Feb 06, 2016 04:55 PM IST | Source: PTI

India unlikely to develop through unskilled labour: ICRIER

The paper, authored by Radhicka Kapoor, examined the effect of growing capital intensity (and associated technological change) on inequality of wages and earnings in organised manufacturing in India.

India unlikely to develop through unskilled labour: ICRIER

India may not be able to grow simply by recruiting its many unskilled people to manufacture goods cheaply, the latest ICRIER paper said.

It recommended that the conventional wisdom to focus on labour-intensive industries to create more jobs needs to be re-examined.

"Not only has the capital intensity of production been increasing sharply, but recent economic growth has benefited industries which rely more on skilled workers and capital as opposed to unskilled or low-skilled workers. Given these trends, the prospects for labour-intensive industrialisation appear bleak," said the paper released by the Delhi-based think-tank.

"Unlike China and its neighbours, India may not be able to climb the ladder of development simply by recruiting its many unskilled people to manufacture goods cheaply."

Increasing automation and rise in capital intensity of production has raised much concern about the ability of the manufacturing sector to create jobs for India's rapidly rising largely low-skilled and unskilled workforce, it noted.

The paper, authored by Radhicka Kapoor, examined the effect of growing capital intensity (and associated technological change) on inequality of wages and earnings in organised manufacturing in India.

The paper observed that in India, unlike in the developed world, technological change is not accompanied by a large increase in the supply of more educated workers, which may have exacerbated wage disparity.

"The serious supply side constraint is evident from the fact that only 4 per cent of total workers engaged in the manufacturing sector have any technical education and only 27 per cent of workers in manufacturing are vocationally trained, of which 86 per cent are non-formally trained," it said.

The government's ambitious Skill India programme, with a target to skill 40 crore workers over the next five years attempts to address this gap.

"For skill development systems to be effective, they need to be able to respond to technological changes in the economy. This requires providing young workers a broad foundation of basic skills and a minimum level of educational attainment so that they are able to learn the requisite skills in enterprises where the jobs are being created," it suggested.

The paper sees contractualisation posing a serious threat to the skilling challenge.

Workers are discouraged from acquiring skills as they feel that even though skilling-up may result in improved productivity, it may not translate into higher wages as firms will prefer to hire them as cheap contract labour, it reasoned.

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