How the apparel industry can solve India’s unemployment problem in the short term

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India’s economy is growing steadily but job growth is not following suit. Nearly 12 million youth join the workforce every year – but only 5.5 million jobs are created.

A major chunk of this unemployed lot is rural, uneducated and unskilled; and a lot of them are women. In the last five years, India’s unemployment rate has been the highest in 2015-16. The need of the hour is to create jobs in the short term; not in the far future.

I believe the answer lies in creating opportunities in the manufacturing sector – viz. the Textiles and Garments industries. India used to be a powerhouse in this sector before it lost out to Bangladesh and Vietnam; countries smaller than ours and with a similar unskilled and labour oriented workforce have overtaken us in apparel export.

The statistics below show just how far behind India is lagging begind these two countries.

  India Bangladesh Vietnam
Population 1.2 bn 150 m  94.5 m
Total workforce in garments industry (in mn) 100 5 4.5
Exports value in 2015-16 (in bn) 18 28 25
% contribution to GDP 5 14 15
% contribution to export earnings 11 80 18
% of exports growth to US in 2015-16 8 12 14

 

While Bangladesh and Vietnam have made huge strides thanks to their governments’s export policies, India has adopted an inverted developing economy model. Government policies in Bangladesh and Vietnam actively promote the growth of their apparel industries, like their bilateral negotiations with Europe and Japan to get duty free imports, which India failed to negotiate.

 

We already have a textiles industry which is the second largest employer, offering employment to over 60 million people indirectly, and 40 million, directly. The most obvious plan of action to generate ample employment opportunities is to boost the textile & garments sectors which have taken a severe beating in the last few years. Since the majority of the unemployed population is unskilled, it would make sense to develop factories in Tier 2 & Tier 3 cities, which could provide employment to thousands of men and more importantly, women.

An excellent example of this is a garments production unit in Nipani, an obscure hamlet in the state of Karnataka, set up with 100% foreign investment. The only other means of employment here so far, was tobacco farming, known for its inhuman working conditions and exploitation in the form of low wages.

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The setting up of the apparel factory has been a major factor in bringing about change in this little town. It employs 400 people from the neighbourhood, 80% of whom are women. Not only has the factory developed and sustained its surroundings, it has empowered women who are now bread winners in their own right. It has given them an opportunity to earn their livelihood with dignity, by providing a respectable working environment with all possible facilities within the factory premises.

If only this example could be replicated a 1000 fold across the country.

Employment opportunities need to be created; but not only in the IT and digital sectors which create jobs only in cities- cities which are already saturated and bursting at the seams with no matching infrastructure. That is why it doubly makes sense to concentrate on the apparel and garments industry which can be developed in smaller towns and rural areas. The government needs to recognise this and support it by making adequate policy changes.

 

 

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