Working for Growth: Creating Productive Employment in South Asia

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The growth benefits of the demographic dividend cannot be fully enjoyed unless the extra workers generated by the demographic transition are productively employed. Youth unemployment is a growing issue in South Asia, particularly among first-time job-seekers and, increasingly as regional education levels improve, among graduates. Consequently, government policy among the South Asian states must prioritize the creation of productive employment domestically.

Two alternative paths remain open in this respect: a ‘low road’ approach, which consists of expanding low-wage jobs in order to absorb the excess labour, and a ‘high road’ approach, which seeks to develop more highly-skilled forms of employment in the services, industrial and agricultural sectors. While the latter is plainly the more desirable option, it is also more difficult to implement, a fact that governments must consider during the process of reframing labour regulations. Policies aimed at developing South Asia’s burgeoning services sector could prove particularly useful in this regard, as the sector’s growing need for high-skilled workers supports a ‘high road’ approach to job creation.

The promotion of entrepreneurship is also a key factor in ensuring productive job creation in South Asia. A World Bank study finds that entrepreneurship is particularly significant for job creation in economically lagging regions. It improves allocative efficiency and firm competition, supports innovation and promotes trade growth through product variety. It is also useful in aiding the transition from informal- to formal-sector activity. Consequently, a policy focus on entrepreneurial development is an important element of the drive towards productive job creation.

While strong regional growth since the 1980s has enabled South Asia to provide more and better quality jobs for the members of its labour-force thus far, the challenge of providing such employment for an average of 18 million new labour-market entrants each year over the next two decades remains a daunting one. Efforts to improve labour productivity through physical capital deepening, and through re-allocating excess agricultural labour into high-productivity industries such as manufacturing and services, will prove important in ensuring that the region’s growing labour force is productively employed.

“Working for Growth: Creating Productive Employment in South Asia” will be a Parallel Session (1B) in the forthcoming 6th South Asia Economic Summit 2013. Six leading experts will engage in the panel discussion – Aynul Hassan (ESCAP), Samar Varma (IDRC), Mohommed Razzaq (Commonwealth Secretariat), Ghafoor Liwal (Afghanistan), Pranav Kumar (India) and Ganga Tilakaratne (Sri Lanka). It will be chaired by former FICCI chief and thought-leader, Dr. Rajiv Kumar (India).

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