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<br /> <keyword id="3658" type="COUNTRY" weightage="100" keywordseo="India">India</keyword> has a very high proportion of the workforce that are employed in the informal sector. It poses several distinct challenges that are unique in the Indian context. Some of these include mapping informal sector labour, understanding the employment and <keyword id="6358907" type="ORGANIZATION" weightage="100" keywordseo="unemployment">unemployment</keyword> in this crucial segment, providing them access to labour benefits as well as well as making them aware of their rights and responsibilities. The recently concluded 46th Indian Labour Conference laid stress on some important elements of understanding the labour challenge that India faces at present.<br />
<br /> First, the need is to understand the present woes of the <keyword id="6357125" type="UNKNOWN" weightage="100" keywordseo="labour-market">labour market</keyword> in the context of the institutional setting. It includes bringing to the table a tripartite delegation having representatives from the Government, the industry and the labour unions. Rather than having just a few meetings between the government, industry representatives and labour union representatives the goal should be to have continuous ongoing discussions to formulate better policy and law for all the stakeholders. A one-sided perspective often acts as a hindrance to the overall balance that needs to be achieved between these three entities forming the basis of labour policy in the country.<br />
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Second, the issue of having a low self-esteem of people employed as labour needs to be tackled at all levels. It calls for changing the societal mindset that forces labour to have and maintain a low self-esteem. Often people employed as labour are looked down upon which results in this flawed outcome. It also has to do with the fact that there is often a mentality of non-recognition of employee and overt dependence on the employer leading to exploitation at the workplace. Recognising this through certification that the government is keen on pursuing is thus a step in the right direction.<br />
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Third, there needs to be a simplification of laws in the labour domain. Post independence some of the labour laws are enshrined in the Indian Constitution. However, culling of unnecessary laws and simplification from the present labour law is necessary. It is one of the major reasons why India has such a massive workforce in the unorganised sector. Employers often find it exceedingly difficult to hire. They also stay small in scale precisely to not come under the ambit of laws that apply to bigger enterprises. A plethora of laws has resulted in a situation where often it is difficult to decipher the precedence of what applies where. The laws rather than acting as an enabler for better employment often end up producing precisely the opposite result. The laws thus require a careful relook and will have to be simplified at both the central and the state level.<br />
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Fourth, the need is to provide skills to people who are not employed at present. There is often a mismatch between skill sets imparted at the educational institutes and the industry requirements. The company often asks for previous work experience, while the employee often asks for being given the work experience. The situation can be resolved by upgrading the curriculum and training methodology as well as providing more apprenticeships. The need is also to provide career-counseling services to students. This is where the recently dedicated national career service that plans to connect the 978 employment exchanges through IT will go a long way in improving job-related services for job seekers.<br />
<br /> In the years ahead the opportunities for labourers needs to grow. The tripartite system of government, labour unions, as well as industry, needs to ensure that the opportunities expand at a rapid pace. They along with citizens also need to ensure that there is societal acceptance of people who work as labourers and there is the dignity of labour. Skilling of people in India holds the key for a <keyword id="576921" type="UNKNOWN" weightage="100" keywordseo="demographic-dividend">demographic dividend</keyword> that will propel economic growth. India's Labour Woes<br />
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(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India.)<br />
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(Image credits: Indiatimes)<br />

India's labour woes

Skilling is one of the major challenges facing India today. India has at present roughly 65 percent of the population below 35 years of age. It raises the possibility of economic growth provided India can leverage its <keyword id="576921" type="UNKNOWN" weightage="100" keywordseo="demographic-dividend">demographic dividend</keyword> by empowering people with skills. Over the next five years, the present 9-14 age group people will enter the workforce. In addition, a large proportion of people drop out of the formal education process in India. Skilling also imparts opportunities to these people who have not been able to pursue formal education. Four points are critical for '<keyword id="6569577" type="UNKNOWN" weightage="100" keywordseo="Skill-India">Skill India</keyword>' to be successful and being fully equipped to leveraging India's demographic dividend. <br /><br />

	First, the focus should be on mapping skills across various sectors for employment. It's means that the industry, as well as the government, should look at enlisting the skill requirements of the country. The industry should also interact frequently with institutions is telling them their requirements so that there is no mismatch between industry expectations and institutional curriculum. It also ensures that people who go to these institutions and imbibe the skills become job ready. The focus of skilling should be on future skills and jobs of the future and not on curriculum that is outdated and redundant in the industry.
<br /><br /> Second, mapping the skills with location's requirements, and institutions is very important. At a national level, the need is to map the skill requirement of the world and impart skill training appropriately where there is a huge demand for the workforce at the international level. It also means that states and, in particular, cities should identify areas in which they have conventional strength. For instance a location like Hyderabad that is good in the <keyword id="189164" type="UNKNOWN" weightage="100" keywordseo="pharmaceutical-industry">pharmaceutical industry</keyword> should focus on providing skills for that particular sector. Similarly, a place like Shimla, which attracts tourists, should focus on skills for development of its tourism cluster. These have to be locally identified and then taken to appropriate institutions that can provide training in these areas. <br /><br /> Third, it is important to build institutions that not only provide formal training but also provide certification to people. It is often a neglected dimension of skilling. An automobile technician working in a factory in say <keyword id="87" type="COUNTRY" weightage="100" keywordseo="Germany">Germany</keyword> takes pride in his job. In India, one often find low self-esteem and low worth of such individuals in the society. Certifications and instilling a sense of confidence and pride is a must for development of skill potential of India. Certifications should also be provided to people who can pass basic tests but have no formal recognition at present. <br /><br /> Finally, formalizing the process of skilling and provision of multiple skilling are the need of the hour. It is because formalization would lead to a better and a systems-oriented approach to skilling that to date has been a largely informal process. For instance, driving is often learnt not by training institutions but by some other driver teaching the newer one. If the process is formalized, it would certainly lead to better outcome during the process of learning and even post that once the driver has finished training. Similarly, a large number of people often face problems in operating mobile phones. If training is provided for learning the basic functionality, a large number of problems will be taken care of. In the present time, the need is to look for multiple skills and constant up gradation of existing skills. The issue of <keyword id="107737" type="ORGANIZATION" weightage="100" keywordseo="Entrepreneurship">entrepreneurship</keyword> is also related to the issue of skilling with people having multiple skills often wanting to start their venture. Thus, skilling empowers and at the same time is necessary for realizing the aspirations of people. <br /><br /> If India focuses on these broad points, it can surely leverage its demographic dividend at the same time solving the problem of <keyword id="6358907" type="ORGANIZATION" weightage="100" keywordseo="unemployment">unemployment</keyword> of youth. It would require a concerted effort on the part of policymakers at various levels, technical institutions as well as the industry in understanding the skill gap and in taking steps to reduce the gap. In the years ahead India has the potential to become the human capital of the world. Realizing this dream cannot be achieved without systematic thinking and implementation of the 'Skill India' mission. <br />
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	(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India.)<br />
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	(Image credits: bankersguru)<br />

Skill in India

<p><div class="KonaFilter image-container float_right"><div class="image"><p class="source"><span>Reuters</span></p></div><p></p></div>The future of an economy is determined heavily by its evolving demographics.</p>
<p>Knowing how young or old a country's population will be is crucial for investors and businesses.</p>
<p>Many point to population growth in developing nations as a source of rising domestic demand. But there's a lot more to be considered. For example, the Arab Spring was an extreme, but important reminder of what can happen when you have a young and able workforce with little access to jobs.</p>
<p>With that in mind we drew on George Magnus' presentation to The Conference Board titled <a href="https://conferenceboard.adobeconnect.com/_a984803641/p6pfpbsi1k0/?launcher=false&amp;fcsContent=true&amp;pbMode=normal">"The Age of Ageing: Global demographics, destinies and coping mechanisms."</a> In it, Magnus highlights five big demographic trends shaping the world right now.</p>
<p><strong><span style="text-decoration: underline;">1. The ratio of children to older citizens is declining</span>:</strong> The ratio of children to older citizens stands at about 3:1 but is declining. By around 2040, there will be more older citizens than children. By 2050, there will be twice as many older citizens as there are children. Some exceptions to this however are China and Russia.</p>
<p>"The number of over-60s in the rich world is predicted to rise by 2.5 times by 2050 to 418 million, but the trajectory starts to level off in about 20 years time. Within this cohort, the number of people aged over 80 will rise six times to about a 120 million. </p>
<p>"In emerging and developing world, the number of over 60s will grow by more than 7 times to over 1.5 billion by 2050, and behind this, you can see a 17-fold increase in the expected population of those aged over 80, to about 262 million."</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Conference Board/George Magnus" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/535e74076bb3f7ef4cd4a33e-960/screen shot 2014-04-28 at 11.29.09 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="https://conferenceboard.adobeconnect.com/_a984803641/p6pfpbsi1k0/?launcher=false&amp;fcsContent=true&amp;pbMode=normal">Conference Board/George Magnus</a></span></p></div><p></p></div></div><br /> <br /><strong><span style="text-decoration: underline;">2. There has been a sea-change in the nature of illness to non-communicable diseases</span>: </strong>One of the consequences of rapid aging and rising longevity is the "sea change in the nature of illness and disease and therefore scientific and pharmaceutical businesses," said Magnus. "I'm referring, of course, to what the World Health Organization has called the invisible epidemic of non-communicable diseases, which is now responsible globally for about 60% of deaths, and nearly half of the actual and effective life years due to disability."</p>
<p>"By 2030, depression is expected to become the biggest single cause of disability affected life years, which is a composite measure of years of life lost to  premature death and disability. The arrows show a complete turnaround in the principal burden of disease."</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Conference Board/George Magnus" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/535e746fecad04b8791f7328-960/screen shot 2014-04-28 at 11.31.18 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Conference Board/George Magnus</span></p></div><p></p></div></div></p>
<p><strong><span style="text-decoration: underline;">3. The speed of aging is rising rapidly in emerging economies</span>: </strong>The time taken to double the share of those over 60 years old from 7% to 14% of the population took a long time in western countries. But the emerging markets are aging "at an astounding pace," according to George Magnus.</p>
<p>In France it took over a century to cross this milestone. And in most developed countries it took about 40 - 80 years. In emerging markets, however, the process is playing out in about 20 years with China taking the lead in speed.  "It's this that gives that rise to the common mantra of 'growing old before you get rich,'" said Magnus.</p>
<p>What this means is that emerging markets have far less time to build the financial infrastructure and social security systems to deal with consequences of an aging and rising old age dependency.</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Conference Board/George Magnus" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/535e749769bedd4b259c915b-960/screen shot 2014-04-28 at 11.32.03 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Conference Board/George Magnus</span></p></div><p></p></div></div><br /> <strong><span style="text-decoration: underline;">4. Old age dependency ratio is rising rapidly in Japan, European countries, but at a slower pace in Anglo Saxon economies:</span> </strong> The rising dependence of those over 65 on the working age population is referred to as the old age dependency ratio. This is a product of weak fertility and rising longevity.</p>
<p>The old age dependency ratio in countries like Germany, Japan, Italy, Spain is expected to rise rapidly. These countries are characterized as the "hares" because of the rapid progression of old age dependency. The number of workers per older citizen is expected to fall from about 3-5 today to about 1.5 by the mid-century mark.</p>
<p>Meanwhile, the Anglo-Saxon economies like Sweden and France are "tortoises" by comparison. Here the support ratio will fall from 4-5 workers today, to about 2-2.5 by the mid-century. This is because of higher fertility rates and a more open immigration policy..</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Conference Board/George Magnus" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/535e7588ecad04307f1f7328-960/screen shot 2014-04-28 at 11.35.57 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Conference Board/George Magnus</span></p></div><p></p></div></div><br />The tortoises of the emerging markets have a support ratio of 10-20 workers per older citizen, and this is expected to get to where developed countries are by mid-century. But in some countries in sub-Saharan Africa, the pace of aging is much slower than say in Indonesia, Turkey and Brazil.</p>
<p>India is a "demographic darling" because one-third of its population is aged under 14, and its working age population will grow in the next 20 years, to more than the existing stock of working age people in Western Europe today.</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Conference Board/George Magnus" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/535e7676eab8eaf554d4a33e-960/screen shot 2014-04-28 at 11.39.53 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>Conference Board/George Magnus</span></p></div><p></p></div></div><br /><strong><span style="text-decoration: underline;">5. It's getting harder to exploit demographic dividend</span>:</strong> This is a phase that countries go through when child dependency is falling and the working age population is expanding. But they're also in a phase just before old age dependency starts to rise. Typically, this phase comes with stronger trends in income, savings, investment, and technical progress. This is where where other emerging markets countries hope to be in the next few decades.</p>
<p>Once the old age dependency ratio starts to rise, however, the demographic dividend can't be exploited and it tends to drag on growth. The demographic dividend creates the opportunity to draw on these benefits, but doesn't guarantee it. Exploiting your demographic dividend depends on four Is, according to Magnus - better institutions, investment climate, infrastructure, and innovation.</p>

GEORGE MAGNUS: These 5 Big Demographic Trends Are Shaping The World Right Now

India has been ranked 133th in a new Global Youth Development Index that was put together by the <keyword id="81874" type="ORGANIZATION" weightage="20" keywordseo="Commonwealth-Secretariat">Commonwealth Secretariat</keyword> on the Nation’s condition for youth when it comes down to employment, education, health, civic and political spheres.<br />
<br /> India has ranked poorly, coming 133rd in the index that included 183 countries. India was placed below the neighboring countries like <keyword id="12266" type="COUNTRY" weightage="20" keywordseo="Nepal">Nepal</keyword> (77), Bhutan (69) and <keyword id="6355572" type="COUNTRY" weightage="20" keywordseo="Sri-Lanka">Sri Lanka</keyword> (31) and trailing behind the South Asian average.<br />
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According to a report released last week that showed that India has seen an 11% improvement in score over the last five years and this highlighted the requirement for greater investment and hard-work to reap the the so-called demographic dividend.<br />
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"While India's overall rank is relatively low, it has registered an impressive improvement of nearly 11 per cent in its youth development scores in the period between 2010 and 2015. The research for this report also shows that youth development levels in India lag particularly in the domains of health, education and employment. Improvements in these sectors will give India a much better chance of reaping a handsome demographic dividend," Abhik Sen, the lead author of the '2016 Global Youth Development Index' report told ET.<br />
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The report highlighted the areas in which improvement is needed and they included education, employment opportunity and health and wellbeing.<br />
<br /> The top 10 countries on the index are largely from <keyword id="3791301" type="UNKNOWN" weightage="20" keywordseo="europe-germany">Europe - Germany</keyword> (1), <keyword id="49968" type="COUNTRY" weightage="20" keywordseo="Denmark">Denmark</keyword> (2), <keyword id="103" type="COUNTRY" weightage="20" keywordseo="Switzerland">Switzerland</keyword> (4), <keyword id="6361754" type="COUNTRY" weightage="20" keywordseo="United-Kingdom">United Kingdom</keyword> (5), <keyword id="44173" type="COUNTRY" weightage="20" keywordseo="Netherlands">Netherlands</keyword> (6), <keyword id="21177" type="COUNTRY" weightage="20" keywordseo="Austria">Austria</keyword> (7), <keyword id="63763" type="COUNTRY" weightage="20" keywordseo="Luxembourg">Luxembourg</keyword> (8), <keyword id="6359079" type="COUNTRY" weightage="20" keywordseo="Portugal">Portugal</keyword> (9) - with <keyword id="6355478" type="COUNTRY" weightage="20" keywordseo="Australia">Australia</keyword> (3) and <keyword id="6355311" type="COUNTRY" weightage="20" keywordseo="Japan">Japan</keyword> (10) as the two exceptions.<br />
(image: Indiainsider)<br />

India ranks poorly in Global Youth Development Index, at 133rd spot

<br />A new report by the the research arm of the State Bank of India (SBI), India’s largest bank, has a number of calls to action to its parent - the Indian government - some of which are put forth in an irreverent fashion. “Policymakers, wake up and smell the coffee!”, the report says, in the hope that the Indian government will get its act together and miraculously transform the country.<br /><br />There is an urgency to SBI’s assessment. It says that India has only 10 years to graduate to a “developed nation”. If it fails to do so, it will, in a likelihood, always be classified as a <keyword id="2343673" type="PERSON" weightage="20" keywordseo="developing-country">developing country</keyword>. <br /><br />The reason? If India’s youth isn’t given adequate skills and opportunities, then the country’s so-called “demographic dividend” - its large and young <keyword id="6356897" type="ORGANIZATION" weightage="20" keywordseo="labour">labour</keyword> force - will become a huge disadvantage by 2030. They won’t be able to contribute productively to the economy, and will hence, be a drag on resources and social programmes. <br /><br /><strong>Developed vs developing </strong><br /><br />According to a number of multilateral organisations, such as the United Nations (UN) and the <keyword id="6366068" type="COMPANY" weightage="20" keywordseo="international-monetary-fund">International Monetary Fund</keyword> (IMF), developed countries are categorised as such because they’ve achieved a certain level of infrastructure or the general standard of living and are above a certain bracket with respect to <keyword id="6354971" type="DEFINITION" weightage="20" keywordseo="gross-domestic-product">gross domestic product</keyword> (GDP) per capita. <br /><br />The IMF categorises economies as developed or “high income” if their <keyword id="311782" type="ORGANIZATION" weightage="20" keywordseo="Gross-National-Income">gross national income</keyword> (GNI) per person <a href="https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups">is above $12,236</a>. India currently languishes in the “lower middle income” bracket since its GNI per capita is between $1,006 and $3,955. Despite a slightly larger population, China is in the “upper-middle income” category.<br /><br /><strong>A focus on <keyword id="6355445" type="UNKNOWN" weightage="20" keywordseo="education">education</keyword> reform</strong><br /><br />The right to education does not translate into a right to quality education. <br /><br />In order to prevent its demographic dividend from turning into a disadvantage, SBI says that India will need to dramatically improved education and skill development outcomes in the next decade. This entails the reform and increased investment in government schools, which education a large portion of the country’s children.<br /><br />A few measures include the diversion of funds earmarked for private schools to government schools, for the purpose of upgrading facilities and infrastructure. In addition, teachers need to be better compensated.<br /><br />A new education policy has been stuck in the drafting stage ever since the Modi administration came to power in 2014. Prakash Javadekar, India’s minister for human resource development, told the Hindu yesterday that he will be presented with <a href="http://www.thehindu.com/opinion/interview/the-government-is-spending-nearly-4-of-gdp-on-education/article24146265.ece">a draft of the policy</a> next week. <br /><br />Higher education could also do with a revamp. The University Grants Commission, India’s higher education regulator, is currently <a href="https://www.business-standard.com/article/education/want-radical-reforms-in-higher-education-exams-ugc-invites-suggestions-118061300762_1.html">in the process of taking suggestions</a> from academics, students and university administrators on how to improve the higher education landscape in the country. The revamp is expected to cover entrance exams, the enhancement of technology and infrastructure and structural changes. <br /><br />However, based on how these things usually go, the report by the SBI is unlikely to spur the government into immediate action. India’s education system has been in need of an overhaul for decades now. It’s a extremely large problem to deal with, and ten years is a short amount of time. It seems that India will be stuck “developing” for the foreseeable future. <br />

India’s large and young labour force could become a huge disadvantage by 2030

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><p class="source">REUTERS/Jason Lee</p></div><p></p></div><keyword id="1334" type="COUNTRY" weightage="60" keywordseo="China">China</keyword> announced that it would <a href="http://www.businessinsider.com/china-announces-change-to-one-child-policy-2013-11">loosen its decades old one-child policy</a> at the third plenum. Couples will be allowed to have more than one child if at least one of them is an only child.<strong><strong> </strong></strong></p>
<p>Not only did the policy exacerbate labor shortages, it also skewed China's sex ratio.</p>
<p>"China's demographic dividend is gradually turning into a deficit, adding headwinds to underlying growth momentum," write Morgan Stanley's Yuande Zhu, Helen Qiao, and Yin Zhang.<strong></strong></p>
<p>We picked out 8 key charts from Morgan Stanley that show how the <keyword id="386231" type="UNKNOWN" weightage="60" keywordseo="demographics">demographics</keyword> of the nation have changed and what it means for China's economy.<strong><strong><br /></strong></strong></p>
<p><strong><strong>1. China has had three baby booms since the People's Republic was founded in 1949.</strong> </strong>The first was in the post-war period between 1949-1958. The second boom came after the great famine and lasted from 1962-1972. The last boom came in decade from 1981-1991 as "the second generation of baby boomers entered childbearing age, the high base naturally pushed the birth rate to a higher level."</p>
<p><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div></p>
<p><strong><strong>2. China's fertility rate fell from 5.5 in 1970, to 1.6 by 2012.</strong> Meanwhile the birth rate fell from 33 per 1,000 in 1970, to 12 by 2012. </strong></p>
<p><strong><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div><br /></strong></p>
<p><strong>3. <strong>The population growth rate fell from a high of 2.6% year-over-year in 1970 to 1.2% YoY in 1980.</strong></strong></p>
<p><strong><strong></strong><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div><br /></strong></p>
<p><strong>4.</strong> <strong>China's population growth is set to decline from here and contract from 2030 on.</strong> Post-war baby boomers have already entered retirement age, which Zhu says is speeding up China's aging process.</p>
<p><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div></p>
<p><strong>5. The working age population is expected to decline as early as 2017, which is more significant for the economy.</strong></p>
<p><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div></p>
<p><strong>6. Companies are having a harder time hiring employees despite the economic slowdown.</strong></p>
<p><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div></p>
<p><strong>7. While the one-child policy was created to alleviate population pressures on the economy, it skewed the gender ratio towards boys. </strong></p>
<p><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div> <strong>8. People typically save while they work and spend post-retirement.</strong> "The economic structure will skew towards consumption rather than investment," as China's total dependency ratio begins to turn and baby boomers begin retiring.</p>
<p><div class="KonaFilter image-container"><div class="image"><p class="source">Morgan Stanley</p></div><p></p></div><em>Thanks to Morgan Stanley for giving us permission to feature their charts.</em></p>

8 Charts That Explain What's Really Happening With Chinese Demographics

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0BXZE3LU8MV&amp;SMLS=1&amp;RW=1290&amp;RH=905#/SearchResult&amp;VBID=2C0BXZE3LU8MV&amp;SMLS=1&amp;RW=1290&amp;RH=905&amp;PN=15&amp;POPUPPN=850&amp;POPUPIID=2C0BF1YQZ0PR">Reuters/Mario Anzuoni</a></span></p><p class="caption">Concert goers dance at the Coachella Music Festival in Indio, California.</p></div><p></p></div></div>Millennials are taking over the US. Or at least the US economy.</p><p>Based on the Conference Board's <a href="http://www.businessinsider.com/conference-board-consumer-confidence-june-2016-2016-6">consumer confidence index</a>, the folks at <a href="https://www.bespokepremium.com/think-big-blog/">Bespoke Investment Group</a> highlighted that the economic confidence of people under the age of 35 is at its highest level since October 2000 and is approaching a historic record.</p><p>At the same time, confidence for people over the age of 54 has slid in the past year leading to a record divergence between the two cohorts.</p><p>Bespoke discussed one possible reason for that divergence <a href="https://www.bespokepremium.com/think-big-blog/">in a note to clients</a>.</p><p>"Part of leap in the spread between these two cohorts is random variability, but we also get the sense that the recent record divergence (charted in the green line below) is part of a broader handing off of the baton from the Baby Boomers who are now entering retirement and the Millennials who are only just starting to get married, buy homes, and have children," <a href="https://www.bespokepremium.com/think-big-blog/">said the note.</a></p><p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Bespoke Investment Group" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/57729b814321f1f5018b488f-960/screen shot 2016-06-28 at 11.18.58 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="https://www.bespokepremium.com/think-big-blog/">Bespoke Investment Group</a></span></p></div><p></p></div></div></p><p>This comes after commentary over the weekend on <a href="http://www.census.gov/newsroom/press-releases/2016/cb16-107.html">recently released Census data</a> highlighted that <a href="http://www.businessinsider.com/us-most-popular-ages-2016-6">seven of the most common ten years of age</a> in America are all in the 20s. Plus, millennials just overtook baby boomers as <a href="http://www.businessinsider.com/millennials-are-the-largest-american-generation-2016-4">the largest generation in America</a> (at least according to Pew's definitions). </p><p>On the other end, it is worrying that many boomers have <a href="http://www.businessinsider.com/millennials-are-more-optimistic-than-baby-boomers-2016-4">lost faith in the economy</a>. Now, to be fair, the older bracket in the Conference Board survey has almost always been less confident than the young bracket regardless of generational shifts, and we're just seeing an increase in the spread between age cohorts.</p><p>One possible reason for the drop may be that the <a href="http://www.businessinsider.com/financial-advisor-insights-april-29">main sources of retirement income</a>, such as yields from bonds, have <a href="http://www.financial-planning.com/news/boomers-retirement-confidence-hits-all-time-low">been dropping in recent years</a>, making the financial future for boomers a tad murkier than for retirees in previous generations.</p><p>Based on this divergence, it appears that millennials have taken the reins of the US economy from boomers. They <a href="http://www.businessinsider.com/how-millennials-are-spending-money-2016-3">spend more</a>, generate more income, and make up the largest swath of the labor market. As they become a larger part of the economy, it is encouraging to see increasing confidence.</p><p>"While many focus on the demographic weight of aging Boomers, the US is on the verge of a tremendous demographic dividend as the largest share of the population will be young, highly educated, and ready to consume," <a href="https://www.bespokepremium.com/think-big-blog/">said Bespoke.</a></p><p>"As the chart above helps to show, the kids are alright."</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/michael-moore-trump-can-win-president-2016-6">MICHAEL MOORE: 'I think there's an excellent chance' Trump will be president</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="ZsZ3UxNDE6rPoTkJ2DuWIrKuTqWpJKmN" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Young people haven't loved the economy this much since the tech boom

The immediate priority of finance minister of India is to improve GDP growth and employment rates while keeping the targets of fiscal consolidation (3.5% of GDP in 2016-17) under control. Based on past few quarters’ results of corporate sector, we see demand hasn’t yet picked up. One of the main reasons is lack of rural demand, low rise in urban consumption and high food inflation. Based on this we think our finance minister should focus on sectors which could have a large scale impact to revive the <keyword id="34412" type="ORGANIZATION" weightage="20" keywordseo="economy">economy</keyword> while providing enough employment to receive the benefits of India’s demographic dividend. These sectors include Agriculture, Infrastructure and Healthcare sector.<br />
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<strong>1. </strong><strong><u>Agriculture &amp; Rural economy</u></strong><br />
Indian Agriculture sectors contributes around 17% to overall GDP, however, 49% of India's workforce is dependent on it. Overall GDP growth rate is round 7.5% while Agri-growth stutters around 1.7% (Down from 4% AGR in 11<sup>th</sup> Plan). Drought in last two years has made the situation worse by pushing marginalised farmers and agricultural labourers to the brink, leading to massive agrarian distress.<br />
<br /> · The <keyword id="6355532" type="PERSON" weightage="20" keywordseo="Mahatma-Gandhi">Mahatma Gandhi</keyword> National Rural Employment Guarantee Scheme (MGNREGS) has been successful in providing employment to India’s rural poor and improve their livelihoods. A study NCAER found that the MGNREGS “has reduced poverty overall by up to 32% and has prevented 14 million people from falling into poverty.” Budget allocated should be increased to Rs. 40,000 cr from current allocation of Rs.34, 699 cr as the current allocation is not sufficient to cover the increased demand. Govt. needs to make it demand-driven programme i.e. allocating resources to states and districts based on poverty level &amp; exposure to drought. Making state &amp; local bodies accountable by monitoring KPIs (Employment level, Assets etc).<br />
<br />
· Reliable, faster and effective rural electrification by investing &amp; promoting renewable energy sources (bio-gas, solar, wind etc.) under an integrated rural electrification framework.<br />
<br /> · Crop insurance schemes in India covers merely 23% of farmers. Pradhan Mantri Fasal Beema Yojna (PMFBY) needs to employ technology and innovation in crop insurance by assessing farm-level damage through satellites &amp; drones, linking farmer’s farm to Aadhar number and transferring the amount directly to account. Out of total sown area of 141 million hectare only 45% (65 million hectare) is covered under irrigation. Pradhan Mantri Krishi Sinchai Yojana (PMKSY), launched in 2015, needs to achieve convergence of <keyword id="6362476" type="ORGANIZATION" weightage="20" keywordseo="investments">investments</keyword> by Integration of water source, distribution and farm level applications. Using MSP as insurance mechanism rather than structural tool.<br />
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· National Agriculture Market instead of current Mandi system, which suffers from cartelization of intermediaries’ problem, to enable farmers to discover the true price of their product.<br />
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<strong>2. </strong><strong><u>Infrastructure Sector</u></strong><br /> Investment in infrastructure must give a boost to rail, road, irrigation and ports. Infrastructure has a high multiplier effect and goes a long way in creating sustainable GDP growth. Ports will help boost up trade and rail &amp;road will push activity within the country. Sufficient funds to be allocation to meet NHAI target of 30km/day. <keyword id="547488" type="UNKNOWN" weightage="20" keywordseo="tax-incentives">Tax incentives</keyword> for multi cargo ports with handling capacity of more than 100 MTPA will boost India’s exports. Withdrawal of minimum alternate tax in a calibrated manner must be done. Government should privatize managing of smaller airports and modernization of atleast 400 railway stations should be done in next year. Further atleast 30GW of renewable energy capacity can be established majorly through wind and solar. Accelerated depreciation benefit should be extended to wind sector apart from solar.<br />
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<strong>3. </strong><strong><u>Healthcare Sector</u></strong><br />
In healthcare government should increase allocation to public healthcare by increasing it to 2% of GDP from current 1%. There must be tax holidays given to the pharma sector and the sunset clause on weighted deductions must be extended as India has the potential to become pharmacy of the world. These deductions on R&amp;D will go a long way on propelling innovation in pharma. Universal health insurance should be carried out through Jan Dhan-Aadhar-Mobile which will benefit patients and increase access thus helps us materialize our demographic dividend.<br />
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<strong> </strong><em>The article has been written by Devendra Meel and Sahil Makkar.</em><br />
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<em>(Devendra is a first year PGP student at IIM Bangalore. He has served on the program management &amp; strategy team of RIL's 4G venture. He holds a degree in electronics &amp; communication engineering, and takes strong interest in economics, governance &amp; political issues, reading and cricket)<br />
 <br />
(Sahil is a first year PGP student from IIM Bangalore. Prior to this he has worked two years in R&amp;D division of Samsung. He is a graduate in Electrical engineering from IIT Bhubaneswar. He is an avid follower of cricket and has interest in economics and finance) </em><br />

Budget 2016: It's time to create a long lasting impact

<br /><em>Demographic Dividend -- </em>these are the two most abused words, when it comes to fund managers, economists, stock market experts and everyone else, who have been trying to sell the India growth story over the last two decades.<br /><br />Countries go through a phase when its workforce increases at a faster rate than its overall population. When the youth (people who cross the age of fifteen) in such a country, enter the workforce, find work, earn money and then spend it, they end up creating economic growth.<br /> <br />That kind of economic growth pulls out many people out of poverty. Or so that’s how the dynamic is supposed to work.<br /><br />In fact, one corollary to this theory is, that as women become more literate, and join the workforce, earn and spend money, it creates additional economic growth.<br /><br />In other words, as the society becomes more equal in gender terms, it leads to additional economic growth. (You can read one<a href="https://www.mckinsey.com/featured-insights/employment-and-growth/how-advancing-womens-equality-can-add-12-trillion-to-global-growth"> such argument from McKinsey</a>, which was published in September 2015 and was doing the rounds on the social media, on the occasion of women’s day, recently).<br /><br />But there is a key assumption in that theory—<em>those who are looking for work, are able to find it.</em> Only when this happens, are they going to earn money, spend it, help others earn money, who will spend the money as well, and help still others earn money. Or so the multiplier effect is supposed to work, create economic growth and jobs, and in the process pull people out of poverty.<br /><br />In India’s case, the demographic dividend is gradually turning into a disaster, especially, as we shall see, for women. In fact, a lot has been written about India’s unemployment crisis over the last few years. So, in this piece, we won’t go down that lane. But what we will look at is India’s labour force participation rate or the proportion of the working-age population, which either has a job or is unemployed and is <em>looking for one</em>.<br /><br />The working-age population essentially comprises of people who are of age 15 years or more. Let’s take a look at this issue pointwise.<br /><br />1) The Centre for Monitoring Indian Economy regularly puts out the labour force participation data. In February 2019, the labour force participation rate for working-age population of India stood at 42.74%. This basically means that only 4,274 individuals out of every 10,000, who are a part of the working-age population, either had a job or were looking for one.<br /><br />The interesting thing is that the labour force participation rate has fallen dramatically over the years. In January 2016, it was 47.70%. Hence, back then, for every 10,000 individuals who were a part of the working-age population, 4,770 individuals either had a job or were looking for one.<br /><br />2) Let’s look at this data in some detail. The women who are a part of the working-age population have had to face the brunt of the fall in the labour force participation rate. In January 2016, the labour force participation rate among women was at 16.81%. This has since fallen to 10.97% in February 2019. In urban India, it was at 10.37% and in rural India it was at 11.28%.<br /><br />
  
  
  
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<br />Basically, in simple English, around 11 out of 100 women who are a part of the working-age population, either have a job or are looking for one. The number was around 17 earlier. This is a real reason to worry.<br /><br />3) As far as men are concerned, the labour force participation rate has fallen from 75.06% in January 2016 to 71.19% in February 2019. The labour force participation rate of men has also come down but not as dramatically as that of women.<br /><br />4) The interesting thing is that a bulk of this fall has happened after October 2016. The overall labour force participation rate in October 2016 had stood at 46.49%. From there, as mentioned earlier, it has dropped to 42.74%. The labour force participation rate for men and women, had stood at 74.87% and 14.76% during the month, from where it has fallen to 71.19% and 10.97%, respectively.<br /><br />Not surprisingly, demonetisation happened in the month of November 2016. As cash went out of the system, large parts of the informal economy which depended on cash, were destroyed.<br /><br />5) For those who lost their jobs after demonetisation, it became very difficult to find a new job. And slowly, these individuals stopped looking for jobs, and in the process dropped out of the workforce.<br /><br />These people who have dropped out of the workforce, do not get counted among India’s unemployed, even though they do not have a job. And this is something that never gets talked about in the India’s unemployment debate.<br /><br />6) In October 2016, India’s working age population, stood at around 95.51 crore. Of this, around 41.43 crore people had jobs. In February 2019, India’s working age population had increased to 100.9 crore . The number of people with jobs stood at 40.01 crore. Hence, the employment rate has fallen from 43.37% to 39.65%.<br /><br />What does this mean? While, the working age population has risen by 5.4 crore individuals since demonetisation, the number of employed people has come down by more than 1.4 crore. Hence, one there has been destruction of jobs. And two, no new jobs have been created for so many individuals entering the workforce.<br /><br />7) This further means that other than jobs being destroyed after demonetisation, the economy has been unable to create jobs for the nearly 2.3 crore individuals who enter the workforce every year, though not all of them are looking for jobs. This is a sad state of affairs which never gets mentioned anywhere in the media or even by economists, who are supposed to track such things.<br /><br />8) Women have had to bear the brunt of this. In January 2016, 7.41 crore women were a part of the labour force. This has dropped to 5.23 crore by February 2019, a fall of more than 29%. Meanwhile, the working age population of women has increased from 44.1 crore to 47.7 crore, during the same period. What this basically means is that more and more over the age of 15, are simply not looking for a job because it has become very difficult to find one. Meanwhile, the number of men in the workforce during the period has increased slightly from 37.35 crore to 37.9 crore.<br /><br />To conclude, India’s so-called demographic dividend clearly is not working the way it’s supposed to, especially for its women. For them, it has been a disaster.<br /><br /><strong>See also:<br /><a href="https://www.businessinsider.in/low-india-gst-rates-will-not-help-evasion/articleshow/68281274.cms" data-type="tilCustomLink">Lower rates alone will not stop GST evasion — simpler rules will<br /></a><a href="https://www.businessinsider.in/beyond-india-latest-gdp-data-the-real-cues-about-the-economy/articleshow/68179264.cms" data-type="tilCustomLink">Why even an economic growth of 6.6% is not believable</a><br /></strong>

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