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“Economic growth in the recent past has been led by an increase in labour productivity.” Explain this statement. Suggest the growth pattern that will lead to the creation of more jobs without compromising labour productivity.

Introduction

The four key elements for producing goods and services in an economy are labour, capital, natural resources, and entrepreneurship. Labor serves as a proxy for the human element in the creation of products and services in an economy. The level of production and growth rate of the economy are significantly influenced by the quantity and calibre of labour that individuals provide. The contribution made by the distinctive skills and capacities of various types of people to the labour market is a significant one. The flexibility of the workforce it consists of is a key component of the labour market.

Usually, there is a requirement to raise wages from employment as well as productivity and job numbers. Although the relationship between employment and economic growth is not usually a straight line for nations, it is not necessarily broken. Using Okun’s Law, which states that greater growth results in lower unemployment, economists monitor the relationship between employment and growth. Overall, the sectoral bias of increasing productivity has not reduced overall labour demand but has resulted in shifts in demand that are skill-biased.

While it is true that India has the fastest expanding big economy in the world, the country’s low levels of investment, credit offtake, capacity utilisation in industry, agricultural growth, and plant load factor make it unsurprising that employment growth is also modest.

There can be a growth pattern that will lead to creation of more jobs without compromising labor productivity.

• An industrial and trade policy is required first.
• Second, special programmes are required to create jobs in labor-intensive industries.
• To assist the creation of jobs in micro, small, and medium-sized businesses, cluster development is also necessary (MSMEs).
• In order to produce jobs, fourth, coordinate urban development with manufacturing clusters.
• Focus on women as your fifth point. Despite receiving higher levels of education in the last ten years, girls are losing out on jobs or those with increasing education cannot find them.
• Sixth, government jobs can be created by public investments in the judicial, police, health, and education systems.