With 200 million people being added to the ranks of its unemployed every year, the United Nations Industrial Development Organisation warned that India would not be able to sustain its economic growth and achieve its objective of generating employment unless it undertakes measures to initiate significant labour market reforms.
"India needs sustained growth and flexible labour markets. Significant employment growth is not going to take place without significant labour market reforms," George Assaf, UNIDO's regional director for South Asia said, while delivering a lecture on 'Can India become an economic super power in the 21st century'.
Admitting that labour market flexibility is a difficult social and political negotiation, Assaf said though the economy had grown recently with a relatively inflexible labour market, "this did not imply that inflexibility should continue in the labour markets".
"An economy can only really grow to its full potential, if there are flexible labour markets to respond swiftly or adequately to changed demand conditions," he said, adding that the working age population of India is expected to rise to around 62 per cent of the total population by 2015.
"The previous government promised ten million new employment opportunities each year. The promise was to cater for at least nine million job seekers that enter the market every year. To honour this promise and generate a 'growing demand for labour,' we need to essentially improve India's industrial performance," he emphasised.
Assaf said while agriculture was a vital area, the global experience points to the fact that as an economy develops further, significant numbers of people go out of agriculture. Therefore, the employment growth could only come from industry, he added.
