Goldman Sachs: India Will Generate 110 Million Jobs

It seems like all eyes are on India this season. With the general elections kicking off in 10 days time, Goldman Sachs has released a report, which states India will add as much as 110 million jobs in the next ten year. As the new government takes charge in India, Goldman Sachs foresees new labour market reforms coming into action to accelerate growth rate.

The report says “India’s employment is remarkable for its small scale and informality. To escape stringent laws entrepreneurs keep the scale of their operations small. Most workers are in small enterprises, with the share of workers in enterprises of less than 6 people 65.6%. Self-employed are half the workforce. Even in the formal sector, India’s average factory employs only 75 people, compared to 191 in China. They employ largely contractual workers – the labour force in the formal sector is heavily unionized and protected, consisting of 7% of workers, while 93% of workers are informal. This informality level is the highest in the emerging world.”

This will change in the coming years and the percentage will grow as labour laws are relaxed. India has abundance of informal labour and here lies the opportunity to turn them into skilled ones to enhance growth. There have been reports in the past that suggest India will be the next country to have major multi-national manufacturing units just like China. If this happens, this is going to churn lot of numbers for the country and will help the economies growth in a big way.

As far as the Indian states are concerned this report suggests that states with more liberal labour laws generate greater employment. Gujarat leads the race here followed by Tamil Nadu and Haryana. Bhiar and Jharkhand come at the lower end of the spectrum. There is immense opportunity in India, which the west seems to be eyeballing now. In a couple of months we just might see a better GDP growth and healthier jobs in the country.