By Anand Kulkarni
India’s future socio-economic prosperity rests largely on capabilities embodied in knowledge-intensive industries. Innovative, technologically complex, and sophisticated, they produce differentiated products and pay higher wages and salaries. Also reflecting simultaneously, investments in research and skills, and offering more secure employment.
Since the remuneration in the unorganised sector is underwhelming and offers little or no permanence or social security provisions, it allows India to break out of its reliance on informal jobs in the unorganised sector. Moreover, employment in knowledge-intensive industries also addresses what is becoming a key and unfortunate factor in the Indian labour market: underemployment.
Countering underemployment with knowledge-intensive employment
People who want to work for longer are not able to. In 2013-2014, only 60.5% of people (15 years and above) who were available for work were able to get employed for the whole year. The figures are lower in rural areas (53.2%).
Distinct from regular wage/salary earners, where 92.9% of people available to work for 12 months worked for 12 months; the extent of underemployment is aggravated for those on casual employment and the self-employed.
So, what are these knowledge-intensive industries which give rise to knowledge-intensive employment?
According to the OECD, they are high and medium technology manufacturing and advanced services. The manufacturing sector includes the automotive, aerospace, pharmaceutical, and advanced and specialised machinery industries while in the services- education, health, information and communications, finance, and insurance stand out.
The condition of knowledge-intensive employment in India
The author has examined India’s employment performance in knowledge-intensive industries by adopting the OECD approach. As the table below shows, the knowledge-intensive share of total employment in India i.e the share of total employment accounted for by knowledge-intensive industries, is very small although growing. Thus, the jobs that young, college-educated graduates aspire for, are simply not there.
Knowledge-intensive share of total employment
Source: Government of India, various reports and author calculations. 2013-2014 figures are for population aged 15 years and above, other years are for all ages
Interestingly, in more recent years, the female share of knowledge-intensive employment, has been higher than males. For example, in 2013-2014, of those females employed, 9.3% were in knowledge-intensive industries compared to 8.5% of total males. However, in absolute terms, the numbers favour males considerably.
Digging deeper (not shown in table) we find that one sector dominates: education. Females employed in the education sector in 2013-2014 represent almost half of female employment in knowledge-intensive industries, compared to approximately one-third for males.
In the knowledge-intensive arena, for both females and males, employment as teachers and other professionals is significant. Ironically, the same education sector which is a significant employer is unable to provide the capabilities and knowledge for employment in knowledge-intensive activities on a broader scale.
Accounting for 47.3% of overall employment (with a whopping 60% female share), agriculture is still the dominant employer in India. Of course, agricultural employment often embodies lower value added jobs. They represent vulnerable and sporadic employment patterns which India needs to transition out of in an orderly fashion. But the majority of people still live in rural areas. Therefore, this is a difficult exercise.
What we need for a knowledge intensive economy
Overall, India faces some very large-scale challenges on the labour market front. We argue that India needs to develop and implement a comprehensive knowledge economy strategy. Such a strategy could build on and complement “Make in India” and various “Skill India” initiatives. But they would need to do more.
A knowledge economy strategy would have the following key elements:
1. Develop new industries of the future. For example, new drug discovery in pharmaceuticals (as distinct from generics only), and diversifying the industrial base to reduce reliance on agricultural employment.
2. Undertake labour market reforms to transit from informal to formal work conditions.
3. Promote job generation in rural areas, thereby adding value to India’s natural resource base.
4. Invest in high-quality education and training that meets India’s needs at world’s best standards.
5. Accelerate the development and deployment of key technologies that will underpin the next generation of industries.
Dr. Anand Kulkarni is Consultant and Principal Adviser, Victoria University, Australia.
Australian Bureau of Statistics (ABS) 2002: Directory of non-ABS sources for Knowledge Based Economy/Society Indicators
Government of India 2014 (a): Ministry of Labour and Employment Bureau of Labour Report on Employment-Unemployment Survey 2013-2014
Government of India 2014 (b): Ministry of Statistics and Programme Implementation Employment and Unemployment situation in India 2011-2012
Government of India 2006 Ministry of Statistics and Programme Implementation Employment and Unemployment situation in India 2004-2005 parts 1 and 2
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