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India needs to grow at 8% in order to provide employment to new entrants: McKinsey Report

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India needs to sustain 8-8.5% annual growth to gainfully employ the 60 million new workers expected to join the workforce by 2030, according to a McKinsey report released on Wednesday. The report titled ‘India’s turning point – An economic agenda to spur growth and jobs’, said the economy would have to create 90 million new non-farm jobs by 2030 along with increasing productivity of the labour force by 7% to avoid a decade of low 5% annual growth.

The 90 million figure accounted for people seeking to shift from the agriculture sector to other sectors for employment, it said. “Compared to the need of creating 12 million jobs per year, we have been creating 4 million jobs per year over the last 5-6 years. So this calls for tripling of the annual job creation rate to keep unemployment in check,” said Gautam Kumra, MD, McKinsey India. The rate of economic growth was a function of both employment and productivity growth, according to Kumra, and both would have to rise for India to achieve the envisaged high level of growth.

The report highlighted the role of construction and manufacturing in contributing to job, productivity and GDP growth. “Manufacturing alone has the potential to deliver 20% of the incremental GDP that’s needed and at the same time create some 11 million more jobs,” said Anu Madgavkar, partner at the McKinsey Global Institute, adding that this would have to be accompanied by a high productivity-oriented model involving automation.

Similarly, the construction sector had the potential to create one in four of the non-farm jobs needed along with improvements in productivity by application of modern techniques. “Construction is actually the heavy lifter that will provide millions of job opportunities to workers moving out of agriculture. So this is a 24 million job creation potential opportunity,” Madgavkar said. Businesses would also have to scale-up from midsize to large and from small to midsize to achieve the envisioned growth. According to the report, India had only 600 large companies with over $500 million in revenue. It called for 1,000 mid-sized firms to scale up to large size and for 10,0000 small firms to climb up to midsize.

This ‘missing middle’ was the most vibrant and dynamic part of the economy which spurred innovation and there was a need for easier financing and structural reforms to enable their growth, according to Madgavkar. In order to finance such high levels of growth, the report estimates India will need $2.4 trillion of annual investment capital by 2030. The issue here is not so much the amount as it is the mix of capital, said Madgavkar. “We need it in equity and equity-related risk capital type of instruments because that’s really what companies find challenging,” she said.

The report suggested a range of reforms to deepen capital markets like addressing tax and regulatory barriers in the insurance and pension fund sectors. It also recommended creating a bad bank to take on the non-performing assets of the banking sector. Such a move would address the risk-aversion of the sector and lower the elevated cost of credit for Indian commercial borrowers, it said.

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ESIC: Govt may retrospectively relax conditions for unemployment benefits under Employees’ State Insurance

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The labour ministry has proposed to provide 50 per cent average per day earnings of the subscriber during four contributory periods in the past two years for 90 days of unemployment, as against 25 per cent provided earlier.

Synopsis

The labour ministry has moved a proposal to amend the conditions under the Atal Beemit Vyakti Kalyan Yojana from March, when the government imposed a nationwide lockdown, which will be taken up by the Employees’ State Insurance Corporation (ESIC) board on Thursday.

New Delhi: The government is likely to retrospectively relax conditions for unemployment benefits under the Employees’ State Insurance, which saw zero contribution from eight million subscribers in April and May.The labour ministry has moved a proposal to amend the conditions under the Atal Beemit Vyakti Kalyan Yojana from March, when the government imposed a nationwide lockdown, which will be taken up by the Employees’ State Insurance

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EPFO records 6.55 lakh net new enrolments in June from 1.72 lakh during May 2020

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NEW DELHI: The Employees’ Provident Fund Organisation (EPFO) saw a robust rebound in net new subscribers with addition of 655,000 subscribers in June as industries and services resumed operations after two months of lockdown. Barely 20,000 and 172,000 subscribers were added to the EPFO in April and May respectively, resulting in net additions of about 847,000 in the first quarter of this financial year.

“The month of June has seen speedy recovery with addition of 6.55 lakh net subscribers registering a remarkable 280% month on month growth,” the EPFO said in a statement on Thursday. “The subscriber base growth is on account of increased number of new subscribers, lower exits and higher rejoining by exited members.”

New subscribers increased about 64% to 498,000 in June from 303,000 in May while exits from EPFO subscriber base declined nearly 33% to 296,000 in June from 445,000 in May. The EPFO saw net addition of 1.2 million subscribers in June this year while 2019-20 saw one million new subscribers on average every month.

EPFO

Even the number of members who exited and then rejoined increased 44% in June from May, with more subscribers choosing to retain membership by transferring funds rather than opting for final settlement, said the EPFO. The data comprises all the new members who joined during the month and whose contribution was received.

The EPFO payroll data showed the enrolment of female workers went up to 106,059 in June from 37,085 in April in absolute terms, even though the overall female participation in the workforce remained low.

However, the highest jump in formal employment creation was in the expert service category which predominantly consist of manpower agencies, private security agencies and small contractors.

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Hike to spend up to Rs 40,000 per employee to facilitate work from home throughout 2020

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New Delhi: Mobile messaging platform Hike on Thursday said all its employees will work from home throughout this year and the company will spend up to Rs 40,000 per staffer to help them create a comfortable workspace at their home.

The company, however, has kept its office open for employees who want to access special technologies available within the premise for their work, it said.

Prioritising employee safety and well-being amid the COVID-19 pandemic, the company said it has adopted “remote-first approach for the rest of 2020.”

Backed by global investors including SoftBank, Tiger Global, Tencent, Foxconn and Bharti Enterprises, Hike has over 160 employees at present.

The company, in a statement, said that “valuing employee wellbeing over everything else, Hike’s move to a remote-first culture would make working remotely their default modus operandi.”

However, for those looking to come to the office, it will remain an option with strict guidelines to ensure social distancing and sanitation.

Hike has that it will spend up to Rs 40,000 per employee to help them create a workspace at home.

“Hike would be delivering an ergonomic office chair and a brand new compact office table to its employees residing in Delhi NCR.

“For employees presently outside of Delhi NCR Hike has announced a reimbursement of up to Rs 10,000 for the purchase of their own chair and table to set up their workstation at home,” the statement said.

Hike would also be supporting its employees for any internet and IT accessories requirement.

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