Content:
- Indian industry needs innovation, not mindless toil
- Talent shortage — global challenge, India’s opportunity
Indian industry needs innovation, not mindless toil
Over-Reliance on Cheap Labour
- Indian industry relies heavily on cheap labour rather than investing in technology and innovation.
- This over-dependence restricts long–term competitiveness and global market share.
- Example: Despite being labour-surplus, India’s garment export share has stagnated at 3.1% over two decades.
Relevance : GS 3(Economy)
Practice Question : With an over-reliance on cheap labour, Indian industry risks long-term stagnation. Critically examine the statement in the context of global competitiveness and domestic welfare. (250 Words)
Excessive Working Hours with Low Productivity
- Average weekly work hours in India: 46.7 hours (ILO, 2024), higher than the U.S. (38 hours) and Japan (36.6 hours).
- Longer hours don’t translate into higher productivity due to lack of technological upgrades and poor working conditions.
- Migrant workers often work 11–12 hours daily with no adequate breaks.
Dominance of Informal Employment
- Only 21.7% of workers hold regular salaried jobs; the rest are either casual or self-employed.
- Even among regular workers, ~50% lack job security, written contracts, or social security.
- High informalization leads to worker exploitation and poor quality of employment.
Structural Shift to the Unorganised Sector
- India’s manufacturing workforce: 70% in small, unregistered enterprises with fewer than 10 workers.
- Shift from organised to unorganised sectors driven by large firms seeking to bypass labour regulations.
- Small firms face delayed payments, suppressed prices, and lack adequate credit, weakening their viability.
Contract Labour and Migrant Dependence
- Post-2011-12: 56% of new factory jobs filled through contract labour.
- Contract workers receive lower wages and no labour protection.
- Migrant workers’ vulnerability stems from social disadvantages and lack of social security.
Profit Over Wages: Post-COVID Trends
- Factory sector profit share rose from 31.6% (2019-20) to 46.4% (2021-22).
- Wage suppression has benefited corporate profits but weakened domestic consumption.
Innovation Deficit and Global Competitiveness
- Indian industries, including garments, resist modernisation despite global competitors innovating rapidly.
- Bangladesh and Vietnam have outperformed India by adopting technology and improving productivity.
- Reliance on cheap labour deters technological investments crucial for sustained growth.
Long-term Consequences of Labour Exploitation
- Low wages and long hours reduce workers’ purchasing power, stifling domestic demand.
- Short-term profit focus undermines sustainable industrial growth and global competitiveness.
- Without innovation, India risks being trapped in a low-productivity, low-wage cycle.
Way Forward
- Invest in Technology: Prioritise automation and process innovations.
- Formalise Employment: Improve job security and ensure labour rights.
- Strengthen MSMEs: Provide better credit access and ensure fair payment practices.
- Enhance Worker Skills: Implement vocational training aligned with technological advancements.
- Revamp Labour Laws: Balance worker welfare with industrial growth needs.
Talent shortage — global challenge, India’s opportunity
Context : Global Talent Shortage: Scope and Impact
- Magnitude of shortage: By 2030, the global skilled labour shortage is projected at 85.2 million workers, risking an $8.45 trillion loss in potential revenue.
- Economic impact: Equivalent to the combined GDPs of Germany and Japan, highlighting the global economic consequences of unaddressed skill gaps.
- Sectoral demands:
- Healthcare: High global demand due to aging populations.
- Manufacturing & Construction: Critical in GCC & Australia.
- Services Sector: Dominant in Europe.
- Emerging Technologies: Skills in AI, IoT, blockchain, predictive analytics are increasingly vital.
Relevance : GS 2(Governance , international Relations) , GS 3 (Employment)
Practice Question : With the global talent shortage projected to reach 85.2 million by 2030, how can India leverage this opportunity to position itself as a leading supplier of skilled labour? Discuss the challenges and strategies involved.(250 Words)
India’s Opportunity in the Global Labour Market
- Demographic advantage: India has a youthful workforce amid global aging populations.
- Potential economic boost: By tapping into the global talent gap, India can progress toward the $9 trillion GDP projection by 2030.
- Indian diaspora strength:
- Second largest diaspora in Australia.
- Resilience against anti-immigration sentiments globally, owing to positive perceptions.
Key Destination Geographies & Workforce Needs
| Region | Primary Demands | Emerging Needs |
| GCC | Manufacturing, Construction | Automation, AI, Resource efficiency |
| Europe | Services (Healthcare focus) | Predictive analytics, Sustainability |
| Australia | Manufacturing, Healthcare | Big data, IoT, Management skills |
Existing Barriers to Skilled Workforce Mobility
- Regulatory & Immigration:
- Complex visa processes and strict work permit norms.
- Uncertain immigration policies, especially in Europe.
- Recruitment Malpractices:
- Exploitation & trafficking highlighted in global forums.
- Fraudulent agents targeting low-skilled workers.
- Skill Recognition Issues:
- Indian medical degrees not uniformly recognised in Europe.
- Language & Cultural Barriers:
- Integration challenges lowering productivity abroad.
India’s Initiatives and Policy Measures
- Bilateral & Free Trade Agreements (FTAs):
- Agreements with GCC nations ensure worker rights.
- India-UAE Vision for skill cooperation.
- Skill Development Initiatives:
- Sector-specific training to meet global standards.
- Alignment with emerging sectors (AI, automation).
- Digital Platforms:
- Legal recruitment facilitation to curb fraud.
Strategic Measures for India
- Short-term Measures:
- Streamline recruitment processes with transparent guidelines.
- Promote temporary work visas for circular migration.
- Medium-term Measures:
- Mutual recognition agreements for degrees and certifications.
- Focus on public-private partnerships for targeted skill training.
- Long-term Measures:
- Invest in AI, automation, and sustainability-oriented skills.
- Encourage rotational workforce models for demographic balance.
India’s Competitive Edge
- Minimal global hostility toward Indian skilled workers.
- Established diaspora networks facilitating smooth workforce integration.
- Rapid policy responsiveness to global market shifts.
Link to India’s Economic Goals (Viksit Bharat 2047)
- Tapping global demand can catalyse India’s goal of achieving a $9 trillion GDP by 2030.
- Workforce export can complement domestic employment generation through remittances and skill upgradation.
