Can India Handle a Billion Workers?

Can India Handle a Billion Workers?

The United Nations Development Program estimates that India’s working-age population will balloon to over 1 billion by 2050, outpacing China to become the world’s largest national workforce. Quartz’s Suneera Tandon explains why those projections are making Indian policymakers nervous:

This will mean that over 280 million more people will enter the job market in India by 2050. But the market itself hasn’t exactly been able to cope. Between 1991 and 2013, for instance, “the size of the working-age population increased by 300 million… while the number of employed people increased by only 140 million—the economy absorbed less than half the new entrants into the labour market,” the report said.

China’s working-age population increased by 241 million during the same period; the number of jobs there grew by 144 million. “A wider gap in India than China suggests a more limited capacity to generate employment—a serious challenge given the continued expansion of the workforce in India over the next 35 years,” the report explained.

This is a problem that the Narendra Modi-led government has acknowledged and is trying to solve by pushing labour-intensive sectors such as manufacturing. Besides, it is also bolstering skill development programmes. … It will be a while before these initiatives deliver.

Mass unemployment is one major consequence of the workforce growing faster than the job market; another is wage stagnation. Indeed, new entrants to the workforce in the country’s $160 billion tech sector haven’t seen raises in ten years, Anirban Sen reports for the Economic Times:

According to human resources heads of top companies such as TCS, Infosys and Wipro, as well as several recruiters and experts tracking India’s IT industry, India’s largest outsourcing firms are unlikely to revise fresher-level wages, at a time when spending from top customers such as Citigroup and General Electric is declining and IT firms are scrambling to protect their precious margins, amid rising inflation and cross-currency fluctuations.

More worryingly, experts point out, a huge demand-supply imbalance has tilted the odds squarely in favour of the country’s largest software services firms, with only one job available for every five engineers who are graduating from colleges across the country every year. … Experts stress that the demand-supply gap has reached alarming proportions — while India produces over 1 million engineering graduates every year now, the number of jobs available in the IT industry as of now hovers around 200,000-300,000, according to data from industry lobby Nasscom.