India Inc can create jobs if it wants to, says Panagariya

Endorsing the government's labour law reforms, National Institution for Transforming India Aayog Vice-Chairman Arvind Panagariya on Friday said India Inc needs to step up to create jobs and offer inputs to the government on boosting employment at good wages.

"They should say what the government should do so that employment increases at good wages," Panagariya said in New Delhi at the 18th JRD Tata Memorial Lecture.

"Where is the passion for hiring workers in the industry here? . . you need to lobby to the government to bring more employment."

He admitted that (the industry) has talked a lot about the rigidities in labour laws.

The industry has been pushing for relaxing the labour law framework to boost ease of doing business in the country.

The government, in turn, has taken a host of initiatives to amend labour laws, but all have run into stiff opposition from trade unions.

Trade unions have called for a nation-wide strike on September 2 and are expecting 40 crore (400 million) workers from organised and unorganised sectors to join the call.

"What are those conditions (for creating more jobs) only entrepreneurs can tell. What is keeping them from employing more workers?" Panagariya wondered.

Expressing concern over the industry promoting more capital-intensive businesses, he said, "I fear that entrepreneurs will simply look the other way, hire more and more machinery and go into capital-intensive industry.

“Even within the industry they operate, they choose most capital intensive one. That is ultimately not good from the employment perspective."

He cited an example of labour-intensive industry like ready-made garments where India has been left behind by smaller countries.

"If you look only at India's clothing exports, we are about 1/10th of China even today. . . in absolute terms, we are less than Bangladesh and even a bit behind Vietnam."

He also stressed on the need for phasing out trade barriers to boost growth.

India has a labour force of around 50 crore (500 million), with 1.2 crore (12 million) joining the workforce every year.

Image: Arvind Panagariya. Photograph: Rediff Archives