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02/09/2016

Jobs elusive as India clings to fastest-growing economy tag | Reuters

It’s been two years since India emerged as the world’s fastest-growing major economy, but the rapid expansion has done little to improve the lot of Ashok Kumar.

Parked up and sitting on the kerb, the 25-year-old truck driver is going nowhere fast. He is the sole breadwinner for the 13 people in his extended family and his monthly salary is stuck at $150.

With new, better-paid jobs hard to come by, Kumar lacks options. He fears becoming unemployed like his elder brother, who recently returned to their village in Uttar Pradesh after months of searching in vain for work.

Data out on Wednesday showed India’s economic growth slowed to 7.1 percent in the quarter to June, a 15-month low. That is faster than other major economies, but not fast enough to create enough new jobs to absorb all the one million people who join the workforce every month.

A government survey found that job creation fell by more than two-thirds in 2015. Analysts at HDFC Bank estimate that for every percentage point the economy grows, employment now adds just 0.15 of a percentage point – down from 0.39 in 2000.

It’s a major challenge for Prime Minister Narendra Modi, who has promised to create 250 million jobs over the next decade.

“For one job, there are at least 20 candidates,” said Kumar. “If you want the job, you can’t afford to bargain.”

Nearly two-thirds of India’s 1.3 billion people are under 35 years old. This rising demographic “bulge” will create the largest working-age population in the world. At the same time China, which has long curbed family size, will age as a society.

Whether this so-called demographic dividend will translate into the kind of economic gains seen in Japan and Korea, or lead to upheavals, depends on India’s ability to generate jobs.

Yet, despite average annual growth of 6.5 percent between 1991 and 2013, India added less than half the jobs needed to absorb new job seekers.

MORE WORKERS, FEWER JOBS

Under Modi, India has opened up further to foreign investment, hoping to generate more manufacturing jobs. A loan scheme for small businesses has been set up and there are plans for a $1.5 billion fund for startups.

Modi has also launched a programme to train over 4 million people in different skills in six years.Pronab Sen, country director for the International Growth Centre, a British-backed think tank, said such measures were “laudable”, but they aimed at boosting supply when more demand was needed.

“India has become a demand-starved economy,” Sen said. “If there is no demand, there will be no incentive to produce more which, in turn, will mean no new jobs.”

The level of desperation for work is staggering. In August, nearly half a million people, including post-graduates, applied for 1,778 jobs as sweepers in the city of Kanpur.

This was not a one-off. Last year, in Uttar Pradesh, 2.3 million people sought 368 low-level government jobs that required a primary education and ability to ride a bicycle.

Competition for such jobs has become fiercer as the public sector’s share in formal employment is declining.

Two years of drought has caused distress in farming, while the construction business has suffered a prolonged downturn – making work scarcer in the two sectors that employ the bulk of India’s unskilled workforce.

Satellite cities around the capital, like Greater Noida were, until recently, bustling with construction activity.

Now, Greater Noida’s skyline is dotted with half-built, abandoned, high-rises. Cranes and diggers stand idle.

In Delhi and the surrounding National Capital Region, housing starts fell 41 percent year-on-year in the first half of the year, according to consultancy Knight Frank. Across India, starts were down 9 percent from a year earlier.

Bhuwan Mahato, a contractor who supplies workers to construction projects around Noida, says demand for labour is down by at least 25 percent.

“I wish I hadn’t joined this business,” said Mahato, a 30-year-old migrant from the state of Bihar. “But, truthfully, there are no other opportunities, either.”

Source: Jobs elusive as India clings to fastest-growing economy tag | Reuters

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27/05/2016

India Inc shows growth spreading by end of Modi’s sophomore year | Reuters

Indian companies are posting their best earnings results since Prime Minister Narendra Modi swept to power two years ago, giving the clearest sign yet that India’s fast, but patchy, economic growth is becoming more broad-based.

Though headline growth figures make India one of the world’s fastest growing economies, weak private investment and low capacity utilization rates have painted a less rosy picture.

Going by India Inc’s surge in profit growth in the first three months of the year, however, the outlook really does seem to be brightening, as benefits feed through from lower interest rates and government spending in infrastructure and defense.

On Tuesday, India will release gross domestic product data for the January-March quarter. Year-on-year growth of 7.5 percent is forecast by a Reuters survey economists, slightly faster than the previous quarter’s 7.3 percent.

“Macro indicators are suggesting that at the ground level the economy is gaining momentum,” said Dhiraj Sachdev, a fund manager at HSBC Asset Management in Mumbai.

“That has also been validated in terms of better corporate earnings in many of the sectors.”

Operating profits for 289 companies that have reported results so far leapt 25.5 percent year-on-year in the March quarter, compared with 1.7 percent growth in the previous quarter, according to Thomson Reuters data.

It is Indian firms’ best showing since the April-June quarter in 2014.

Put alongside the 6.8 percent decline in earnings that data provider Factset reckons companies in the S&P 500 suffered during the same quarter, India’s corporates have some things going in their favor.

India’s broader National Stock Exchange share index .NSEI has surged around 17 percent from a near 2-year low on Feb. 29, outperforming a 7 percent gain by the Asia-Pacific MSCI index excluding Japan .MIAPJ0000PUS.

This week, Morgan Stanley upgraded Indian equities to “overweight” from “equalweight” citing rising dividends, and prospects of a simpler country-wide sales tax, lower interest rates and benign monsoon among its reasons.

Source: India Inc shows growth spreading by end of Modi’s sophomore year | Reuters

Posted in Economics, employment, growth, India alert | 1 Comment »

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18/03/2016

Deep in a pit | The Economist

“COMMUNIST Party give us back our money”, “We want to live, we need to eat!” Such were the slogans daubed on banners that were displayed on March 12th during a protest by thousands of coal miners in the dingy streets of Shuangyashan, a city in Heilongjiang province near the border with Russia.

The demonstrators gathered outside the headquarters of Longmay, the largest mining company in the north-east and Heilongjiang’s biggest state-owned enterprise (SOE). They demanded wages which they said they had not received for at least two months. Some protesters blocked railway lines; others scuffled with police wearing riot gear. Internet censors deleted pictures of the unrest (such as the one shown) as they spread across social media.

The protest was one of the biggest by workers at an SOE for many years. It was an indication of the problems that China’s government will probably face as it seeks to cut excess capacity among SOEs like Longmay and reduce their enormous losses. In February the labour minister, Yin Weimin, said that 1.3m coal workers and 500,000 steel workers could lose their jobs over the next five years.

Other estimates say 3m-5m people may be thrown out of work in these industries as well as in aluminium production and glassmaking. That is far fewer than the tens of millions who lost their jobs during SOE restructuring in the late 1990s. But the economies of some cities, including Shuangyashan, are driven by a handful of large SOEs. In these, downsizing will be traumatic and possibly turbulent.

Labour unrest is rising everywhere as economic growth slows (see chart). Many firms, like Longmay, are reacting to financial distress by paying wages late or not at all. According to China Labour Bulletin, a Hong Kong-based NGO, there were 2,700 strikes last year, twice the number in 2014. In the two months leading up to China’s lunar new-year holiday in early February, there were over 1,000 strikes and protests, 90% of them related to the non-payment of wages. Three days after the protest in Shuangyashan, an almost equally large one began at Tonghua Steel in neighbouring Jilin province, also over wage arrears.

In Shuangyashan (its name, meaning Double Duck Mountains, refers to the shape of two nearby peaks), the authorities have tried to soothe the protesters by giving them overdue pay. Some mine workers say they have now begun receiving their salaries for January, and that they have been assured their pay packets for February will be coming soon. But the government remains nervous of further unrest. On March 15th police were still ubiquitous, on the streets of Shuangyashan as well as outside a nearby mine. In the city centre, a row of women who said the men in their families all worked in mines sat holding placards offering their services as cleaners or house painters. “We have no money to eat. What do they expect us to do?” said one woman angrily before being told by police to stop talking. A man who identified himself as a government official followed your correspondent everywhere.

The protests in Shuangyashan were particularly embarrassing for the party, occurring as they did during the 12-day annual session of China’s parliament, the National People’s Congress (NPC), which ended on March 16th. Every year during the NPC session, officials try even more strenuously than usual to prevent street unrest, lest it tarnish the image of political unity and national prosperity that they want the NPC to project (see article). Party bosses in Heilongjiang will get their knuckles rapped by leaders in Beijing for failing to anticipate this outbreak, which followed months of grumbling among Longmay’s workers about lay-offs and overdue pay. In September, the company said it would shed 100,000 of its 240,000 staff.

Source: Deep in a pit | The Economist

Posted in China alert, Economics, labour unrest, Politics | 1 Comment »

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22/07/2015

India’s Labor Force – WSJ

India’s urban women are four times less likely to be in paid work than their male counterparts with the most educated being the least likely to participate in the workforce, the latest figures from India’s labor ministry show.

Meanwhile in rural India, women are marginally more likely to have a job – the ratio of male to female participation in the workforce is 2.6 to 1.

Here are some more findings from the survey.

39%

The proportion of women who have received vocational training were not part of the workforce in 2013/14.

Although women were not asked to give reasons in the survey, Jayan Jose Thomas, an assistant professor of economics at the Indian Institute of Technology in New Delhi and an expert on India’s labor market and industry, said women often face discrimination at work in rural and urban India, including unequal pay.

In urban India, there were also concerns for women’s safety, traveling to and from work and in the workplace. Pushing the figures higher, women who chose to be homemakers were counted as unemployed.

“When you look at the figures for women, you understand the real employment situation in India. You see a huge mismatch,” said Mr. Thomas.

Indian women’s participation in the workforce falls as their education level rises, according to research by Mr. Thomas.

Labor-force participation by women in 2009-10 showed nearly 55% of women with post-graduate level education had not joined the workforce. Most women who didn’t join the workforce said “they are attending to domestic duties.”

524 rupees

The average daily wage for a man educated beyond high school working in an Indian city. That is the equivalent of $8. For women, average earnings were 391 rupees a day.

12 million

The number of people who enter India’s workforce each year. Some argue India’s rigid labor laws, which make it harder to fire employees, may be the reason employers are reluctant to hire full-time staff but Mr. Thomas says, despite official figures showing otherwise, the growth of India’s workforce has stagnated from lack of investment in infrastructure.

Government investment in basic infrastructure, like setting up power plants, needs to take place before the country can realize Indian Prime Minister Narendra Modi’s “Make In India” drive, which seeks to supercharge the country’s manufacturing growth, according to Mr. Thomas.

“India’s infrastructure shortage is so high that you cannot expect private investment to kick-start industrial growth. You need public sector to do the work first,” Mr. Thomas said. “Major initiative has to come from the government.”

5.5 million

Jobs created in India every year. Even though 12 million people join India’s workforce every year, the number of new jobs is much lower. Mr. Modi’s government has set a target of creating 400 million jobs by 2020 to try and narrow the gap.

6.8 %

The proportion of India’s population signing up for vocational training in the country. Among those who successfully train, a large proportion – 75% – find employment.

via India’s Labor Force – WSJ.

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12/07/2015

13 Million Guangdong Migrants Could Gain Permanent Residence By 2020 – China Real Time Report – WSJ

Faced with a persistent influx of rural workers, China’s most populous province plans to allow more migrant residents to settle permanently in its cities, in its latest effort to ease decades-old curbs on rural-urban migration.

Under new guidelines published this week, Guangdong authorities aim to grant local household registration to roughly 13 million migrant workers by 2020, allowing them to access public services—spanning housing, health-care, social security and education—that are typically reserved for urban residents.

Guangdong has often taken the lead in efforts to liberalize the hukou system, a national household-registration regime that curbs rural-urban migration by tying benefits like health care and pensions to a person’s place of birth. Experts say the system forces many rural migrants to live as second-class citizens in urban areas, aggravating social inequality while fueling tensions between locals and outsiders.

Hukou reforms are a pressing matter for Guangdong, a southern Chinese manufacturing hub that hosts the country’s largest transient population. Among its roughly 110 million residents, more than 24 million are migrants from other regions, while another 10.6 million have relocated within the province.

“Reforming the household-registration system will speed up our province’s urbanization process, and facilitate the coordinated development of the Pearl River Delta region,” Peng Hui, deputy director-general of Guangdong’s public security department, told a news briefing this week.

As part of the reforms, provincial officials will aim to “equalize” the provision of public services and ensure “balanced” economic development between rural and urban areas, according to the new guidelines.

China has used the hukou system since the 1950s to keep people from moving to the cities and forming the sort of slums that plague other developing nations. In recent decades, however, rural migrants have increasingly bucked the system to seek better opportunities in urban areas, without approval to live there.

Beijing, for its part, has since changed tack and pushed to urbanize its population of nearly 1.4 billion people, of which about 45% still in live in rural areas. But experts say the government must speed up its dismantling of the hukou system, warning that social tensions could fester and even boil over in the coming decade as China’s “floating population” of more than 250 million continues to expand.

Last year, Beijing pledged some changes to the hukou system, with restrictions to be lifted first in small towns. More stringent requirements will remain on those who want to live in larger cities, which are generally more attractive to migrants.

 

Guangdong’s plan follows a similar approach. Provincial officials say they plan to “fully liberalize” settlement rules in small, county-level cities and so-called “administratively designated towns,” where migrants with legal and stable places of residence will be allowed to apply for permanent residency.

via 13 Million Guangdong Migrants Could Gain Permanent Residence By 2020 – China Real Time Report – WSJ.

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23/06/2015

Who wants to be a mandarin? | The Economist

GOVERNMENT jobs have long been prized in China. Most years new records are set for the number of people sitting civil-service exams. University students, for all their disenchantment with politics, have been flocking to join the Communist Party in the hope of getting a leg-up into the bureaucracy. Such a career has offered security and perks aplenty. The only drawback has been pitifully low wages. This month officials are to get their first pay rises in nearly a decade; even so, many are heading for the door. Students are showing signs of losing interest in the career. Civil servants are anxious.

The reason is President Xi Jinping’s campaign against corruption, the most intense and sustained in the party’s history. It has made it harder to trouser the bribes that have traditionally supplemented those meagre official salaries. Many civil servants now fear a knock on the door by agents of the party’s anti-corruption department. In 2014 it punished 232,000 officials, 30% more than in the previous year. That was still only about 3% of officialdom, but the publicity surrounding these cases has compounded anxieties. Many officials are being taken, with their spouses, to learn a lesson by visiting their former colleagues in prison.

A Chinese job-search website, Zhaopin.com, reported that in the three weeks after the lunar new-year holiday in February more than 10,000 government workers quit their jobs to seek greener pastures, mainly in the finance, property and technology industries—an increase of nearly one-third over the same period in 2014. The company attributed this to a new emphasis on frugality in government work. Lavish meals are now banned (much to the chagrin of restaurants, which have suffered falls in profits). Governments are no longer allowed to build fancy offices for themselves. Stricter controls have been imposed on the size of ministers’ offices and temperature settings in government buildings. The receiving of gifts and donations of cash, once common features of bureaucratic life, has become far riskier. Earlier this year an investigation revealed the diversion by the Shaanxi provincial government of 89m yuan ($14.4m) in disaster relief funds toward the construction of new homes for civil servants. Officials do receive housing benefits, but not enough to cover the kind of well-appointed accommodation to which they aspire.

via Who wants to be a mandarin? | The Economist.

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09/06/2015

Modi to launch India’s biggest labour overhaul in decades | Reuters

Prime Minister Narendra Modi is preparing to launch India’s biggest overhaul of labour laws since independence in a bid to create millions of manufacturing jobs, at the risk of stirring up a political backlash that could block other critical reforms.

Prime Minister Narendra Modi waves towards his supporters during a rally in Mathura, May 25, 2015. REUTERS/Adnan Abidi

Three officials at the central labour ministry told Reuters that the ministry was drafting a bill for the upcoming parliamentary session that proposes to loosen strict hire-and-fire rules and make it tougher for workers to form unions.

The changes, if approved by parliament, will be the biggest economic reform since India opened its economy in 1991, but it is likely to meet stiff opposition in parliament and from labour activists.

The prime minister enjoys a majority in the Lok Sabha, but not the Rajya Sabha, hobbling his ability to pass politically contentious measures.

That handicap has stymied his efforts to make it easier for businesses to buy farmland and convert Asia’s third-largest economy into a common market.

Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, said Modi had little option but to push ahead with the measures.

“Without these reforms, the economy would stagnate, and frustrated investors would look elsewhere,” he said.

“You cannot make political opposition an excuse for not taking tough decisions.”

Since taking office in May last year, Modi has taken a series of incremental steps to make labour laws less onerous for businesses, but fear of a union-led political backlash made him leave the responsibility for unshackling the labour market with Indian states.

He let his party’s governments in Rajasthan and Madhya Pradesh take the lead in this area.

Encouraged by a successful and peaceful implementation of the measures in those states, the federal labour ministry now intends to replicate them at the national level, one of the ministry officials said.

Manish Sabharwal, one of the brains behind Rajasthan’s labour reforms and co-founder of recruitment firm Teamlease, said the federal administration would have been better off without attempting these changes.

“Let states carry out these changes and save your political energy for other policy reforms,” he said.

via Modi to launch India’s biggest labour overhaul in decades | Reuters.

Posted in Economics, employment, Good news, India alert, Labour, labour reform | 1 Comment »

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07/05/2015

China pulls out stops to avoid lay-offs as economy cools | Reuters

As growth in China’s sagging economy looks on the verge of spilling below 7 percent, officials worried about a spike in unemployment are pulling out all the stops to avoid mass lay-offs.

State firms are encouraged to keep idle workers employed, subsidies and tax breaks are given to companies that do not fire their workers, and some businesses are even enticed into hiring despite the slackening economic growth.

The measures appear to be working for now, said a senior economist at the Development Research Center, a think-tank affiliated to China’s cabinet.

“There is no big problem in employment. They (top leaders) are more worried about financial risks and debt risks,” said the economist, who declined to be named.

But things could change quickly.

In one of the first signs of distress in China’s labor market, the Liaoning government said in April it had slashed its 2015 job creation target to 400,000 from 700,000, to reflect a “severe” employment trend.

That came in the wake of data that showed Liaoning, one of three rustbelt provinces in northeastern China, grew just 1.9 percent in the first three months of the year, the slowest of China’s 31 provinces and regions.

Disappearing job opportunities or a spike in unemployment are always a concern for China’s stability-obsessed government, especially with 7.5 million university graduates estimated to join the labor market this year.

via China pulls out stops to avoid lay-offs as economy cools | Reuters.

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21/03/2015

China’s Coming Education Crisis – China Real Time Report – WSJ

Yao Xinyu, founder of a popular software hosting service called GitCafe, opted not to attend college because he felt he could do a better job teaching himself what he needed to be successful in the real world.

His parents disapproved but he stuck to his guns, studied on his own and built the successful startup after attracting 3 million yuan in capital from Greenwood Asset Management in late 2013. The 24-year old doesn’t see much chance that colleges in China will change to better meet the shifting needs of China’s economy, he said, since demand is high, their business model is profitable and there’s little incentive to adapt.

“I just decided I knew how to develop my own career,” he added.

One the knottiest problems China faces as its economy slows is a mismatch between people’s education levels and the needs of an economy increasingly reliant on technology and innovation, the Organization of Economic Cooperation and Development said Friday in a report on China.

China’s productivity is decelerating and it’s important to reverse this “worrisome” trend given the nation’s rapidly aging population and the related prospect of slower rates of savings and investment, the Paris-based organization said.

“The knowledge taught and skills nurtured at school do not sufficiently match labor market needs,” it said. “Workplace training-based vocational education arrangements are woefully inadequate.”

While China has aggressively stepped up its spending on research, this isn’t translating sufficiently into innovation, the 34-member OECD said. China’s spending on research and development hit 2% of gross domestic product in 2013, which is above the European Union average, and has set a target of 2.5% of GDP by 2020. But innovation remains weak as measured by international patenting and trademark registration, the report said. “And the bulk of university research is not relevant for business,” the OECD said.

Many of China’s past gains in productivity were related to capital, but the country’s future focus should be on the economic benefits of better trained workers, said Angel Gurria, secretary general of the Paris-based group. “Productivity, productivity, productivity, it’s not a choice, it’s a must,” he said. “Without it, China’s not going to be able to continue growing at this cruising speed.”

China has targeted economic growth of 7% this year, a reduction from last year’s 7.4% which was its slowest pace in nearly a quarter century.

via China’s Coming Education Crisis – China Real Time Report – WSJ.

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11/03/2015

Chinese shoe factory workers strike over benefits | Reuters

About 5,000 workers have gone on strike at a shoe manufacturer in southern China over benefits, two activists and a worker said, marking one of the biggest work-stoppages in the country in months.

The company that owns the factory, Stella International Holdings Ltd, lists Guess? Inc, Michael Kors Holding Ltd, Prada SpA and Burberry Group PLC among its customers.

China’s slowing economy, rising costs and the spread of social media have driven an increase in strikes. Last year, the number of strikes more than doubled to 1,378 from 656 the year before, according to China Labour Bulletin, a Hong Kong-based advocacy group.

The strike at Stella’s Xing Ang factory in the city of Dongguan started on Sunday with workers unhappy about not receiving housing assistance, said Liu Zai, who added she had not received the funds in eight years at the factory.

“We want an explanation. Why haven’t they paid this for so many years?” she said by telephone.

Liu and two activists said all of the factory’s workers, about 5,000 people, were on strike. On Wednesday, most were forced to return to their workplace but were still refusing to work, Liu said.

via Chinese shoe factory workers strike over benefits | Reuters.

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