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ISSUES WITH INDIAN LABOUR MARKET

Despite having blessed with a huge “demographic dividend”, India is having its own set of issues when it comes to its labor market. The shortage of jobs and job creation, along with slow growth in income has plagued the Indian economy. Faster growth of jobs must be the principal objective of whatever economic reforms the Indian government undertakes now. The major issues regarding labor market could be categorized in four broader heads. One, the labour market is not functioning the way it should. Two, unless the employers have the right to fire, they will not hire more workers. Three, the thrust and aim of government’s policies must be to protect workers’ incomes and not to protect jobs which disappear when industries change. Fourth being, the issue of labor unions, who care only for their own highly paid workers. Thus becoming obstacle to labour market reforms. While the aim of the union must be to benefit workers. One of the other major weakness of the Indian economy, concerning the labor market, according to some of the economists, is the ‘informalisation’ of the economy with large numbers of workers who have little job security and earn less too. Moreover, since contract and casual workers can be easily fired, the inability to fire the workers they hire cannot be the constraint on employers growing their enterprises. The huge pool of available labourers adds to the plight of workers and labour reform. The next issue with Indian labour market is that of the archaic laws. India’s labour laws are obsolete, archaic, too many, often contradictory, and poorly administered. They must be reformed for good. Even the labour unions are demanding reforms. The government is in the process of simplifying and consolidating the laws into a few codes. The reformed laws must suit emergent conditions and transient needs. They must provide more flexibility to employers and employees. Above all, they must ensure fair treatment of workers, and provide a wider social safety net, which is demand of the time. The other issue of concern is the imbalance existing in the market. There are some real imbalances across the economy, with some key sectors facing a shortage of skill sets and personnel. Such shortages are mainly in very important social services like health and education. The quality of these services, especially those available to low-income, remote and rural households, is shockingly low due to the scarcity of quality doctors, nurses and teachers. The issue can be solved by artificial intelligence and the use of technology. While robotization can displace jobs in sectors facing adequate labor supply, it can be quite useful in filling the gap created by the shortage, if any, of skilled personnel. The labor market differs from markets for other commodities and goods. In other markets, the suppliers and buyers only buy and sell goods from each other. Whereas, in the labor market, employers, who are the buyers of labor, also have a critical role to play in developing an adequate supply of skilled labor. They work on the largest resource available on Earth that is “human resource”. Hence, a devoted planning by all the stakeholders is important for the growth and development of the Indian labor market.


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