India Workforce: NCAER Report on Job Growth

New Delhi, Dec 11 (PTI) India needs to overcome bottlenecks to increase both quality and quantity of workforce participation and labour productivity, an NCAER report released on Thursday said.

The report underlines the role of skilling and small enterprises as key drivers of job creation in the country, an NCAER statement on the study said.

The study titled "India's Employment Prospects: Pathways to Jobs", authored by Professor Farzana Afridi and her team of researchers at NCAER, says the recent increases in employment are primarily due to the rise in self-employment, while transition to a skilled labour force has been slow.

Strengthening employment opportunities in labour-intensive manufacturing and services sectors could help sustain GDP growth around 8 per cent, consistent with the vision of Viksit Bharat, it says.

Launching the report, NCAER Vice Chairman Manish Sabharwal said, "India is on track to become the world's 3rd largest economy, and while its per capita GDP currently ranks 128th, this highlights valuable opportunities to prioritise employment and inclusive growth."

The main challenge is that the unincorporated household enterprises operate with low levels of capital, productivity, and technology adoption.

"India's self-employment dominance is due to economic necessity rather than entrepreneurial dynamism. Just like small farmers, most of the small enterprises function at subsistence level. India must confront the reality that its employment future is tied to the productivity of its smallest enterprises," said Prof Afridi.

"Enterprises using digital technologies hire 78 per cent more workers as compared to those not using tech. Even 1 per cent increase in access to credit increases expected number of hired workers by 45 per cent," said the lead author.

Regarding persistent challenges in generating employment despite a distinct demographic advantage, the report says that on the supply side, India's workforce could benefit greatly from upskilling, particularly with the advent of new technologies and AI.

Medium-skilled jobs dominate employment growth, especially in services, whereas manufacturing remains low-skill intensive.

"Increasing the share of skilled work force by 12 percentage points through investment in formal skilling could lead to more than a 13 per cent increase in employment in the labour-intensive sectors by 2030," it says.

Simulations in the study show that increasing the formally skilled workforce under the moderate growth scenario could lead to significant job gains in the labour-intensive sectors.

"Increasing the share of skilled workforce by 9 percentage points could generate 9.3 million jobs by 2030," it says.

G C Manna, Senior Advisor, NCAER, said the report highlights the key sectors with strong potential for driving employment growth.

Professor Aditya Bhattacharjea, Visiting Professor, Institute for Studies in Industrial Development, said, "The report places India in an international context and highlights areas where the country has unique opportunities for improvement and stronger alignment with global benckmarks.