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5 ways India can solve unemployability in 2020

Last updated on: January 02, 2020 13:42 IST

Poor quality of education is one of the most important reasons for high unemployment in India, says Kavita Nigam.

80 per cent Indian engineers unfit for any job

Image published for representational purposes only. Photograph: Brian Synder/Reuters

The official unemployment rate in India is at a 40-year high of 6.1%.

Several factors, global and domestic, are hobbling economic growth leading to higher unemployment in the country.

Globally, higher tariffs are disrupting trade while domestically the large number of NPAs on banks and NBFCs balance sheets are hampering investor confidence.

In an uncertain climate, investors are cautious about making investments that create jobs. 

While little can be done about global trade barriers, it would be fair to say trust in the global system of trade has been considerably eroded over the past year. 

Despite global headwinds because of the trade war, a few be taken to increase employment in India over the long term. A few ways more jobs can be created in India are as follow.

1. Adopt the newest technologies

On the surface, it seems wider adoption of technology will further increase unemployment.

While it is true that technology, particularly automation, leads to layoffs; in the Indian context, technology can be a job creator. Automation can create as many or more jobs than it replaces.

In India, automation is at a nascent stage; only some of the largest enterprises have widely adopted it.

On the road toward widespread adoption of automation by industry, more jobs will be created than eliminated.

Automation in manufacturing will result in the expansion of the domestic manufacturing sector because of which many new jobs -- that cannot yet be automated will be created. The net result of automation in the Indian manufacturing sector will be the creation of more jobs for people.

The days of large unmanned factories humming with activity are far away indeed, especially in India, where labour is cheap and the cost of automation steep for most manufacturers.

The country is in a sweet spot where adoption of automation will make industries more efficient and able to employ more workers in jobs that cannot be automated. For instance, manufacturers that use thousands find that automation allows them to manufacture a broader range of products and employ hundreds or if not thousands, more in newly created jobs.

In the early years of automation, growth of automation will happen side by side with growth in employment.

Importantly, industries that automate manufacturing will increase output and profits, the beneficiary of which will be society.

2. Make data universal

The newest entrant in the Indian telecom segment is just as interested in providing outstanding telecom services as it is in capturing consumers’ data.

It would be fair to say the whole endeavour behind bundling online services is to understand consumers better than ever before.

Data is a powerful weapon in any businesses arsenal and the ways it can used to understand consumers is breathtaking.

In an illiquid atmosphere, data can be used to lend to those who will repay loans.

The current crisis in the economy is partially the result of NBFCs not lending to borrowers which in turn has reduced demand.

The hesitation of NBFCs to lend, the subsequent drop in consumer demand, and the rise in unemployment can be combated using data.

Big data can evaluate borrowers using up to 5,000 data points. A human lending officer uses a mere 10.

Big data can lend based on how confidently a borrower types his or her loan application and how often they charge their smartphone battery.

A borrower who types a loan application confidently and keeps their smartphone battery charged is a better credit risk than someone who doesn't do either.

These data points are only two of the up to 5,000 data points that a fintech company can use.

When data is used to evaluate borrowers, it will restore faith in the Indian credit system and possibly revive it, thereby increasing demand and creating jobs.

Over the next decade, data will be a crucial job creator and driver of economic growth. 

3. Improve infrastructure

Eleven years ago, Paul Krugman was awarded the Nobel Prize in economics just as the US entered the most significant downturn since the Great Depression.

His advice to policymakers was they spend on infrastructure as it would increase demand and employment.

His advice may be pertinent to Indian leaders today.

The country needs excellent infrastructure to grow, and only the government can build it.

By taking steps to build better highways, roads, airports, ports, and other public works, the government will increase demand and generate jobs.

Over the short term, spending on infrastructure is a sure way to create employment.

4. Spend on education

For India to remain competitive over the long term, it must spend on education.

In a country where a good education is prized more than it is in any other, there are surprisingly few institutes of excellence.

Besides the IITs, IIMs, and a sprinkling of few colleges, most institutes of higher education in India do a poor job at educating students.

Poor quality of education is one of the most important reasons for high unemployment in India.

Investing in education pays dividends and investing in the right education even more so. India needs skilled technicians and workers even more than simple graduates.

Investments in education should be made accordingly to lower unemployment.

5. Enact business friendly labour laws

Labour laws in India remain sclerotic.

Countless businesses in India can employ many more workers but choose not to because hiring more people means the company will fall under the ambit of complex regulations.

Businesses succeed when they can hire and fire to remain profitable.

Perhaps the biggest existing stumbling block to growth in India is businesses inability to fire labour as necessitated by market conditions.

India’s archaic labour laws will have be re-examined to lower unemployment.

A slowdown has undoubtedly taken hold in India.

Growth in the number of consumer goods manufactured is virtually flat, and there is certainly no magic bullet for this ill.

The economy is complicated; but over the long and short term, the measures described above have to be implemented to keep unemployment in check and make the economy globally competitive. 

Kavita Nigam is General Manager HR, Karam Industries.  She can be contacted on contacted on

Kavita Nigam