Strong economic growth in India due to improving labour productivity: ILO

In its annual report, Global Employment Trends 2012, the International Labour Organisation (ILO)  has said that in the backdrop of a global slowdown, South Asia region has witnessed the most robust growth. Growth in India, Sri Lanka and Bangladesh has been by 7.8, 7.0 and 6.1 % in 2011, respectively as compared to the world average of 4%. With its large domestic economy, India is likely to weather the latest global slowdown better than most, but it is struggling with stubborn levels of inflation despite monetary tightening.The growth in the region has been attributed to the rapid rise in labour productivity rather than an expansion in employment. Until the 2000s, employment and labour productivity grew at similar rates. However, in the past decade, increased labour productivity has taken over as the driver of growth in the South Asia.

 This situation is prominent in India, where total employment grew by only 0.1 % from 2005-2010 (from 457.9 million in to 458.4 million),while labour productivity grew by more than 34% in total over this period. A major reason for the slow growth in employment in recent years is the fall in female labour force participation. This has been the most pronounced in India, where the participation rate for women fell from 49.4 % in 2004-05 to 37.8 % in 2009-10 for rural females and from 24.4 % to 19.4 % for urban females. This drop in participation can only partly be explained by the strong increase in enrolment in education, because it has been evident across all age groups.The report further says that far more important in the South Asian context, is the persistence of low-productivity, low-pay jobs, which are mostly located in the agricultural and urban informal sectors.

ILO has said that some countries like India, are however showing a structural shift where the share of employment in agriculture has decreased from 59.8% in 2000 to 51.1 % in 2010.India has also witnessed a rise in real wages between 2004-05 and 2009-10 for males and females in both rural and urban areas in India. Moreover, wages have improved not only for regular wage and salaried workers but also for casual ones. Working poverty, however, based on the $2 a day international poverty line, persists at the highest  levels in South Asia. South Asia still accounts for almost half of the world’s working poor (46.2 % in 2011).Overall, the worsening economic conditions will make it more challenging for the South Asia region to promote the creation of productive jobs in the non-farm sector and continue the battle against the persistence of informality, vulnerable employment and specific barriers for women and youth in the labour market, the report said.

On its overall global view, ILO has said that global economy will need to create 600 million jobs over the next decade to meet the ''urgent challenge'' of tackling the legacy of unemployment left by recession and to find work for those entering the labour force. ILO said that three years of ''continuous crisis conditions'' had left 200 million jobless. It estimated that a further 400 million jobs - 40 million a year - would be needed over the next decade to absorb growth in the international labour force.