Thursday, 9 February, 2023
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Jobless growth a myth, not possible for India to grow at 7.3% with decelerating labour

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The loud proponents of jobless growth are doing their bit to ensure we don’t ask the right questions about the Indian economy.

“Always predict the worst, and you’ll be hailed as a prophet.” Musical humorist Tom Lehrer’s quote aptly sums up the never-ending debate in India about ‘jobless growth’.

In the last four years, India has grown at an average of 7.3 per cent. Growth in GDP is a result of growth in inputs and productivity. Even at the best of times, productivity growth does not contribute more than three percentage points to GDP growth.

Therefore, it is clear that the Indian growth story can only be attributed to increase in inputs (capital, labour). Since growth in capital has slightly decelerated, it is mathematically impossible for labour growth to have slowed concomitantly. In simple words, it is not possible for India to grow at 7.3 per cent with decelerating growth in capital and labour.

The number of jobs have actually increased, and the recent Das & Das study corroborates this. This professor-banker duo leveraged Employees’ Provident Fund Organisation (EPFO) data to prove that India is adding 15 million to the labour force every year. And this is excluding all jobs created by the platform economy. To give you a sense, there are more than one million Ola and Uber drivers in India.

The proponents of jobless growth often quote the Quarterly Employment Survey (QES) conducted by the labour bureau, which is voluntary, unverified, and limited to enterprises with more than 10 employees in only eight sectors. According to the QES’s logic, founders of many private equity shops and disruptive technology companies with small core teams are unemployed. If WhatsApp were made in India, its founding team would be considered unemployed almost until it got acquired by Facebook. Relying on QES to reveal the number of jobs is like relying on a rickshaw to take you to Mars.

Now that we have put the jobless growth rhetoric to rest, let us address the main challenges to skilling India.

First, underemployment, which translates to multiple workers performing tasks that can be done by a single worker.

Second, our systemic failure to create high-productivity, high-wage jobs for unskilled/semi-skilled labourers through effective reskilling programmes.

Third, lack of effective public-private partnerships. The entire notion of government creating jobs is misplaced. Government can and should create the right ecosystem for entrepreneurs, small and medium businesses and enterprises to create meaningful employment opportunities. There has been a lot of talk about public-private partnerships but action has been limited.

Fourth, industry needs to do much more – apprenticeship programmes, reskilling initiatives, inclusive hiring. Corporate social responsibility won’t be enough. Reskilling India needs to be part of corporate strategy.

Fifth, unpreparedness for jobs of the future. The World Economic Forum estimates that 85 per cent of the jobs of 2030 haven’t been created yet. Automation and other applications of Artificial Intelligence will redefine workforce. Routine, repeatable, boring jobs may be lost to robots, but there will be an abundance of new kinds of jobs that require empathy, creativity and innovation. Reports suggest that for every job lost there will be five new jobs created. These jobs will require preparation: our schools need to re-pivot and focus on ‘why’ instead of ‘what’, college curriculum needs to be continually updated, and we need to bridge the boardroom-classroom divide by creating a better connect between industry leaders, mentors, job creators and job seekers.

The loud proponents of jobless growth are doing their bit to ensure we don’t ask the right questions. They focus on evocative media reports instead of logic and hope to shape the skilling strategy of India.

Lewis Carroll’s words from ‘Alice in Wonderland’ sum it up: “If you don’t know where you are going, any road can take you there.”

Utkarsh Amitabh works at Microsoft, is the founder of Network Capital, and is a ‘Global Shaper’ who represented the community at Davos. (Views are personal)

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  1. To sum up this article- Horrible click bait article filled with copy-paste rhetoric of well known phrases. The author’s premise which was supposed to be about job creation quickly turns to “re-skilling”. What is the country supposed to do when hordes of young people join the workforce just to find out there are no jobs? (::I can hear crickets chirping::). We don’t have a reliable labour data collection and the author uses the same logic and data to support jobs growth (with merely his OPINIONS) . Has the author also considered GDP growth in government spending? (Apparently NOT!)

  2. Yet another attempt at misdirection. First the author uses a report thats been discredited for its conflict of interests and criticized for its untested data source for estimating employment. Second, it falls back on the gig economy and under paid self employment as a marker of job creation. The author rubbishes tested methods of data collection that provide a trend line for employment, the author does not quote a range of reports and articles from independent sources that corroborate to not mere jobless growth but a shrinking in real incomes at the bottom. But grandiosely proclaims to have buried the ‘myth of Jobless growth’. The author should take a step back and ponder where the myth is about joblessness or about growth or is it worse that all numbers today are only myths.

  3. “if you torture the data long enough, it will confess to anything.”

    Darrell Huff.
    Three problems in analysis.
    1. Utkarsh Amitabh quotes Das & Das study which is a government financed study based on a secret data set that does not pass tests of academic rigour.
    2. Changing the methodology of computing GDP is still a problematic development. Many economist have suggested that it has added 2-3% of pseudo growth. If that is removed then no.s are 4.3% and then accounting for other factors jobless growth is not a mathematical impossibility!
    3. If author wants to count startup and pakoda selling as jobs; he must do it even for years prior to 2014. Everything was not invented in 2014.

  4. There is a great problem with the skill landscape because we see education as separate from skills. This can only be corrected by the government.
    Regarding the private partnership and corporate strategy around Skilling and Upskilling and Reskilling, a lot is to be done by private sector and emphasis has to shift from delivery to the Quality. When customer demands quality, the supplier has to go for Skilling it’s labour there will be no escape.
    Liked the article but when we are saying jobless growth it means that employment rate is not keeping pace with the no. of youth coming in market in the same time frame.

  5. One would reverse the proposition. If jobs are not being created, that is because growth is not happening. Changing the methodology of computing GDP has only given us bragging rights to being the fastest growing large economy in the world.

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