India, which has shown resilience in weathering the 2009 global meltdown and expects a steady economic growth of 8.5 per cent, has reasons to worry because the GET report says incidence of ‘vulnerable employment’ is highest in South Asia, including India. There are 580 million people in the region falling under the category although unemployment rate has been fairly stable, ranging between 4.3 and 4.5 per cent over the last three years. What should send alarm bells ringing is the fact that the Reserve Bank of India has witnessed a decline in FDI, which can be interpreted as a sign that all is not well with the country’s growth potential. Hence, the Government must formulate strategies to not allow the job market to slow down and create fairer and better-functioning labour markets. Focusing on population control can be a good starting point because it is difficult for any Government, irrespective of sound policies, to create jobs keeping pace with unbridled population growth. Further, the Government should take steps to promote cottage and small-scale industries, extending loans to rural youth and women and enabling them to generate a sustainable income.
Jobless despite growth
The world economy may have turned around from one of the worst economic recessions that left it scarred in 2009 but things still look far from being radiant as global unemployment remains at a record high for the third consecutive year. If Global Employment Trends 2011, published by International Labour Organisation, is anything to go by, then low job creation remains a major stumbling block in the global economic recovery. What should worry policy-makers is that in stark contrast to macro-economic recovery, unemployment remains quite high. According to the International Monetary Fund, the world economy, which has registered a five per cent growth in 2010, is likely to remain on track with an estimated 4.5 per cent global GDP growth in 2011. But what comes as a surprise is that the increase in GDP growth and investment has done little to improve job markets. The global unemployment rates, which rose from 5.6 per cent in 2007 to 6.3 per cent in 2009, dropped only marginally in 2010 to 6.2 per cent. This definitely remains a cause for concern as high incidence of unemployment indicates a fragile economic recovery. In essence, a slack job market reflects that productivity gains are not translating into real wage growth. Hence, it is essential to create jobs so that consumption and aggregate demand grow and push the growth trajectory up. The seriousness of the matter can be guaged by the fact that even business leaders from across the world participating at the annual World Economic Forum in Davos have agreed that increasing unemployment does not augur well for sustained economic recovery.