why it is impossible to create new jobs in existing industries

one can take cue from the agriculture sector of india, where the demand for farm produce is not commensurate with supply, to understand the jobs generation issue. on the supply side, the number of growers is high and this has resulted in glut in the market for such crops as wheat and sugarcane. by contrast, farmers who have wisely shifted towards alternative options, for example floriculture, are prospering in an otherwise distressed sector.

this is enough to understand what needs to be done in manufacturing and services sectors to generate jobs for the large number of youths entering the labourforce.

be it the conventional textile industry or telecom, the demand for their products has hit the wall. thus, these industries cannot be expected to generate the jobs needed in the economy. the information technology sector is not in similar distress and new engineers (with updated skills) are being recruited. this is owing to demand for new tech, including cloud, artificial intelligence and robotics, for which the supply side needs to produce more and for which more and more workers are required.

the government’s skill india scheme failed to take note of the fact that by skilling young Indians in conventional industries where the supply is already more than demand, we are only creating unemployable skilled youths. another area of pain is that even the demand cannot be boosted since new buyers are either jobless or underpaid.

for india to create new jobs, we need to closely study the supply and demand sides of all sectors of the economy. this study would reveal that unless we create an altogether new supply side, the dream to create jobs will remain as such. the country needs to invest heavily in emerging industries, for example cannabis (coca-cola has recently announced its plans to infuse cannabis in its beverages) and lithium-ion battery powered electric vehicles.

the underlying problem is that we are wasting our time and money in skilling the workforce keeping in mind traditional jobs and industries. this is exactly the same as is with the farm sector- the supply side is already outperforming the demand side. the best way to create jobs is to identify promising new industries, encourage setting up of new enterprises in these and skill youths with respect to these findings.

a simple way to create jobs in india

what do you expect would trigger organic job creation? increased economic activity? and for this increased economic activity do you want new enterprises to come up or the existing ones to expand? if this is the case, you may be at fault while pursuing the goal of job creation.

our country, india, is a typical example of how population rise outpaces creation of new economic activities. you may come up with best measures – liberalisation or incentives to new enterprises – but the impact of these measures wouldn’t be enough to result into creation of as much employment opportunities as the country seeks.

a simple and untapped way out to this problem is expanding the existing economic activities in such a manner that already existing enterprises see an increase in their appetite to absorb more unemployed youth.

take an example. a public sector bank in india works from 10 am to 5 pm and remains shut on alternate saturdays and all sundays. while banking services are mainly accessed by the working class, this section feels handicapped when they see the establishment closed at a time when they are off from their work responsibilities.

this gives an alternate opportunity to create more jobs in the already established economic activity and without even any expansion in product list. the same public sector bank can function from 7 in the morning till 7 in the evening and could operate on all 365 days of the year.

another target achieved by this exercise will be eradication of income disparity and inequality in living standards of the populace. by cutting short the working hours from 8 hours/ day to 6 hours/ day, 2 people instead of 1 will employed in the same job for the day. indeed, the compensation for the job has to be rationalized and in the process equitable distribution of wealth will automatically be achieved.

the same exercise would cover all establishments in the country, public or private. the only tough stance that the government needs to take is to rework maximum working hours for employees/ workers so that more people get the opportunity that is presently rewarding only a few.

india is also a typical example of a country where an employed person becomes rich on the expense of the other.

early retirements (of course with social security), extension of working hours of enterprises and a 24x7x365 working environment are the measures that would create enough jobs without having to rely on new economic activities and setting up of new enterprises.

the lost gst opportunity – ‘job creation’

goods and services tax is being hailed as the most far-reaching tax reform ever in independent india. gst will curb ambiguity in indirect taxation, will ease compliance and can augment tax collection of the government, all agreed. but has gst delivered on the front that is all more critical than these, did the government factor in  job creation while planning for gst roll out?

in bits they did. they foresaw automatic creation of jobs once the tax reform comes into play, for businesses will need tax consultants to understand the new complexities and to steer clear of penalties for wrong/ delayed filings. but what the government did was to leave it to the market forces for creation of new jobs, and this is where they made a blunder.

in a recent letter to chartered accountants across india, pm modi has requested for their cooperation in honest and effective implementation of gst. this is where the problem lies.

the already well-off community of chartered accountants, where the number of professionals is deliberately kept low to enable the existing ones make windfall profits owing to the ever-high need of taxation consultants in the country, has emerged as the only winner. by inviting their support, the prime minister has only undermined the interests of non-ca fraternity, comprising of simple commerce graduates.

the need was to create a pool of gst professionals by picking up fresh graduates from rural/ undeveloped parts of the country and training them for a year or even 6 months on what gst exactly is and how businesses, small and large, have to comply with new tax reform. in one go, the government would have created lakhs of jobs for fresh graduates and in the process would have decreased the unwanted dependency of businesses on chartered accountants.

the pm, finance minister and the think tanks failed to notice the pressing need of creating new jobs for lakhs of youths joining the unemployed bunch every year. skill development by various ministries is only adding to skills, but where are the jobs? factory growth is dismal, it sector has lost its sheen and there isn’t much hope in agriculture.

so where does the government feel this newly skilled youth will be absorbed?

gst reform could have delivered on multiple counts, job creation, equity in income distribution, augmented spending by households, lessening the workforce presently employed in agriculture, cutting well-known malpractices undertaken by chartered accountants to enable businesses evade taxes by replacing them with a fresh pool of tax professionals, and much more.

gst, sadly, remains an untapped opportunity but can be a lesson for future reforms. there can be no question raised on the intent of the government to usher in true reforms, however, holistic planning is required to fetch maximum benefits out of a single move.