Growth in employment opportunities is decreasing worldwide. But the situation is quite grim in the case of India. Recently there were some headlines about IT companies cutting off their head count. These headlines had further increased the panic among the students & current employees. There is no confusion that the growth rate in employment opportunities is far lower than the GDP growth rate & much smaller than the growth rate in the employable labor force. Under these circumstances, it is imperative to gauge the current situation, future situation & possible alternatives.
Current Situation – How worse it is?
The situation is serious as of now. India’s top ten IT firms which constitute around 75% of total IT market has added only 208 employees in April –June quarter. Their total employees are 9.53 lakh by end of June quarter. This quarter used to see highest fresh recruitment because in this quarter graduation & post-graduation courses come to end. In top 7 IT firms around 56000 professionals were jobless.
This clearly means that there are hardly any new jobs in the sector. Much of worry comes from the point that it’s not only IT sector which is slowing down. All other major sector has gone down. Even in country’s top institute IITs, placement has reduced from 79% last year to 66% this year. Job speak index has grown only 1.8% & 1.1% respectively since 2015 & 2016 respectively. Worst hit is IT Software industry with 24% decline, ITeS with 12% and construction saw a 10% decline. Other sectors like manufacturing also saw a decline.
How worse will it in Future?
India adds 15 lakh engineers each year to its work force out of this only 5 lakh gets employment. On the top of it, IT industry already has the surplus manpower. As per “McKinsey” Company’s report about half of the workforce in IT industry will be of no use in next three to four years. Another estimate of “Head Hunters” states that India will witness around 2 lakh job loss annually for next three years. Other sectors like Manufacturing, construction, Automobiles also will witness either job loss or no addition. Even if manufacturing, construction or MSME sectors pick up under “Make in India” scheme. What sort of jobs will they provide?
These sectors employ mainly unskilled or low skilled workforce with low wages. The demand for a High skilled professional is less in these sectors. Engineers or postgraduates from professional courses invest around 10 lakh in their education. Many of them opt for education loans. These professionals need a minimum monthly salary of 20 thousand to pay their education loans only. With no job or job with low wages, how will they repay their loans? With such circumstances, there will be huge tension in the society. We all know that higher unemployment leads to higher crime rates.
What are reasons for this?
On the surface, reasons are automation, increased international restrictions, competitiveness and global slowdown. But apart from these, Industry unpreparedness, faulty education system, over emphasis on engineering education & reliance on only a few sectors are also significant reasons.
The government continuously talked about demographic dividend but did very less to reap that. The fact is that India’s agriculture & manufacturing sector were already labor surplus now IT industry also has so. Government agencies just walked the trend without any planning or research. AICTE has doubled the number of engineering colleges from 2007 to 2016. These colleges distributed degrees to students with no skill development in them.
India had primarily exported only IT skilled labor, but this could have included professionals from other disciplines also. Biotech, fine arts, basic science disciplines also had the potential to export skilled labor. But our indigenization and ignorance towards these educational courses had closed that option. We want the Sanskrit language as an optional course which hardly provides any employment opportunities instead of some other which can do so.
Ignorance towards arts & humanities courses also had worked against the situation. The government had continuously reduced concentration on higher education in basic sciences & fine arts. Expenditure on research in these courses reduced year after year. As a result, we have more than 30% positions vacant for qualified professors in India’s Top most institutes like IIT’s, Delhi University and other central universities only. Imagine the status of others.
What are the Alternatives?
The alternatives lie with other service sectors which have potential to grow & also can employ skilled manpower with reasonable wages. Banking – Financial Services, Hospitality & Tourism, Health services, Ports & Shipping are such industries. Each of these sectors still has huge untapped potential & depends majorly on the domestic economy.
Importance has to be given to sports, creative arts, Fine arts, Humanities by the Indian society and also by the government. Not everyone can be a good doctor or Engineer.
Now, some turbulence during this transition cannot be avoided. But the impact can be minimized if the government shows some strong reaction to the current situation.