Job Creation Growth Slipped To 2.8% In 2019: CARE Ratings
The pace of employment growth in India slowed down in the last two financial years, according to a study by CARE Ratings. It observed job creation growth at 3.9 percent in 2017-18 and 2.8 percent in 2018-19.
The study collected samples from 1,938 companies across all sectors, with the value of sales at Rs 69 lakh crores in FY19. It included all listed public sector entities with available information but did not have enough representation from the Small and Medium-sized Enterprises sector.
The study revealed that between 2014-15 and 2018-19, the total employment had increased at an annual growth rate of 3.3 percent. In comparison, GDP grew at a rate of 7.5 percent during this four-year period. Ideally, the rate of growth in employment should be inclined to the growth in GDP, which is the broadest indicator of economic growth.
“On an annual basis, the difference between the growth rate in GDP and employment was 5.5 percent in 2015-16, 4.1 percent, 3.3 percent and 4 percent respectively in the subsequent years. Therefore, there is a case that supports the argument that employment growth has not been commensurate with GDP growth with a difference of 4.2 percent in CAGR during this period,” Care Ratings said.
Almost half of the companies surveyed had witnessed a decline in growth in employment over the period, while 35 percent of them recorded a growth of 11.5 percent. Several manufacturers have cut down on their production capabilities to limit losses after a steep decline in demand over the last few months, which has resulted in higher joblessness.
The agency also found that core industries witnessed negative growth in employment, with crude oil merely maintaining the employment level. These industries have been impacted by the slowdown in GDP growth and challenges on the NPA (non-performing assets) for banks.
The growth for the heavy investment industries also turned negative while, the infrastructure witnessed a growth of 0.4%.
Early this month, the Centre for Monitoring Indian Economy (CMIE) released a fresh set of data on India’s unemployment rate which rose to a three-year high of 8.5 per cent in October from 7.2 per cent in September 2019. The last time India saw such an unemployment rate was way back in August 2016 at 9.59 per cent.
Even though the government has announced a series of measures to create more demand and revive the economy, the situation doesn’t seem to be changing as per the CMIE data and the CARE ratings.
According to experts, the unemployment in India has impacted the unorganised sector, which includes a major chunk of seasonal labour. Daily-wage labourers have also been hit due to demand slowdown.