“On the one hand, there is unemployment. On the other hand, there are employers struggling with labour shortages because they can’t get people with the right skills,” said Sachchidanand Shukla, group chief economist, Larsen & Toubro. “These policies are to create a pool of skilled people and also nudge employment – more a five-year agenda to enhance employability and address skill and labour shortages.”
Shukla said the proposals were a “very broad positive step” that’s good for the economy and would indirectly address the consumption demand. “But expectations that there will be an immediate payoff is not right,” he said.“The government has to take the lead; businesses will follow,” Shukla said. “The budget is also trying to create a future pool for manufacturing. That will buy some insurance against disturbances in the future when AI may impact services and white-collar jobs.”
K Sudarshan, managing director, EMA Partners India, said the budget sought to solve the fundamental issue in terms of capability building and making graduates employable.
Some sectors benefit more
Low-end sectors such as textiles, leather, basic chemicals, basic machine tools and garments might see a quicker response but overall recovery would take some time, said Abheek Barua, chief economist, HDFC Bank. “Labour market rigidities persist, technologies can be inflexible, skill building is not like flipping a switch,” he said.
The budget focused on formal jobs creation and that’s an area of immediate need, with only 20% formal work in India, said Ajit Isaac, chairman of business services provider Quess Corp. In certain sectors, like manufacturing, the movement will be faster, while it’ll take longer structurally to add formal jobs in sectors such as hospitality and retail, he said.
“The schemes on EPFO (Employees’ Provident Fund Organisation) support, employment-led skilling programmes, contribution to first-time formal employees will assist job creation across all segments, i.e., banking, ITeS, retail, telecom and manufacturing,” Isaac said.
CIEL HR Services chief executive Aditya Narayan Mishra said the budget will have a positive impact on the job market in the short term. The consistent capex push will drive growth in demand in the construction, engineering and manufacturing sectors, while the sops given for fresher hiring and policy-level support for skilling will give a temporary boost to the job market across sectors, he said.
In the short term, sectors such as financial services, infrastructure, and retail and e-commerce, along with initiatives like urban development, might see quicker job creation due to immediate government initiatives and investments, according to Kartik Narayan, CEO – staffing, TeamLease Services.
“Sectors such as power and energy, tourism, agriculture, and initiatives like Inclusive HRD and Next Gen reforms may take longer to see the full impact of job creation due to the nature of the projects involved, such as large-scale development projects and technological advancements,” said Narayan. “Initiatives like the National Green Hydrogen Mission and the comprehensive development of tourism sites will require time to develop and realise their full employment potential.”