PEP national policy conference held in India to discuss findings on the impact of trade on employment

August 19, 2016 | Kolkata, India

A team of local PEP researchers in India held a national policy conference in Kolkata to present their findings on the impact of trade on employment in the manufacturing sector.

August 19, 2016 – A team of local PEP researchers held a national policy conference in Kolkata, India, to share and discuss their findings on the impact of trade on employment in the country’s manufacturing sector.

The research team organized the event in collaboration with the Enterprise Development Institute (EDI), and the Bengal National Chamber of Commerce and Industry. The conference was hosted at the Indian Institute of Foreign Trade (IIFT).

Seventy people, including key national policy actors, industry experts and academics, attended event, which featured a keynote address and related papers as well as the presentation and discussion of the team’s findings.

In this study – selected under the PAGE initiative in 2014 – the research team analyzed data on production and employment in the manufacturing sector from the Annual Survey of Industries for the period 2004 to 2011. The team’s findings indicate that industrial output has a significant and positive effect across industry groups. Increased exports increase demand for workers while increased imports lead to job losses. The demand for skilled workers increased compared to that for unskilled workers over the observed period as external trade has been mainly in skill-intensive and capital-augmenting production processes. The team states that their results indicate that productivity enhancement is a good and viable way to increase labor-intensity in the growing export sectors.

Based on these findings, the research team recommends that government policies be put in place to increase competitiveness (especially with countries such as China) by raising skill levels, help develop large-scale businesses that can generate employment, provide incentives (e.g. tax breaks, subsidies, training etc.) for the labor-intensive sectors that are more likely to hire low- or un-skilled workers. Find out more about the research methods, findings, and policy recommendations in the following PEP publications: Working Paper 2016-19 and  Policy Brief 141.

Main outcomes

The main objectives of the conference were to 1) communicate the team’s findings to a large audience including key policy actors, 2) discuss the issues emerging from the team’s findings with key stakeholders and 3) identify key areas for future research.

Among the attendees were Sushmita Dasgupta, economic advisor for the Government of India’s Ministry of Commerce; Dr. D K Das, consultant for the Indian Council for Research on International Economic Relations (ICRIER) and the event’s keynote speaker; and six experts from the manufacturing industry. This guest list ensured a lively and productive panel discussion on the topic of “absorbing the increasing labor force in India’s manufacturing sector”.

As well as a channel for the research team to convey their findings and recommendations, the involvement of policy actors and other academics provided an opportunity to identify the core issues needing to be addressed by policymakers.

Key recommendations emerging from these discussions included support from the industry representatives for flexible labor laws, more vocational training and the introduction of a uniform, countrywide goods and services tax to increase activity. Dr. Kingshuk Sakar of the VV Giri National Labor Institute for the Ministry of Labor and Employment, however, expressed the necessity of treating employees as consumers as well as a cost centre and warned against flexible labor laws.

During the conference, the representative of the Labor Department expressed a particular interest in further discussing the issues highlighted by the project while Ms. Dasgupta (Ministry of Commerce) expressed her willingness to advise the government on concrete action to address the barriers to labor-intensive Indian exports.

Further research collaboration opportunities were proposed to look in greater detail at the core issues identified during the event, in particular with Dr. Das (ICRIER) on the subject of labor-intensive industries and unskilled workers.

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