fewer than ten staff which are not incorporated. Another 11% are casual jobs with formal companies. Only 16% of Indians say they get a regular wage. People with informal jobs are usually very poor. An official study of 2004-05 data concludes that 80% of informal workers got less than the then national minimum wage of $1.46 a day. India’s IT firms,account for only a few million jobs out of a total of half a billion. All this seems closely linked to the lack of manufacturing. Although some 23% of Indian workers are categorised as working in “industry”, compared to nearly 30% in China and 22% in Indonesia, half of India’s “industrial” workers are in construction whereas the figure is just a quarter in Indonesia. The remainder are in the “manufacturing” but these are not jobs that involve exposure to modern machinery, techniques and training . More than half of Indians in the manufacturing sector work in facilities without electricity.
Posted on: Wed, 12 Jun 2013 03:04:12 +0000
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