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Employment Elasticity Essay

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EMPLOYMENT ELASTICITY- AN INTRODUCTION Employment elasticity, which is a measure of the change in employment with a change in output growth, has been a serious concern especially in developing countries like India, where employment remains a serious concern. India, being a labor intensive economy suffers from serious employment problems, the most prominent one being “jobless growth”. It has been estimated that while the economy boasts of having an impressive growth rate (averaging well above 5% for the past decade), employment growth rate has been a meager 2.6%. India’s poor performance when it comes to employment can be attributed to the slow development of the manufacturing sector in the country coupled with the low employment elasticity …show more content…

In times of jobless growth, the government resorts to doles in order to pacify the citizens. However, this is not a viable solution because the doles pose a huge burden on the fiscal condition of the government and the economy as a whole. Secondly, with high growth rates not contributing to increase in employment, the conclusion that is arrived at is that the owners of capital are being benefited but not the owners of labor. In other words, the rich are becoming richer and the poor are becoming poorer. Thus, low employment elasticity is also a cause for inequality. Thirdly, n direct concern of low elasticity in times of very high growth rates is that it may be worse currently, even when the economy is not growing at its best. This means a reduced disposable income to those who do work and no income for those who do not have jobs. Therefore, low elasticity of employment also leads to a lower standard of …show more content…

Hence, there emerges a need to strive to increase the secondary sector output by increasing investments, both public and private. Increased investments coupled with improved technology and renewed infrastructure can lead to the rapid development and expansion of industrial output. Industrialization and commercialization should be used as tools to achieve this goal. A revision of labor laws in order to protect the workers from exploitation and ensure job security can also help in improving elasticity of employment in the manufacturing sector. Obsolete laws and regulations should be amended and new laws should be introduced which are characteristic of the changing nature of labor in an era of globalization and

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