Content:

1. Indian industry needs innovation, not mindless toil
2. Talent shortage — global challenge, India’s opportunity

Indian industry needs innovation, not mindless toil

Over-Reliance on Cheap Labour

• Indian industry relies heavily on cheap labour rather than investing in technology and innovation.
• This over-dependence restricts long–term competitiveness and global market share.
• Example: Despite being labour-surplus, India’s garment export share has stagnated at 3.1% over two decades.

Relevance : GS 3(Economy)

Practice Question : With an over-reliance on cheap labour, Indian industry risks long-term stagnation. Critically examine the statement in the context of global competitiveness and domestic welfare. (250 Words)

Excessive Working Hours with Low Productivity

• Average weekly work hours in India: 46.7 hours (ILO, 2024), higher than the U.S. (38 hours) and Japan (36.6 hours).
• Longer hours don’t translate into higher productivity due to lack of technological upgrades and poor working conditions.
• Migrant workers often work 11–12 hours daily with no adequate breaks.

Dominance of Informal Employment

• Only 21.7% of workers hold regular salaried jobs; the rest are either casual or self-employed.
• Even among regular workers, ~50% lack job security, written contracts, or social security.
• High informalization leads to worker exploitation and poor quality of employment.

Structural Shift to the Unorganised Sector

• India’s manufacturing workforce: 70% in small, unregistered enterprises with fewer than 10 workers.
• Shift from organised to unorganised sectors driven by large firms seeking to bypass labour regulations.
• Small firms face delayed payments, suppressed prices, and lack adequate credit, weakening their viability.

Contract Labour and Migrant Dependence

• Post-2011-12: 56% of new factory jobs filled through contract labour.
• Contract workers receive lower wages and no labour protection.
• Migrant workers’ vulnerability stems from social disadvantages and lack of social security.

Profit Over Wages: Post-COVID Trends

• Factory sector profit share rose from 31.6% (2019-20) to 46.4% (2021-22).
• Wage suppression has benefited corporate profits but weakened domestic consumption.

Innovation Deficit and Global Competitiveness

• Indian industries, including garments, resist modernisation despite global competitors innovating rapidly.
• Bangladesh and Vietnam have outperformed India by adopting technology and improving productivity.
• Reliance on cheap labour deters technological investments crucial for sustained growth.

Long-term Consequences of Labour Exploitation

• Low wages and long hours reduce workers’ purchasing power, stifling domestic demand.
• Short-term profit focus undermines sustainable industrial growth and global competitiveness.
• Without innovation, India risks being trapped in a low-productivity, low-wage cycle.

Way Forward

• Invest in Technology: Prioritise automation and process innovations.
• Formalise Employment: Improve job security and ensure labour rights.
• Strengthen MSMEs: Provide better credit access and ensure fair payment practices.
• Enhance Worker Skills: Implement vocational training aligned with technological advancements.
• Revamp Labour Laws: Balance worker welfare with industrial growth needs.

Talent shortage — global challenge, India’s opportunity

Context : Global Talent Shortage: Scope and Impact

• Magnitude of shortage: By 2030, the global skilled labour shortage is projected at 85.2 million workers, risking an $8.45 trillion loss in potential revenue.
• Economic impact: Equivalent to the combined GDPs of Germany and Japan, highlighting the global economic consequences of unaddressed skill gaps.
• Sectoral demands:
  • Healthcare: High global demand due to aging populations.
  • Manufacturing & Construction: Critical in GCC & Australia.
  • Services Sector: Dominant in Europe.
  • Emerging Technologies: Skills in AI, IoT, blockchain, predictive analytics are increasingly vital.

Relevance : GS 2(Governance , international Relations) ,  GS 3 (Employment)

Practice Question : With the global talent shortage projected to reach 85.2 million by 2030, how can India leverage this opportunity to position itself as a leading supplier of skilled labour? Discuss the challenges and strategies involved.(250 Words)

India’s Opportunity in the Global Labour Market

• Demographic advantage: India has a youthful workforce amid global aging populations.
• Potential economic boost: By tapping into the global talent gap, India can progress toward the $9 trillion GDP projection by 2030.
• Indian diaspora strength:
  • Second largest diaspora in Australia.
  • Resilience against anti-immigration sentiments globally, owing to positive perceptions.

Key Destination Geographies & Workforce Needs

Existing Barriers to Skilled Workforce Mobility

• Regulatory & Immigration:
  • Complex visa processes and strict work permit norms.
  • Uncertain immigration policies, especially in Europe.

• Recruitment Malpractices:
  • Exploitation & trafficking highlighted in global forums.
  • Fraudulent agents targeting low-skilled workers.

• Skill Recognition Issues:
  • Indian medical degrees not uniformly recognised in Europe.

• Language & Cultural Barriers:
  • Integration challenges lowering productivity abroad.

India’s Initiatives and Policy Measures

• Bilateral & Free Trade Agreements (FTAs):
  • Agreements with GCC nations ensure worker rights.
  • India-UAE Vision for skill cooperation.

• Skill Development Initiatives:
  • Sector-specific training to meet global standards.
  • Alignment with emerging sectors (AI, automation).

• Digital Platforms:
  • Legal recruitment facilitation to curb fraud.

Strategic Measures for India

• Short-term Measures:
  • Streamline recruitment processes with transparent guidelines.
  • Promote temporary work visas for circular migration.

• Medium-term Measures:
  • Mutual recognition agreements for degrees and certifications.
  • Focus on public-private partnerships for targeted skill training.

• Long-term Measures:
  • Invest in AI, automation, and sustainability-oriented skills.
  • Encourage rotational workforce models for demographic balance.

India’s Competitive Edge

• Minimal global hostility toward Indian skilled workers.
• Established diaspora networks facilitating smooth workforce integration.
• Rapid policy responsiveness to global market shifts.

Link to India’s Economic Goals (Viksit Bharat 2047)

• Tapping global demand can catalyse India’s goal of achieving a $9 trillion GDP by 2030.
• Workforce export can complement domestic employment generation through remittances and skill upgradation.