India to remain one of the fastest growing economies in the global sector, it has to
make progress in the structural transformation that can lift workers from lowproductivity
agriculture and the informal sector to higher productivity activities.
Manufacturing, which has been the main vehicle throughout the world to achieve
this transformation, has remained somewhat subdued in India. While Govt is aware
that the light manufacturing sector predominantly is run by SME sectors which
contributes around 15% of India's GDP ,so far no major step has been taken to
improve sustainability & growth of this sector which is the largest contributor to
Indian manufacturing Industry. Recent "Make in India" initiative is a welcome
move but needs a lot of infrastructural transformation to "make it happen". The
honourable Prime Minister has aptly remarked that for him FDI stands for "First
Develop India". Foreign direct investment will be the sub sequential result.
Developing India is totally integrated with developing its biggest under-utilised, unproductive asset -it's MANPOWER. The challenging task is to make them highly productive. A very high percentage of our workforce are employed in SME sector in light manufacturing. They suffer from low pay, lack of security, lack of basic education & skill. Unless a focused integrated policy is developed and implemented fast all the ambitious future projection of Indian economy will remain a dream, not a reality.
it 's a statistical fact that SMEs in manufacturing as well as in services & real
estate take care of lion's share of the employment of the country(approx create1
million jobs every year) but very few of us bother about skill utilisation & quality
of life under such employment. It's critical in India with 2nd highest population in
the world to have high employment generation amongst large number of
uneducated, unskilled workmen & landless farmers. Jobs provide higher earnings
and better benefits as country grows, and they are also a driver of development.
Poverty falls as people work their way out of hardship and as jobs empowering
women lead to greater investments in children. Efficiency increases as workers get
better at what they do, as more productive jobs appear, and less productive ones
disappear. Societies flourish as jobs bring together people from different ethnic and
social backgrounds and provide alternatives to conflict.
| Jobs are thus more than a byproduct of economic growth. They are transformational .This is why in India the critical questions are:- | High unemployment and unmet job expectations among youth are the most immediate concerns for the country .But in a country like ours, where farming and self-employment are prevalent and safety nets are modest , unemployment rates should be low & growth is seldom jobless. Unfortunately in India it's not happening. Most of our poor work long hours but simply cannot make both ends meet and the violation of basic rights is not uncommon. Therefore, the number of jobs is not all that matters: jobs with high development payoffs are needed. This is not happening as the policy makers have not been looking at jobs as drivers of development but as derived labour demand. | ||
| 1) | should the country build its development strategies around growth, or should it focus on jobs creation ? | ||
| 2) | Can entrepreneurship be fostered, especially among the many microenterprises in India, or bank upon a few family of entrepreneurs ? | ||
| 3) | Are greater investments in education and training a prerequisite for employability, or can skills be built through jobs? | ||
| 4) | In times of major crises and structural shifts, should jobs, not just workers, be protected? | ||
High unemployment and unmet job expectations among youth are the most immediate concerns for the country .But in a country like ours, where farming and self-employment are prevalent and safety nets are modest , unemployment rates should be low & growth is seldom jobless. Unfortunately in India it's not happening. Most of our poor work long hours but simply cannot make both ends meet and the violation of basic rights is not uncommon. Therefore, the number of jobs is not all that matters: jobs with high development payoffs are needed. This is not happening as the policy makers have not been looking at jobs as drivers of development but as derived labour demand.
With my exposure to both in multinational companies with FDI and a few SME
companies of reasonable growth ,all working in manufacturing sector I have
developed a strong conviction that the manpower productivity based on quality& output has been the most critical issue for business sustainability. In light
manufacturing operations which are labour intensive, all the big players outsource
most of these operations to SMEs to avoid high cost of labour for compliance of
plethora of old labour laws of the country . The Factories Act was enacted in1948 & The Industrial Dispute Act was enacted in 1947 both nearing 70years of
Existence without major change. The resultant effect has been the jobs outsourced
are mostly carried out by SMEs using casual labour & to remain competitive ,tend
to avoid compliance of any law including social security Acts to minimise the cost
of labour. When cost of labour becomes the critical issue it stands as restraining
force for growth &sustainability. The interesting part is while labour cost normally
does not exceed more than 10% of the total cost as against 50-60% of other inputs
in manufacturing sector 90% of management time & energy are spent on
containing this 10% of the cost. This also results in fall of quality of finished
goods. Until & unless a overall reform of outdated labour laws are made to change
the basic principle to protect the job as well as productive workers the future
growth of light manufacturing will be unsustainable. The surprising part is that
large companies in service sector whose manpower is generally educated and with
high technical skill have also started this process of outsourcing only to circumvent
legal barrier to hire and fire. The discomfort of tackling with human face by big
entrepreneurs has made labour laws to be so critical for growth which is more a
perception than reality.
Skill, infrastructure and manpower (SIM) are the critical issues which need to be fully developed to get higher productive performance in manufacturing. High quantity with superior quality will add value for money and help the manufacturing industry to compete successfully in the global market.Growth in any manufacturing unit can be achieved by obtaining a share of the benefits of technological progress and gradually raise the standard of living of its stakeholders. Changes of labour laws are needed to make these updated with present technology & infrastructure though it's less critical than is often assumed . The key to success & growth is to run the industry with a human face. In SME sector more the buy-in from its workforce greater is the productivity resulting in profitable growth. To sustain the growth it's necessary to obtain a share of the benefits of technological progress and gradually raise the standard of living of the employees which will generate the motivation in them to be highly productive& fully committed to the organisation,s growth. Employee cost needs to be treated as investment and not just a fixed expense. Management process in SMEs in manufacturing sector must have a human face,to start with.
Tarit Kumar Bhaumik
Retd Vice President – BOC INDIA