More on India's manufacturing sector challenge

I had blogged earlier about the headwinds from technology induced labor market disruptions and structural changes in manufacturing sector that Indian economy will have to navigate. In this context, Tim Taylor points to the January 2015 issue of ILO's World Employment and Social Outlook which has a few interesting stats.

The report describes many people as holding jobs in the "vulnerable employment" sector - or "own-account work and contributing family employment". It finds that in 2014, 75.6% of the workforce of South Asia worked in "vulnerable employment", marginally smaller than the 76.6% in Sub-Saharan Africa, and far higher than elsewhere.

It also dwells on the issue of premature de-industrialization, as reflected in this graphic which shows that manufacturing's share of employment has been peaking much earlier among the latest entrants into the global manufacturing supply chain.

This assumes great significance for India, which has recently staked its growth behind manufacturing. In fact, apart from agriculture, manufacturing is expected to have the slowest employment growth rate among all sectors in the 2014-19 period.

In fact, evidence from 2000-13 from across countries shows that manufacturing's share of employment has either declined or been stagnant even during periods of growth acceleration.

In the 2000-13 period, the share of non-routine manual occupations has declined sharply in East and South Asia, whereas that of non-routine cognitive occupations has risen more than that of routine occupations in South Asia.

However, going ahead, a continuation of this trend will depend on the quality of workers joining the labor force. It is here that India's pathetic learning levels are a cause for great concern.