Wednesday, November 20, 2013

Demographic Dividend - more people means more jobs

This post is going to be short - because the point is simple, and other people have made it before me.

The idea of Demographic Dividend assumes that more people in a certain age group will mean more jobs and more income for the country.

However, this assumption has another underlying assumption - that the more people entering the workforce are all "employable" - i.e., they have the skills, attitude and infrastructure to enter the workforce and be productive.

There is global skill shortage. This report indicates that India has a skill shortage. But the skill shortage is way more than what is here. According to another research paper read elsewhere, the gap between skill requirements and skill training - esp in vocational skills, is very high.

30% of the population lives in urban areas. An even smaller population in metros. The share of GDP from urban areas is 52%. This means that at least 70% of India's "Demographic dividend" lives in a place where it cannot be optimally employed because the infrastructure is not suited to high productivity employment. If we take away the non metro cities (Realistically, the non metro cities do not have  very conducive infrastructure) , then this gap surges even more.

aka the Indian Work Ethic. Perhaps its a matter of global concern, but the Indian Work ethic just keeps getting worse among knowledge workers and students looking to land knowledge jobs.
This report has some key figures for us. This and this deserves to be read too.

So, the short point is, that the Indian worker may be looking for employment, but that does not automatically make him/her employable.

And therefore, the Demographic Dividend tempo must be tempered to be closer to reality. The reality may not be bleak, but if we dont stop bursting at the seams, we are very likely to burst right down the middle.

End of story. 



Onkar said...

So true

Sharmila Rao said...

you have hit the crux, its the attitude, to work, life we as a culture lack integrity and ethics.

R. Ramesh said...

yes, true..good post boss:) best wishes

Anonymous said...

What was once perceived as a demographic dividend... and this comes from a Mutual fund seller who tries his best to sell Indian economy the red flags are slowly growth... if the interest rates remain as high as this for another two years... and if growth remains as low for another two years... then fear for the worst as we will have a demographic disadvantage... because no new business' are happening...if they do not create more jobs... this new Indian population unlike the 70's and 80's will not take things lying down...

However, true to my original colour... I feel we are at the tip of turning the interest cycle the other way and growth will soon follow! I suspect I am going to make money in the next 3 years :D :D

Fingers crossed!

How do we know said...

Onkar sir: thank you!

Sharmila: Thank you!

Ramesh: Thank you!

Hitchie: its not just about investments. We have natural resources and welfare indices to worry about.. and i worry about those things a lot.