In weak economic times, firms typically focus on efficiency and put high scrutiny on hiring numbers. Hence, the young talent labor market specifically at entry levels is more likely to be at the receiving end of unemployment/temporary jobs. Essentially, there is clear evidence that shows the impact on young talent due to slowdown.
Research on mature economies around the world has demonstrated that organizations encourage training when GDP growth declines. In fact, a one percent reduction in GDP growth may be associated with a nearly four percent increase in training expenditure. There is also a large body of existing research, which evaluates the effects of such education and training policies. The importance of skilling and, re-skilling and upskilling cannot be emphasized enough.
India’s Current Employment Scenario
According to data released by the National Statistical Office (NSO), India’s GDP growth slowed to a seven-year low of 4.7 percent during October–December 2019. Meanwhile, the unemployment rate reached 7.78% in the October 2019–February 2020 period.
According to a recent report from India Ratings and Research, close to Rs. 10.52 lakh crore of the country’s corporate debt is at risk of default over the next three years. The report identified the amount of vulnerable debt faced by firms in India’s real estate, energy, auto and auto ancillaries, telecom and infrastructure sectors, among others.
Given the situations, corporations need control measures, including the review of people’s costs. Unit economics in the tech and internet industries are driving P&L decisions. Consequently leading layoffs or reviewing hiring numbers. India Inc needs to understand the dynamics of other industries besides labour intensive ones that focus on consumers and the internet of things. This leads to the readiness of talent at entry levels
Is India’s Youth prepared enough for future roles?
The employment issues facing India today is compounded by the lack of industry-ready education and skills among vast sections of its youth. As discussed earlier, economic scenarios like India’s current one also see fewer companies invest in training new employees, focusing instead on upskilling incumbent employees. As a result, young labour market entrants are left short-changed at the beginning of their careers.
Address skill gaps and create opportunities
Government action is required to address this real and present employment issues facing India today, especially of its youth, long seen as a national ‘demographic dividend’.
To address this issue, policies have to be put in place to
- Leverage India’s higher education infrastructure by improving enrolment, quality, and affordability of higher/professional education
- Focus on skill-building by enabling sectors with infrastructure and projects that help in raising the bar of talent for a new age companies
- Invest in industries like automobile, hardware, logistics and shipping as well as specialized sectors chip design, 3D printing, internet of things etc.
- Invest in nationwide healthcare infrastructure so that companies have a common way to engage and provide health security for talent without increasing costs on healthcare benefits
- Create equal pay opportunities and safe work environments for women to retain them longer in the workforce.
Focusing Government policies on regions with higher population growth will be a distinct advantage. Improving the country’s healthcare sector with focused investments will also be a forward-looking policy that will ensure national benefits in the long run. With India’s elderly population projected to double to 16% in 2040 from 8.6% in 2011, healthcare will constitute a sizable wallet share of Indian citizens. Moreover, provisions need to be put into place for today’s youth population aging tomorrow.
Other advantages will include the creation of a robust growth platform for entrepreneurs and a thriving gig economy with the right investment opportunities and a transparent business environment that encourages creativity and innovation.
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