It curtails the employer's right to realign and re-structure their human resources as per the market conditions. The result is greater reliance on less productive employment avenues and pressure on the farming sector. This will change if the fundamental issue is addressed comprehensively.
The contribution of manufacturing towards employment is a mere 12 percent. The larger chunk of our population, around 58 percent, is still dependent on low productive agricultural employment that contributes only 15 percent of the GDP (In contrast, in a developed country like the US, the contribution of agriculture to employment is merely two percent).
The small and medium enterprises, which are a major source of employment and earnings from exports, are the worst affected by this archaic labour regime. It hampers their ability to grow, attain the economies of scale and be competitive. And importantly it hampers their ability to create more jobs for the economy.
Yet another issue of concern to industrial growth is the yawning gaps between the skills of the workforce and the requirements of industry and resultant shortage of skilled manpower. Removing this lacuna is a major challenge faced by the government and the industry. In fact, the government has lately embarked on an ambitious scheme of skill development in conjunction with industrial bodies.
A revamped educational curriculum with emphasis on vocational training attuned to the growing needs of industry is the need of the hour. Further, we need continuous interaction between industry and educational institutions to ensure practical industrial experience even as students progress with formal education. This has the potential to throw open opportunities for immediate employment of educated youth turned out by polytechnics and technical institutions, as well as saving costs for training incurred by employers after recruitment.
The need of the hour is a paradigm shift in the industrial policy along with rapid development of infrastructure and wiping out of the power deficit. Of course, this needs to happen simultaneously with skill development on a large scale that also keeps employers' needs at heart. This will be the way forward to meet the challenges and make India a manufacturing power house.
The author is Director and Co-Founder, TeamLease Services
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