A new report highlighted by The Economist, reports that 3 out of 10 new workers in the next decade will be in India. That’s right, India. Not China. By 2020, India will add 110M new workers.
A few stats on India’s worker landscape:
- Expect that about 1/3 of those people will work in the services sector (think: IT outsourcing and the like)
- India’s manufacturing sector has grown at 8% per year over the past decade … last year surpassing agriculture sector in terms of GDP with 16.1% employing about 12% of population
- Labor to capital ratios in many areas including clothing, jewellery and toymaking have halved in the last decade … that is, worker productivity has dramatically increased
- India’s factories skew to being small or very large (see chart) due to more then 200 federal and state labour laws. Most damaging is the Industrial Disputes Act which requires the government’s permission for company’s with > 100 employees before letting anyone go.
- Labour-intensive businesses in states with more flexible labor laws grew at 7% per year (for the last 20 years) vs. 3.5% per year for the same time period.
So with no major new labor law reforms in sight, the question is where will the 70M non-service sector new workers find (or make) employment?