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Labour is India's biggest challenge

India is experiencing a strange dichotomy of not having sufficient jobs on the one hand and not enough skilled workers on the other.

india Updated: Jun 01, 2006 17:27 IST

India is experiencing a strange dichotomy of not having sufficient jobs on the one hand and not enough skilled workers on the other -- making labour force the biggest challenge for the country, says "A survey of business in India" of

The Economist.

The survey, released on Thursday, was bullish on the sub- continent nation's economy, but said the government has to step up investments in infrastructure, health and education to ensure constant flow of skilled workforce as the industry was facing a shortage.

While staffing problem in BPO industry is not new, the dilemma is being experienced "less acutely (by industries) across the board, including IT and manufacturing," Simon Long, author of the survey, said.

Talent crunch will be a problem, as it could affect productivity, he said.

The survey said: "India is at last ready to take the place in the world that its huge population should command. Business is booming, India is seen as the next big thing, and no large international company can do without an India strategy.

"But despite the positive outlook for the country and its economy, challenges remain."

It said the problems were twofold. "On one side there are not enough jobs. Seventy million people will join the labour force in the next five years. That's equivalent to almost a quarter of the increase in the world's working-age population.

"Currently 260 million people live on less than one dollar a day. India needs to help those leaving the farm and replicate in basic industry what it has achieved in IT," it said.

Long, who is also the South Asia Bureau Chief of The Economist, said that labour-intensive manufacturing was not prevalent in India. Multiple low-paying jobs in manufacturing do not exist for this section of the workforce and even basic education is lacking.

The other side of the labour problem was a shortage of qualified and experienced talent. "In recent years Indias success on the global stage has been partially thanks to its wealth of technically adept, English-speaking talent. But across industry, the lament is now the same, it is hard to find qualified people and hard to retain them", the survey said.

In this regard, Long said that the government needs to devote resources to productive investments (education), instead of misdirected subsidies".

"Training is a very important aspect. Industry is facing a lack of it despite India having an educated population," he said.

The Survey also offers opinions about the changes needed in bureaucracy, infrastructure and education to help India realise its business potential.