India’s Job Growth Needs: A Goldman Sachs Report
India is projected to need around 10 million new jobs each year from FY25 to FY30 to sustain a 6.5% annual growth in Gross Value Added (GVA), according to a report by Goldman Sachs. The report suggests that encouraging affordable housing could boost the real estate sector, which employs over 80% of construction workers, thereby creating jobs across various skill levels.
Expanding Job Opportunities
Goldman Sachs recommends establishing IT hubs and Global Capability Centers (GCCs) in tier-2 and tier-3 cities to alleviate pressure on major urban centers and increase job opportunities in less developed areas. Shifting fiscal incentives towards labor-intensive manufacturing sectors like textiles, food processing, and furniture could also support job creation for low- to middle-skill workers.
Government Initiatives
The government’s Production-Linked Incentive (PLI) schemes have mainly benefited capital-intensive industries, but there is a positive shift towards labor-intensive sectors such as textiles, footwear, toys, and leather goods. This aligns with India’s broader employment goals, as 67% of manufacturing jobs are in labor-intensive fields.
Employment Trends
Over the past 20 years, India has added about 196 million jobs, with significant growth in the last decade. Many workers have moved from agriculture to construction and service roles. Construction accounts for 13% of total jobs, while the services sector, contributing 34% of employment, has expanded due to digital transformation in retail.
Rising Labor Force Participation
India’s Labor Force Participation Rate (LFPR) increased from 50% in FY18 to 60% in FY24, driven by female participation, especially in rural areas. This rise is attributed to better measurement practices, financial inclusion through credit schemes for women, and more opportunities in small enterprises. India’s demographic transition presents a 20-year window to leverage a low dependency ratio with a growing working-age population.
Doubts Revealed
Goldman Sachs -: Goldman Sachs is a big company that helps people and businesses with money matters. They give advice on how to make and manage money.
GVA growth -: GVA stands for Gross Value Added. It’s a way to measure how much value is added to the economy by producing goods and services.
FY25 to FY30 -: FY25 to FY30 refers to the financial years from 2025 to 2030. A financial year is a period used for calculating annual financial statements in businesses and governments.
Affordable housing -: Affordable housing means homes that are not too expensive, so more people can afford to buy or rent them.
IT hubs -: IT hubs are places where many technology companies and jobs are located. They focus on information technology, like computers and software.
Labor-intensive sectors -: Labor-intensive sectors are industries that need a lot of people to work, like making clothes (textiles) or processing food.
PLI schemes -: PLI stands for Production Linked Incentive. These are government programs that give benefits to companies for producing more goods, especially in certain industries.
Demographic advantage -: Demographic advantage means having a large number of people, especially young ones, who can work and help the economy grow.