Job Creation in Urban India: A Note for discussion K.V.Ramaswamy Indira Gandhi Institute of Development Research, Mumbai

Importance of Urban India Urban population grew by 2.76 percent per annum in the decade Its share in total population increased to 31.1 percent in 2011 from 27.8 percent in 2001 Little less than 50 percent of the jobs created in India is accounted for by urban India over the period More than 85 percent of the jobs created in business services and more than 80 percent in manufacturing were in the urban sector 26/03/20132Berkeley-Bengaluru

Who is creating jobs in Urban India? Construction is the fastest growing sector with a share of 10 percent of total urban employment Transport, Communications and Other business services together take the second place Manufacturing occupies the third place in terms of jobs growth. Its share in total urban employment is 23 percent Other business services include real estate, financial services, IT and IT enabled services and social and community services 26/03/20133Berkeley-Bengaluru

What type of urban jobs? Nearly 80 percent of all urban workers are in informal employment broadly defined to include both self employment and wage employment (casual wage + regular wage) Manufacturing, non-trade services and construction dominate urban informal employment 26/03/20134Berkeley-Bengaluru

Education-skill composition? Services sector has greater proportion (61%) of workers with secondary education and above Manufacturing 54 % of the workers were having below secondary education Construction is dominated by casual workers with below primary education. It is expected to create highest incremental casual employment up to /03/20135Berkeley-Bengaluru

Development of skilled workforce Construction industry requires a large number of carpenters, masons, plumbers and construction machine operators Manufacturing requires a wide variety of industry specific skills and technicians in garments, textiles and auto-component industries etc Services face of shortage of skilled professionals 26/03/20136Berkeley-Bengaluru

Current State of Vocational Education (VET) In the age-group the proportion of population having formal vocational education has declined to 2% in 2009 from 2.4% in 2004 Proportion with non-formal VET has declined to 4.8% in 2009 from 7.7% in 2009 It has declined in absolute terms as well 26/03/20137Berkeley-Bengaluru

Unemployment among VET Unemployment rate among persons with formal vocational training is 24% Whether the vocational training was ever helpful in getting a job? (NNS 66 th round) 29% of the individuals said they have not benefitted from training Is there a mismatch? VET for informal sector? 26/03/20138Berkeley-Bengaluru

26/03/20139Berkeley-Bengaluru

26/03/201310Berkeley-Bengaluru

Incentive for firms to hire apprentices/trainees? The Apprentice Act, enacted in 1961, regulates the program of training apprentices in the industry Labor Ministry initially suggested that companies should absorb 50% of the trainees that they hire later backtracked to suggest preference should be given to them 26/03/201311Berkeley-Bengaluru

Flawed VET system? VET for informal sector workers? Entry barriers? Minimum secondary school education (class VIII and Class X) is a prerequisite for enrolling in craft and apprenticeship schemes for construction-related training.. Duration…. Issue of private participation.. 26/03/201312Berkeley-Bengaluru

References Ramaswamy and Agrawal (2012):Chapter-8, India Development Report, M.Dev(Ed) Ruchi Hajela (2012): “Shortage of skilled workers: a Paradox of the Indian Economy”, SKOPE research paper No.111 Tushar Agrawal (forthcoming):Skill development in India: an examination”, Journal of education and work 26/03/2013Berkely-Bengaluru13

Thank you 26/03/2013Berkely-Bengaluru14