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Jobs galore in manufacturing sector in next five years

By A Staff Reporter

A study undertaken by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has projected 87.37 million new jobs by 2015 with a very significant share of 32 percent by the manufacturing sector followed by the trade and construction.

The chamber study on “Emerging Future jobs”, has revealed that the next most important source of new employment is expected to be trade with 24.24 million new jobs followed by construction with a figure of 15.13 million.

The Report released by ASSOCHAM president, Dr Swati Piramal said that agriculture which accounts for a major share in total employment now is likely to be minor contributor to new employment. Financial services will almost double its employment size, though still has a small (3.4%) share in total employment.

Within the manufacturing sector, textile products, food products, beverages, transport equipment, metal products, leather products and machinery are expected to contribute the major part of increase in employment, points out the report.

Employment in IT and ITeS is expected to grow very fast to increase from 1.62 million in 2007 to 3.28 million by 2015. Employment on account of foreign tourism, i.e. generate and therefore accounted for in different sectors such as trade, transport, manufacturing and services is also expected to increase rapidly from about 8.88 million in 2007 to 18.11 million in 2015.

According to ASSOCHAM, manufacturing will be the highest employment potential sector because after agriculture, it accounts for the largest share of employment at 12.5% among different divisions of economic activity and a faster growth of employment in it, therefore would mean addition of a large number of jobs.

A one per cent growth in employment in manufacturing sector would mean over 6.25 lakh new jobs. Second, employment elasticity of this sector has not only been much higher than average (0.51 as against 0.32 in recent times.

The report suggests that if manufacturing GDP is made to grow at 10 per cent per annum, its employment will grow at over 5 per cent which would mean an addition of over 30 lakh new jobs every year.

The 11th Plan target of 4 per cent employment growth for manufacturing does not seem very high. It could be higher if this growth is based on faster growth of products groups like textile products, food products, beverages and leather products.

Projections about jobs are made on the basis of certain assumption which include first due to the global slowdown and current GDP growth of the economy is not likely to reach the target of 9 per cent as set for the 11th Plan but as the economy had already grown at 9 per cent in the first year of plan (2007-08) and the emerging global and domestic trends suggests an early recovery to a high rate during the last two years of the plan, it is assumed that the GDP growth for the 11th Plan would average to about 8 per cent per annum.

Growth rate during the subsequent three-year period (2012-2015) is projected to be 9.5 per cent. Second, employment elasticity of GDP growth is assumed to follow a declining trend in most sectors so that in aggregate, it is estimated to be 0.30 during the 11th plan period and 0.27 during the subsequent three years period as against the elasticity of 0.32 observed during 1994-205 and 0.53 in the shorter period, 2000-2005. This is due to increasing compulsion of efficiency and technological changes required to meet them.

Third, secondary sector especially manufacturing sector followed by construction is expected to grow faster than in the past and faster than the services sector, the former growing at 10 per cent and latter at 9.5 per cent during 2007-12 and former at 11.5 and latter and 11 per cent during 2012-15. Fourth, agriculture is assumed to be growing at 2.5 per cent during 2007-12 and 3.5 per cent during 2012-15, but its employment elasticity is expected to be low and declining at 0.25 during 2007-12 and 0.10 during 2012-15, as against 0.33 observed during 1994-2005.