Source | The Economic Times : By Namrata Singh
MUMBAI: The moderation in GDP growth rate may further widen the gap between the number of job aspirants entering the market and the rate at which job creation is taking place. The situation has got staffing firms worried, and here’s why. According to the Economic Survey, the employment in organised sectors as on March 31, 2012, is 46.8 million.
Hiring industry officials told TOI, every year, 2-3 lakh jobs get created in the formal sector. the total number of additional people entering the job market every year is 12-13 million, they said. The country’s GDP growth declined 2% to 5.7% in the June quarter of 2017 compared to 7.9% in the corresponding quarter of the previous year. If the GDP growth declines further, it could add to the burden.
As a rule of thumb, the industry believes any rise in GDP growth spurs job creation. And it’s true the other way around as well, they said.
Notionally, some believe, one percentage point rise in GDP growth has the potential to create a million jobs over a period of time. Aditya Birla Group chief economist Ajit Ranade said, “It is absolutely without a doubt that the GDP has a correlation with employment and livelihood. When GDP growth rises, there would be a certain amount of job creation, and vice versa. One can debate as to what would be the exact impact on job creation, but the number of around a million jobs per 1% of GDP growth looks reasonable given that 12-13 million people enter the workforce every year.”
It’s not quite music to the ears of placement firms. Adecco India country manager & MD Priyanshu Singh said, “We have had a great run of 15-20 years with mass employers like IT/BPOs. Now they have hit a wall. We are sitting on this ‘demographic dividend’ with around a million people joining the workforce every month. How will you provide these guys jobs?