India’s Uncertain Demographic Dividend

Jayan Jose Thomas, PhD, Associate Professor of Economics, Indian Institute of Technology Delhi and Member, Planning Board, State Government of Kerala

A version of this article was originally published in Chinese as ‘印度不确定的人口红利’ [Yindu bu queding de renkou hongli], Diyi Caijing, 10 July 2017. This is part of a series by Indian scholars in China’s top business affairs news portal facilitated by the ICS. The English version follows below the Chinese text.

普遍的观点认为,印度将受益于所谓的“人口红利”。据世界银行估计,2010年至2030年间,印度15岁至59岁人口将增加至2亿多人。与此同时,包括中国在内的世界大部分发达地区的适龄劳动人口预计将会下降。也就是说,未来几年,印度会为全球劳动力供给的大幅增长贡献力量。

然而,实现人口红利对印度来说并不容易。首先,获得诺贝尔经济学奖的阿马蒂亚·森(Amartya Sen)指出,在卫生和教育领域,印度面临严峻挑战。2010年,印度的婴儿死亡率是每千名47例,而在中国,这个比例已减少到每千名13例。

对印度政策制定者来说的另一个重大挑战,是为新进入劳动力市场的印度人创造就业机会。事实上,大部分年轻劳动力的增长将来自印度最贫穷的地区,主要包括北方邦和比哈尔邦在内的北部和东部地区。

印度几乎近一半的劳动力仍从事和农业相关的活动。由发展经济学家亚瑟·刘易斯(Arthur Lewis)在上世纪50年代提出的“剩余劳动力从农业转向非农业部门的转变”理论,最近才开始在印度实现,这也意味着印度目前有更多人在工业和服务业寻找工作。

那么,印度在创造就业方面的表现如何?就此问题,我们从国家抽样调查组织和印度人口普查进行的就业和失业调查中获得了一些证据。我们估计,在2004~2005年度至2011~2012年度期间,印度工业和服务业的潜在劳动力以每年1470万的速度增长。而上述期间印度在工业和服务业中实际创造的就业量仅为650万每年。

2005~2010年间,印度新增的非农就业岗位近一半出现在建筑业,工资较低且工作条件差。

制造业——这一在东亚和中国劳动力市场转换率最高的行业,在印度国内生产总值(GDP)和总就业人数中所占比例相对较小。2011~2012年度期间,制造业占GDP的比重仅为15.8%,而中国为31%。

印度所有制造业工人中有近80%(2011~2012年度为6130万)处于无组织状态,也就是说,他们都在一些只雇用10个工人以下的企业工作。另一方面,印度制造业却有将近70%的产值由20%工作在有组织的制造业企业的工人所创造。印度有组织的制造业企业主要从事资本或技能密集型产业,包括汽车和制药业。

普遍观点认为,印度规范雇主与雇员的关系的劳工法,是对该国工业发展重要的制约因素。但这个观点却存在很大局限性。劳工法仅适用于有组织的制造业部门(仅适用于雇用100名以上工人的工厂)。此外,近年来,印度几个州府并没有非常严格地执行这些法律。同时,从2000年开始,不属于劳动法管辖范围内的合同工的就业增长占印度有组织制造业的一半以上。

印度制造业目前面临最严重的问题是国家基础设施匮乏带来的瓶颈,包括道路,港口和电力。基础设施部门的危机反过来是上世纪90年代印度公共投资下降的结果,随着2007~2008年度私人企业投资下滑,投资情况进一步恶化,再加上银行信贷不足,该国的其他小微行业也受到伤害。

因此,对投资(包括公共、国内私人和外国投资)进行大规模刺激,将对恢复印度制造业产生重要影响,从而为数百万贫困印度人创造工作。

制造业需要越来越多使用自动化生产技术,是印度和中国等国家所面临的另一个挑战。需要指出的是,2005年,中国制造业在GDP和就业中分别占32%和16%,而1970年的日本——制造业在GDP和就业中分别占36%和27%。

印度和中国还同时面临着一个独特的挑战,数以百万计的年轻人正在试图离开农村到城市寻找体面的非农就业机会。两国应努力发明新产品和新的制造工艺,这样不仅能创造更多产量,还能创造更多就业机会。我们应该在符合社会和环境可持续发展的前提下,来定制我们的研究和创新体系。

(作者系印度理工学院经济学副教授、印度喀拉拉邦政府规划委员会成员。本文选自德里中国研究所参与推动的印度经济系列研究)

It is widely believed that India is going to benefit from the so-called ‘demographic dividend.’ Estimates by the World Bank suggest that the population aged 15 to 59 years will increase by more than 200 million in India between 2010 and 2030. During the same period, working-age population is expected to decline in most developed regions of the world, including China. In other words, India could potentially contribute a substantial chunk of the increase in the global labour supply over the coming years.

However, realizing the demographic dividend is not going to be easy for India. To begin with, the country faces severe challenges in the areas of health and education, as highlighted by the Nobel Prize-winning economist Amartya Sen. In 2010, the infant mortality rate in India was 47 per 1,000 live births, whereas in China this rate had been reduced to only 13 per 1,000 live births.

Another important challenge for India’s policymakers is to create jobs for its citizens newly entering the labour market. In fact, the largest additions to the population of the young are going to come from some of the poorest regions of India, mainly the states/provinces in the northern and eastern belt, including Uttar Pradesh and Bihar.

Almost a half of India’s workforce is still engaged in agriculture and allied activities. The shift of the surplus labour force away from agriculture to the non-agricultural sectors – as suggested by the development economist Arthur Lewis in the 1950s – has begun in India only recently. But this also implies that there will now be greater numbers of people in India seeking jobs in industry and services.

Given such challenges, what has been India’s record with respect to creating employment? We have some evidence in this regard from the employment and unemployment surveys conducted by the National Sample Survey Organization and the Census of India. Our estimates show that during the period between 2004-05 and 2011-12, the potential workforce in industry and services in India grew at the rate of 14.7 million a year. At the same time, the actual rate at which employment was created in industry and services in India during the above period was only 6.5 million year – or at less than half of the required rate.

Almost half of all new non-agricultural jobs added in India during the second half of the 2000s was in one sector, construction, which is characterized by relatively low wages and poor working conditions.

Manufacturing – the sector that transformed the labour markets in East Asia and China the most – has a relatively small share in India’s gross domestic product (GDP) and total employment. In 2011-12, the share of manufacturing in GDP was only 15.8 per cent in India while it was 31 per cent in China.

Close to 80 per cent of all manufacturing workers in India (which numbered 61.3 million in 2011-12) are in the unorganized sector – that is, they work in enterprises that employ less than ten workers. On the other hand, the organized sector accounts for less than 20 per cent of all manufacturing workers but close to 70 per cent of the total value added by Indian manufacturing. The organized manufacturing sector in India is dominated by capital- or skill-intensive industries, including automobiles and pharmaceuticals.

It is often argued that India’s labour laws, which regulate employee-employer relationships, have been an important constraint to industrial growth in the country. But this argument has severe limitations. Labour laws apply only to a part of the organized manufacturing sector (only to factories that employ 100 or more workers). Further, in recent years, several Indian states have not been very strict about the implementation of these laws. Additionally, contract workers, who do not come under the purview of these labour laws, account for more than a half of the incremental employment in India’s organized manufacturing from the 2000s onwards.

The most serious problem faced by Indian manufacturing is on account of bottlenecks in infrastructure in the country, including its roads, ports and electricity. The crisis in the infrastructure sector is, in turn, a result of the decline in public investment in India beginning in the 1990s, which was further aggravated by the fall in private corporate investment after 2007-08. Micro and small industries in the country have also been hurt due to inadequate access to bank credit.

Therefore, giving a massive stimulus to investment — including public, domestic private and foreign investment — will be crucial to reviving Indian manufacturing and thus creating decent jobs for millions of poor Indians.

The changing nature of manufacturing, which increasingly uses more automated production techniques, is yet another challenge to countries such as India and China. It needs to be noted that even in China manufacturing accounted for only a 16 per cent share of the total workforce when that sector’s share in GDP was more than 32 percent (in 2005). Contrast this with Japan in 1970 when manufacturing accounted for shares of 36 per cent and 27 per cent respectively in GDP and employment.

Both India and China face a unique challenge in which millions of our young people are trying to leave their villages in search of decent non-agricultural jobs in the cities. The two countries should try to invent new products and manufacturing processes that not only generate more output but also create more jobs. We should tailor our research and innovation systems in a way that suit socially- and environmentally-sustainable ways of production.

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