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					Excerpts from Gujarat Social Infrastructure Vision-2010

            Chapter 9 ( Employment and Training )
9.1 Introduction

World economy is undergoing a lot of changes. This change is affecting all
economies irrespective of whether it is a transition economy, controlled, socialist
or market economy. The result of it is paradigm shift in employment structure of
most of the countries. What is required at this point of time is aligning it
strategically so that maximum advantage is taken from its competencies and
existing weakness is removed or nullified.

A common trend observed worldwide is that employment is moving away from
traditional agriculture to industry and more to services. This is the result of

1. Static wages and efficiencies of Agricultural sector which need much lesser
   number of people
2. Rapidly increasing demand for services world over and associated higher

This trend is more visible in developed countries where a significant proportion
of employment has shifted to services. This phenomenon is throwing up a lot of
challenges and opportunities for nations which is forcing each to take stock of its
capabilities and weaknesses lest that will be unveiled by market forces. One
such example is South Korea, which boasted of booming economy until a few
years back and then crumbled. Each of the countries has to evaluate itself on
efficiency and cost factors.

9.1.1 Advantage India
There are four stages of performance any economy occupies at any time. The
quadrant, which India occupies currently, is relevant in case of Gujarat also.
Focus of Gujarat should be to graduate into the third quadrant in the immediate
future as in figure 9-1.

                        Figure 9-1 Efficiency v/s Cost
         High Cost, High Efficiency              High Cost, Low Efficiency
                                                 South Korea
         United States, Japan
    o    Low Cost, High Efficiency                   Low Cost, Low Efficiency
    s                                                India, Philippines, Sri
    t                                                Lanka

The reason for low cost in case of India has been low wages and low land rents
even though a higher interest rate is offsetting this to an extent. This throws a
niche segment opens for Indian economy. There is a great opportunity to be
tapped by leveraging our core competencies and entering vacant slot of low cost
and high efficiency.

Even though each country has its own market structures some common factors
do exist in this rapidly “ Globalizing Economy”. One such factor is Human
Capital. Growth potential of a country is changing form its financial and
technological strengths alone to availability and quality of its manpower. This is
great opportunity for India and especially for Gujarat. By proper planning
perennial problems of unemployment can be eliminated while giving a great
boost to the economy.

9.1.2 Employment Generation Strategies

There are two popular models, which can be adapted to Gujarat’s conditions.

1. The so-called “ Input based model” involves high mobilisation of labour and
   capital in high growth export oriented manufacturing industries and
   controlling domestic services sectors through strict regulations. This results
   in high employment growth. Flip side of this strategy is resulting growth is
   difficult to sustain.

2. Second model which is “productivity based “ relies on fully liberalised
   capital, labour and product markets and encourages best practice
   companies to enter the country and invest in all economic activities. But
   corresponding increase in employment is less relative to Input based model.

Case of Gujarat requires that both models be combined to ensure that a high
rate of employment generation is achieved while increasing productivity and
giving a suitable environment to best practice companies.

9.1.3   Framework

The Framework for Labour Market has been diagrammatically laid out in Figure

                  Figure 9-2 Framework for Labour market

   Investment in High
   Growth       Sector
   especially   Export
   oriented                                                         Investment      by
                                                                    best      practice

                         Employment level                                 Higher
                                                                          e income

Growth in                     Increase             Expanding
Output                        in                   Domestic
                              economic             sector

9.2 Roadmap to success

Need of the new economy is both number and quality of people. There is a lot of
scope for improvement both in number and quality. As per the census
information only 20% of the workforce had metric and above education,
8.9%had middle but below metric education and only 5% were graduates.
Situation is worse when it comes to technically educated. A drop out rate of 47%
by fifth standard and 59% by seventh standard is not a satisfactory situation.
Bottom line is education has to be given importance. Strategies to be adopted to
transform the current scenario will depend on the following factors.

9.2.1 Limits on employment rate?

Unemployment and inflation are two variables that have been discussed
maximum. Relation between these two variables was investigated by British

economist A.W.Philips and it is known as Philips curve. He hypothesised that
when wage rates rose rapidly ,unemployment rates were low and wage rates
rose slowly when unemployment rates were high. Modified Philips curve indicate
a relationship between rate of inflation and unemployment rate. As per this
relation unemployment rate increases when rate of inflation is less and vice
versa. It implies that unemployment rate cannot be brought below a certain
level without increasing inflation and full employment was possible only with
infinite inflation.

“Stagflation” in 70s belied expectations when a high unemployment rate co-
existed with high inflation. It was proposed that Philips curve exist only in the
short run and in the long run there is no trade-off in which case Philips curve is

9.3 Training

As we have seen that both number and quality are important to achieve the
objectives training needs to be given a priority such that unemployed acquire
necessary skills for employment, skill level of existing workforce is augmented
so that there is an increase in productivity and value added to the economy and
new areas of employment is explored.

9.4 Analysis of Gujarat’s labour market

Gujarat has been dependent on Primary sector over the years for a major
portion of employment. But there is gradual shift from this sector to secondary
and tertiary where the per capita income is higher. This is shown by the
decreasing percentage of employment generated by this sector which has come
down from 59% in 1991 to 56% currently. This is an expected development
considering that 56.50% of population, which was involved in primary sector ,
contributed 23.93% of NSDP where as secondary sector with 19.21%
employment contributed 33.41% and tertiary sector with 24.29% of the
employees contributed 42.65 %. This shows that even though agriculture
employs the maximum number of people its contribution towards NSDP is less
than other sectors. This is due to high underemployment and low productivity.

                   Table 9-1 Percentage Share of GDP
                Sectors   Percentage Percentage share
                          share     in in employment

                Primary                 23.93                   56.50
                Secondary               33.41                   19.21
                Tertiary                42.65                   24.29
          Source: Directorate of Economic and Statistics, Government of Gujarat

9.5 Indicators of Employment

Employment scenario can be analysed by comparing standard indicators with
other countries and states.

9.5.1 Employment – to- Population Ratio

                Table 9-2 Employment – to – Population Ratio
No.       District             Total Workforce       Employment-to-
                                                     Population Ratio
1         Jamnagar                   513997                      36.39
2         Rajkot                     846419                      36.85
3         Surendranagar              420688                      40.58
4         Bhavnagar                  798736                      38.02
5         Amreli                     421235                      39.56
6         Junagarh                   779233                      38.16
7         Kachchh                    411951                      36.42
8         Banaskantha                686986                      39.32
9         Sabarkantha                601721                      44.00
10        Mahesana                   981024                      43.19
11        Gandhinagar                121966                      46.46
12        Ahmedabad                  1493992                     36.98
13        Kheda                      1154106                     41.27
14        Panchmahal                 984406                      47.80
15        Vadodra                    1070330                     44.23
16        Bharuch                    575237                      43.38
17        Surat                      1329836                     42.71
18        Valsad                     836280                      47.10
19        Dangs                      67549                       50.45
20        Gujarat                    14095692                    41.17
           Source: Directorate of Economic and Statistics, Government of Gujarat

•    Global Scenario

Analysis of international scenario throws up some interesting observations in
that many countries had a decreasing employment-to-population ratio for men
and a rising ratio for women. In many countries this was caused by declining
participation of men aged 55 to 64 years and in some others even 25 to 54
years old contributed to this decline. This is an indication of tendency towards
early retirement among men, which is counteracted by movement of women into
the labour market.

•   Benchmarking Gujarat with other countries

     Figure 9-3 Benchmarking Gujarat with other states and countries

                 E m p lo ym en t-to -P o p u latio n R atio

           40       7 1 .1
           30                    6 1 .7          6 1 .5
           20                                                    3 7 .4 6   4 1 .17

                                          C o u n try /S ta te

       Source: Directorate of Economic and Statistics, Government of Gujarat, OECD

Position of Gujarat, as far as employment– to- population ratio is considered, is
not satisfactory. Average employment – to- population ratio of Gujarat is very
low compared to some of the European countries. A major reason for this low
figure is low women participation in labour force. This as explained else where
can be reduced if not eliminated by suitable measures like providing training and
suitable career avenues for women.

9.5.2 Labour Force Participation Rate

•   Global Scenario

An interesting observation is that labour force participation rates for males at
prime age, 25 to 54 years are almost the same in all countries. There are
variations in the pattern of labour force entering and leaving labour market
across countries depending variables like extent of schooling and economic
activity. One example is that of Burkina Faso where a gradual entry into and exit
from labour force reflects a combination of schooling and economic activity
among younger population and limited coverage of retirement schemes. In
some other countries like Germany and Russia it has sharp slopes showing
massive entry and exit at some age ranges.

•   Gujarat

                  Table 9-3     Labour Force Participation Rate
District                        Male           Female           Total
Jamnagar                        92.78          21.33            58.15
Rajkot                          91.91          22.79            58.11
Surendranagar                   93.92          28.44            62.68
Bhavnagar                       98.35          29.81            65.07
Amreli                          97.75          24.57            61.51
Junagarh                        90.92          20.96            56.78
Kachchh                         94.01          24.33            59.74
Banaskantha                     97.72          20.15            60.30
Sabarkantha                     92.24          28.74            60.60
Mahesana                        91.51          23.93            58.26
Gandhinagar                     82.21          14.25            49.70
Ahmedabad                       84.49          15.15            51.84
Kheda                           91.16          19.90            57.01
Panchmahal                      94.91          27.11            62.10
Vadodra                         90.34          20.58            57.33
Bharuch                         93.29          29.62            63.04
Surat                           95.09          30.20            65.04
Valsad                          92.13          32.89            63.16
Dangs                           82.14          62.73            72.56
Gujarat                         92.06          23.95            59.27
           Source: Directorate of Economic and Statistics, Government of Gujarat

World over male participation rate is much more than female participation rates.
Gujarat follows same pattern as far as male and female participation rates are
concerned with male participation rate at least thrice that of female participation
rate in most cases. An exceptional case is that of Dangs where female
population is forced to work to meet sustenance needs. Labour Force
Participation Rate for Gujarat is represented below
Gujarat has a very high participation rate for men (92%), which rank among the
best in the world, where as the same for women is very less compared to other

•   Benchmarking Gujarat with other countries

             Figure 9-4 Benchmarking Gujarat with other countries

                   L a b o u r F o r c e P a r tic ip a tio n R a te

           100                             78                 76              6 7 .1
                       5 9 .2 7
                      G u ja r a t     D e n m a rk      Sw eden            U n it e d
                                                                            S ta te s
                                                C o u n try

    Source: - Directorate of Economic and Statistics, Government of Gujarat, ILO and OECD

 The figures represent a creditable picture of Gujarat in comparison with other
countries even then there is a lot of scope for improvement.

•   Analysis

Even though figures represent a rosy picture, due to entrepreneurial spirit of
Gujaratis, situation leaves much to be desired. Most of the labour force is
engaged with low value addition. The case of Underemployment is widespread,
with agriculture accounting for the maximum. Case of Dangs is an example of
extreme underemployment, which expectedly has a high labour force
participation rate. Most of the population is employed without much earnings, a
situation which is very much like some of the African countries.

9.5.3 Employment by Sector

The Employment by sector indicator groups the economically active population
into three broad groups namely primary, secondary and tertiary. The primary
sector consists of Agriculture, hunting, forestry and fishing activities. The
secondary sector comprises of mining and quarrying, manufacturing,
construction and public utilities. The tertiary sector consists of whole sale and
retail trade, restaurants and Hotels, transport, storage and communications,
finance, insurance, real estate and business services, and community, social
and personal services.

•   Global Scenario

Employment by sector is frequently used as an indicator of a country’s stage of
development. In case of most of the developing countries agriculture is the main
occupation of population. Downside of this is, a major portion of population

supposedly engaged in agriculture represents underemployment. There is a
shift in most of the countries from sectors that produce goods (primary and
secondary) to the tertiary sector. Except sub-Saharan countries, relative
employment in primary sector is declining everywhere and tertiary sector is
contributing half of the employment.

•   Benchmarking Gujarat with other countries

                                               Figure 9-5 Benchmarking Gujarat

                                               E m p lo y m e n t b y S e c to r
     Percentage Employment

                             50                                                    P r im a r y
                             40                                                    S e c o n d a ry
                             20                                                    T e r t ia r y










                                                       C o u n try

    Source: - Directorate of Economic and Statistics, Government of Gujarat, ILO and OECD

•   Analysis

A look at the above figures reveals that Gujarat as a state has a long way to go
compared to other countries. Most of the countries analysed for the purpose had
a heavy dependence on agriculture in the past and it has gradually come down.
There are three major reasons for this.

1.Value added by an individual in agriculture is less than that in industry which is
less than that in services and hence rapid growth of economy can come from
services and industry in that order. Hence there is an incentive for workers to
shift towards Services.

2.Income earned by individuals are comparatively more in services.

3.Agriculture, mostly being commodity based the growth in demand comes
mainly from population growth and not from per capita consumption.

•   Gujarat

Gujarat is primarily dependent on agriculture with 59% of population in 1991
dependent on it for employment. This sector also faces from a great degree of

underemployment also. Again there is a lot of difference between different
districts and hence it calls for a thorough analysis of the data.
                  Figure 9-6 Sectoral Employment in Gujarat
                                  G u ja r a t in   1 9 9 1

                              T e rt ia ry
                                 2 5 %

                                                       P rim a ry
                       S e c o n d a ry
                                                         5 9 %
                            1 6 %

           Source: - Directorate of Economic and Statistics, Government of Gujarat

•  Percentage employment in different sectors
              Table 9-4 District Wise Sectoral Employment
District       Percentage         in Percentage     in Percentage                     in
               Primary               Secondary         Tertiary
Jamnagar       57.58                 13.67             28.75
Rajkot         51.16                 19.72             29.12
Surendranagar 64.33                  14.82             20.86
Bhavnagar      55.97                 23.85             20.18
Amreli         67.20                 16.79             16.01
Junagadh       67.43                 8.70              23.87
Kachchh        57.68                 10.06             32.26
Banaskantha    77.59                 7.23              15.18
Sabarkantha    76.45                 4.43              19.12
Mahesana       65.24                 11.70             23.05
Gandhinagar    42.54                 13.28             44.18
Ahmedabad      26.59                 27.58             45.83
Kheda          70.43                 9.19              20.37
Panchmahals    82.01                 4.18              13.80
Vadodara       55.90                 15.16             28.94
Bharuch        68.74                 10.50             20.77
Surat          44.84                 31.56             23.60
Valsad         62.18                 18.48             19.34
Dangs          87.94                 2.49              9.57
Gujarat        59.34                 15.86             24.80
Source: - Source: Directorate of Economic and Statistics, Government of Gujarat, ILO and

From the table it is clear that some districts like Ahmedabad, Gandhinagar and
Surat have made a lot of progress but most others are still depending on
agriculture. Dangs, Panchmahals, Banaskantha and Sabarkantha are the

districts most dependent on agriculture with at least three fourth of population
dependent on agriculture.
Districts in the state can be divided into four classes to help in planning, based
on Indicator.

Primary<50          Primary>50           Primary>60           Primary>70
Secondary>25        Secondary<25         Secondary<20         Secondary<15
Tertiary>20         Tertiary<20          Tertiary<15          Tertiary<10
Ahmedabad           Jamnagar             Amreli               Panchmahal
Gandhinagar         Rajkot               Junagarh             Dangs
Surat               Surendranagar        Mahesana             Banaskantha
                    Bhavnagar            Bharuch              Sabarkantha
                    Kachchh              Kheda
                    Valsad   Projections of the Workforce

Workforce is projected for two scenarios. One without any intervention on the
part of Government and another with intervention. Both are listed as follows
along with a comparison.

• Trend based
In the first case total work force is projected considering present policies and
growth continue. Considering that workforce will be growing at 2.5% and
primary, secondary and tertiary continue to grow at 2.00, 3.14 and 3.57 %as
noticed in 1991-2000,total workforce will be 211 lakhs with an employment of
182 lakhs. Primary, Secondary and Tertiary will provide employment for 102,35
and 45 lakh people. Employment gap will be 30 lakhs.

Situation will be worse in 2010 with 229 lakh employed out of 264 lakh work
force. Primary, Secondary and Tertiary will account for 122,46 and 61 lakh
people respectively with an employment gap of 35 lacs. Table 9-5 shows the
trend based Employment and Gap Projections for the next decade based on the
trend based growth rates of the share of the sectoral employment. Table 9-4
shows the Employment and Gap Projections for the next decade based on the
intervention based growth rates of the share of the sectoral employment

•   Interventions based

Government interventions will be targeted at facilitating rapid increase in
employment opportunities. This will include creating appropriate environment in
terms of increasing investment in health and education, encouraging foreign
investment as well as domestic investment, providing trained manpower for the

industry depending on the demand pattern and increasing participation of
private sector in all possible endeavours.

•   Workforce Population

The size of the workforce main workers in 1991 is 140.97 lacs. This includes
workers in the primary, secondary, tertiary sectors. The total number of people
who were employable in 1991 is 165 lacs. This indicates a gap of 24 lakhs
people who are seeking employment. The growth in the number of people
seeking employment in 2010 will depend on the population growth rate in the
period 1980 to 1992 as these people will reach employable work age in 2010.
The overall improvement in mortality rates, more women entering the work force
will mean that the growth rates are likely to be higher than the rate of growth
from 1991 to 2001. The overall rate of growth for the workforce population is
therefore taken to be 2.5% from 2001 to 2010. The growth in the main workers
will be driven by the growth in the individual employability in the sectors. The
growth rate in the number of people who are seeking employment has been
projected to grow to 270.58 lakhs by 2010.

•   Primary sector

The growth rate of primary NSDP for the state has been 7.29% from 1993 to
1998. The share of primary in the NSDP has come down from 26.14% in 1993
to 24.91% in 1998. This shows that the growth in primary has been slower than
the growth in secondary, tertiary sectors.

The growth of primary is likely due to the

    •   Improvements in the yields due to better technology, farming methods
    •   Augmentation in the infrastructure due to investments
    •   Results in better price yields for crops

The share of agriculture in NSDP is likely to increase marginally in 2010. The
per capita value added is likely to increase due to the better efficiencies in this
sector. The share of employment in this sector will come down, as the growth in
the employability in the tertiary sector is likely to be higher.

The workforce projections for the agricultural sector have been assumed to have
the following features

    •   The trend based projections indicate a growth of 43 lakhs additional
        workers from 1991 to 2010 at 2% growth. The total workforce employed
        by the primary sector is 127 lakhs by this growth rate. This is a share of
        53% of the total workforce.

    •   Based on the interventions in terms of investments, accelerated growth,
        labour reforms the projections in primary sector are expected to grow at
        2% for the primary sector for 1991 2001, 2.5% between 2001 2010. This
        is due to the fact that employment opportunities in the secondary, tertiary
        sector are likely to grow at more rapid rates due to the increased
        opportunities. Also the value added per capita in agriculture is likely to
        increase leading to relatively less employment for the same rate of
        economic growth.
    •   Intervention based projections show a share of 50% for the primary
        sector in 2010.

•   Secondary Sector

The share of the workforce in the secondary sector has increased marginally
from 17% in 1981 of workforce to 18% in 1991.The factors that will affect the
worker employment in this sector will be as follows:

    •   Average growth rate of secondary sector
    •   The per capita value added in the sector.

The projections for the employment in these sectors is else where in the
document. The trend based projections show the workforce to increase to 46
lakhs workers in 2010 at 3.14% growth.

Efficiencies of production increases with increased growth in this sector will
affect the employment share in this sector. Share of workforce in industry likely
to increase marginally since the growth in per capita value added in industry is
likely to be the highest for this sector. This would be higher than the growth in
absolute numbers of people employed in this sector therefore the net share in
the employment is likely to increase marginally from the 18% in 1991 to 19% in
2010. The total number of workers in 2010 employed in the secondary sector is
projected to be 48 lakhs. The growth rate between 1991 2001 is 3.1%, between
2001 2010 is 3.5%.

•   Tertiary Sector

The share of NSDP of the tertiary sector is 42.65% in 1991. The growth in this
sector has been 9.07% from 1993 to 1998. The growth does not include the high
rates that have been achieved by the information technology sector. The share
of the information technology sector will result in an increasing share of this
sector in the NSDP due to high growth, high value addedness per capita.

Industry groups covered by this sector are
   • Trade & Commerce
       • Transport, Storage & Communication
       • Information Technology

       •    Workers in other services

The growth rates have been projected on the basis of the employment share of
these sectors from 1991. The projections for the workforce have been done as
follows: -

The growth rate of employment for this sector has been 3.94% from 1981 to
1991. The trend based projections indicate that the workforce is to grow from 32
lakhs in 1991 to 63 lakhs in 2010 at a rate of 3.54%.

The highest employment growth rates are projected for this sector. This is due
to the following reasons
    • The share in NSDP of the tertiary sector is projected to grow due to the
        high growth rates for this sector
    • The high growth rate will be commensurate with employment growth. The
        value added per capita will be lower than the secondary sector. Therefore
        elasticity of employment growth with sectoral growth will be lower
    • The net result of interventions in terms of investment will result in a higher
        growth in employment in this sector

The intervention based projections show the workforce to increase from 32
lakhs in 1991 to 79 lakhs in 2010. The share grows from 22% in 1991 to 27% in

Tables 9-5, 9-6, 9-7 give the projections of the workforce trend based,
intervention based, comparison of intervention based and trend based scenario.

           Table 9-5   Employment and Gap Projections (Trend Based)

  Year        Total   Employment                  Employment In             Gap
            Workforce                                 Lakhs
                                        Primary Secondary Tertiary       (without
 1991-         2.5%                       2%       3.14%      3.57 %
 2001-         2.5%                       2%       3.14%      3.57 %

  1981                      110           69         19         22
  1991         165          141           84         26         32           24
  1992         169          145           85         27         33           25
  1993         173          148           87         27         34           25
  1994         178          152           89         28         35           26
  1995         182          156           91         29         36           26
  1996         187          160           92         30         38           27
  1997         191          164           94         31         39           27

  1998       196            168          96       32         40          28
  1999       201            173          98       33         42          29
  2000       206            177          100      34         43          29
  2001       211            182          102      35         45          30
  2002       217            186          104      36         46          30
  2003       222            191          106      37         48          31
  2004       228            196          108      39         50          31
  2005       233            201          110      40         51          32
  2006       239            207          113      41         53          32
  2007       245            212          115      42         55          33
  2008       251            218          117      44         57          34
  2009       258            223          119      45         59          34
  2010       264            229          122      46         61          35
All percentages are historical figures

This scenario can be changed with proper intervention. With intervention growth
of Primary, Secondary and Tertiary will be 2.5,3.5 and 6.3% respectively. In
2006 with a workforce population of 239 lakhs employment will be 220 lakhs.
Out of this Primary, Secondary and Tertiary sectors will provide 110,42 and 62
lakhs. Culminating with an employment gap of 9 lakhs in 2010 of a workforce of
264 lakhs.

      Table 9-6 Employment Gap Projections Intervention based
Year    Total         Employme Primary    Secondary Tertiary Gap
        Workforce     nt
1991-          2.50%                  2%         3.14% 3.57% Interventi
2000                                                           on Based
2001-          2.50%               2.50%         3.50% 6.30%
   1991           165       141        84            26     32       24
   1992           169       145        85            27     33       25
   1993           173       148        87            27     34       25
   1994           178       152        89            28     35       26
   1995           182       156        91            29     36       26
   1996           187       160        92            30     38       27
   1997           191       164        94            31     39       27
   1998           196       168        96            32     40       28
   1999           201       173        98            33     42       29
   2000           206       177       100            34     43       29
   2001           211       183       103            35     46       28
   2002           216       190       105            36     49       26
   2003           222       197       108            38     52       25
   2004           227       204       110            39     55       23
   2005           233       212       113            40     58       21
   2006           239       220       116            42     62       19

    2007           245         228        119            43           66        17
    2008           251         237        122            45           70        14
    2009           257         246        125            46           75        12
    2010           264         255        128            48           79         9
1991-2000 figures for percentages are historical and 2001-10 are      projected

With intervention sectoral components of employment also will change. Change
in sectoral composition is depicted in the following table. Without intervention
Primary sector which provided employment for 59% people will provide
employment for 56% in 2001 and 53% in 2010where as with intervention it will
come down to 56% in 2001 and 50% in 2010.

 Table 9-7     Comparison of Intervention based and Trend based Scenario

                   Intervention based                  Trend Based
Year          Percentage Employment         Percentage Employment

               Primary   Second Tertiary    Primary Seconda          Tertiary
                           ary                         ry
       1981       62       17     20           62      17              20
       1991       59       18     22           59      18              22
       1992       59       18     23           59      18              23
       1993       59       18     23           59      18              23
       1994       58       19     23           58      19              23
       1995       58       19     23           58      19              23
       1996       58       19     23           58      19              23
       1997       57       19     24           57      19              24
       1998       57       19     24           57      19              24
       1999       57       19     24           57      19              24
       2000       56       19     24           56      19              24
       2001       56       19     25           56      19              25
       2002       55       19     26           56      19              25
       2003       55       19     26           55      20              25
       2004       54       19     27           55      20              25
       2005       53       19     28           55      20              25
       2006       53       19     28           54      20              26
       2007       52       19     29           54      20              26
       2008       51       19     30           54      20              26
       2009       51       19     30           53      20              26
       2010       50       19     31           53      20              27

9.5.4 Unemployment Rate
Unemployment rate is defined as usual, weekly and daily status depending on
the pattern of unemployment.

                       Table 9-8 Unemployment Rate
                    Unemployment Rates in India

                                    Usual      Weekl      Daily
                    State           Status     Status     Status

                    Andhra              1.58      3.35      6.76
                    Gujarat             2.06      2.99      5.74
                    Karnataka           2.09      2.56      4.99
                    Madhya              1.74       2.8      3.57
                    Maharashtra         2.63      3.68      5.07
                    Punjab              2.39      2.33      3.11
                    Rajasthan           0.72      1.02       1.4
                    Tamilnadu            3.4      4.69     11.35

                    India               2.67      3.72      6.06
Source: Urban –Rural percentages from Census 1991
                   Unemployment percentages from NSS 93-94(50th round)

Unemployment rate by all the three definitions place Gujarat in a better position
than all India average but worse than some states like Punjab and Madhya

                    Table 9-9 Classification of Workers
State                  Total     Main Marginal       Total  Non
                  Population Worker % Worker % Worker % Worker %

Andhra                  665.08        42.77        2.28       45.05      54.95
Gujarat                 413.10        34.12        6.11       40.23      59.77
Karnataka               449.77        38.45        3.54       41.99      58.01
Madhya                  661.81        37.67        5.15       42.82      57.18
Maharashtra            789.37         39.28        3.68       42.97      57.03
Punjab                 202.82         30.07        0.81       30.88      69.12
Rajasthan              440.06         31.62        7.25       38.87      61.13
Tamilnadu              558.59         40.81        2.50       43.31      56.69
India                 8385.84         34.18        3.32       37.50      62.50
                                 Source : Census 1991
Analysis of profile of population on employment characteristics reveal that
Gujarat’s figures present a mixed picture. While percentage of main workers in
Gujarat is more than Punjab and Rajasthan; it is less than Andhra Pradesh,
Karnataka and Maharashtra. Percentage of marginal workers in Gujarat is more

than all other states except Rajasthan. Total worker percentage in Gujarat is
less than Andhra Pradesh, Karnataka and Maharashtra and more than Punjab
and Rajasthan.

Population of Gujarat can be represented as follows with majority being Non

                         Figure 9-7 Employment Profile

                                Employment Profile

                                             34%          Main Worker
                                                          Marginal Worker
                   60%                                    Non Worker

          Source: - Directorate of Economic and Statistics, Government of Gujarat

9.6 Synthesis

Everywhere employment is closely linked to state of economy and hence any
change in national or state economy affects labour market in Gujarat. With this
in perspective. It will be worthwhile to look at changes in economy, which can
affect the state labour market.

9.6.1 Important Characteristics of Indian Economic Environment

In the emerging scenario following are the features of Indian Economy

1. Increasing degree of openness
2. Reducing role of state intervention
3. Reliance on market intervention
4. Shifting resources from non-traded goods to traded goods sector
5. Shifting resources within the traded goods from import competing activities
   to export oriented activities
6. Dismantling controls and market determined prices
7. Reducing importance of public sector

9.6.2 Effects on Labour market

As a result of the changing scenario the labour market is showing:

1. Tendency towards offloading regular jobs in favour of temporary ones
2. Outsourcing operations
3. Increasing Contractualisation and Casualisation of labour force
Apart from these Globalisation is posing unique threats and opportunities for
country and Gujarat.

9.6.3 Threats

Major industries like Textiles; Chemicals, Cement, Engineering etc are gripped
with recession and is facing competition from other countries. Better quality
products are available at a cheaper rate and are displacing domestic companies
out of competition. With decreasing market share and profits and almost
stagnant productivity levels domestic companies have stopped expansion or
stared reducing production. This has rendered many jobs redundant or cut short
increase in number of jobs. The situation is piquant for Gujarat, which has a
competitive advantage in Textiles. This sector which has major prospects is
pulled down by discriminatory treatment meted out to it by Western countries.
The worst affected are uneducated and unskilled who are facing a problem of
mismatch of demand and possessed skills. The solution adopted to save jobs
and retaining people even when the productivity levels were far from
satisfactory. This in turn has put industry in another tight spot with reducing
controls over imports.

9.6.4 Opportunities

Opportunities are increasing in non-traditional areas like Information technology;
Electronics and IT enabled services. These sectors are very attractive for
following reasons
1. High growth rate of theses sectors world wide
2. Potential of Gujarat to provide the above mentioned services
3. High returns associated with them
4. Possibility of off-shore development in case of IT which pre-empt necessity
    of mobility of labour

•   Information Technology – Waiting to Peak

IT has come as a god given gift to India. This sector combines strengths of the
country and these perfectly complement the weaknesses of the existing
strongholds. A huge number of people who has been treated as a bane of the
economy have turned out to be boon. Combined with high rate of English
speaking population and higher technical education, India has just what the
industry wanted. NASSCOM(National Association of Software and Service
Companies)-McKinsey study has brought out some interesting predictions .As
per the study IT in India is expected to boom provided necessary decisions are
taken at the right time.

             Table 9-10 Projections of the study for the year 2008

                                                                    Revenue $Billions

Sector      India        India      Sub        Total Domestic         Total 1998      CAGR
            Based        Centric    (International)                                   (%)
IT Services 23           7          30               8.5              38.5     2.1    34
Software    8            2          10               9.5              19.5     0.6    40
IT-enabled 15            2          17                  2             19       0.4    47
E-Business 4             1          5                   5             10       0.2    48
Total       50           12         62                  25            87       3.3    39
              Source: National Association of Software and Service Companies

As per the above mentioned study major sub segments in each of the above
segments are listed below

•    IT Services

1.   Web enabling legacy systems
2.   E-commerce /extended enterprise applications
3.   Standards based application integration
4.   Knowledge management
5.   Convergence applications

•    Software Products

1. Emerging Silvers
2. Productisation
3. Embedded Software

•    IT enabled Services

1.   HR Services
2.   Remote customer interaction
3.   Data search, integration and analysis
4.   Engineering and design services

•    E-businesses

1. Domestic business to business
2. NRI oriented business to consumer

•   Domestic Market

1. Large corporate users
2. Electronic Government
3. Increased consumer spend

If Gujarat can target to earn 10% of the total revenue it can generate $ 8.7
billion, most, of which will be new addition to the economy.

9.6.5 Exploiting the opportunity

Advantage of India over other countries is availability of abundant, high quality
and cost effective manpower. As per NASSCOM projections 2.2 million high
quality workers have to be trained to achieve the set target by 2008 all over

This calls for a three pronged strategy as follows:-

       1.     Expand the base of people with basic skills
       2.     Ensure continuous and rapid upgradation of skill
       3.     Launch a concerted effort to project Gujarat as favoured work

Globally most of the advanced countries are facing shortage of trained
manpower, which India has, in abundance. The problem is becoming more
critical with emergence of new technologies. The number of people employed in
software and EDP activities with end-user organisations is estimated to be
2,80,000 as on march 31st 1999.With a projection of 2.2 million software
engineers by 2008 it is quite a promising field and can be use to advantage by
emphasizing on technical education.

9.6.6 Recent Trends

Gujarat has made a lot of progress as far as employment is concerned and is
ranked higher than all India Average in most of the indicators

As per 1991 census there was 140.96 lakh main workers and 25.25 lakh
marginal workers. In percentage terms this amount to 34.12 and 6.11 of total
population of 413.10 lakhs. Number of organised workers was 16.19 lakh, which
is 11.49% of main workers. Main workers increased to 167.88 lakhs by the year
of 1998 with an absolute increase of 26.92 lakhs. This is an increase of the
order of 19.1 % over 1991.But the increase in organised sector in the same

period was to 17.89 lakhs with an increase of 1.7 lakhs which is an increase of
10.5 5 over 1991.There was a gradual reduction in the percentage of organised
workers in the main workers but an increase in absolute number. This trend was
changed to the worse in the year 1999 when the absolute number also
decreased by 49000. This is a signal of things to come. The percentage of
organised sector will keep coming down and hence activities to generate
employment will have to concentrate on unorganised sector. Labour market is
influenced and influences pro-active labour market policy and unemployment

Their relation and corresponding factors can be described as in Figure 9-8

                     Figure 9-8 Labour Market Dynamics

                             Market             More Job Openings
                                                High Flexibility

                                                        labour market
High coverage of insurance
Long Duration                                 Labour Reforms
                                              Emphasis on upgrading skills
                                              Right and Duty to accept offers

9.6.7 Employment –A conceptual Framework

A conceptual framework showing the interplay of various factors such as
investments, labour laws etc. on employment is diagrammatically represented
below :

                     Figure 9-9 Conceptual Framework
Labour            Fiscal          Non-              Infrastructure      Trained
Laws,             Incentives      Fiscal                                Manpower
Social                            Incentives



9.7 Labour Laws

Labour laws were originally prepared to protect workers from exploitation of
employers and served its purpose in the existing environment then. But labour
laws failed to change along with times and have become an impediment for
employers and employees as well. A well-known example is that of Information
technology and electronics industry. These are sunrise industries and hold a lot
of potential in terms of employment opportunities for both sexes. Unfortunately
Women are not preferred as employees as these industries necessitate
employees to work at odd hours, which in case of women, is illegal as per
existing laws. This is denying a lot of opportunities for a majority of women who
are otherwise qualified.

Labour Policy Initiatives

•   Labour reforms to facilitate and encourage employment generation
•   Facilitate smoother entry and exit of employees
•   Labour reforms for higher women participation

                    Figure 9-10 Labour Market Scenario

                License Raj      Current Situation      Proposed Situation

               Guaranteed        Profits are no         Market         driven
               Stream of         more Guaranteed,       economy,       Better
               Profits           Market      position   prospects for the
Employer                         under        threat,   efficient companies
                                 Efficiency the key
                                 to survival
               Protection of     Jobs and               Hire and Fire will be
               job and           privileges still       the order of the day,
               privileges        protected to a         Better pay and
                                 great extent           facilities for
               Poor    quality   Slightly better        Much better products
               products     at   products at            at cheap prices
               exorbitant        cheaper prices,
               prices            Increasing

Current restrictions on employers have led them to take extreme steps to
maintain their profitability. As retrenchments are not allowed employers are to
put up with extreme inefficiency and high wages under threat of strikes. This
discourages further investments in labour intensive sectors where India has a
natural advantage and eliminates possible employment. Even existing
employers resort to labour saving technology. Most of the new investments are
using high capital- low labour technology. A clear indication of the growth of
private sector employment all over India can be seen from the growth pattern of
private and public sector. From 1981-91 despite an annual growth of 5% private
sector private sector did not grow from 8 million. After the reforms this has
grown to 10 million proving that given a proper environment labour market can
absorb a lot more people. In essence potential of labour market is not tapped to
the fullest extent.

This call for reforms in the labour sector with following key objectives

1. Firms must have the right to retrench

2. All workers should have uniform rights irrespective of size of firms including
   appropriate retirement benefits and severance pay based on the number of
   years worked
3. Discrimination against female workers to be eliminated
4. Proper enforcement mechanisms to be instituted

9.8 Vision 2010

♦   Reduce Unemployment level to 4%
♦   Ensure availability of trained manpower for industries
♦   Provide safety net for all employees including informal sector
♦   Generate half crore employment opportunities
♦   Pro-Active industrial environment

9.9 Action Plan

Causes of unemployment in developed and developing countries are different to
the extent that lack of aggregate demand is the reason for unemployment in
developed countries where as in developing countries it is lack of capital
equipment and other complementary resources necessary to keep workers at
work and certain structural factors like decline of specific industries that lead to
unemployment. Situation is the same in case of India. Another problem faced by
India is slow growth of modern technology and lack of specialisation. This points
to the core of the problem-Lack of qualified manpower. The solution is making
quality man power available where it is required at the time of demand by
training them to achieve necessary skills.

Government will adopt a policy of conscious intervention which assists in
development of new employment opportunities, improving quality of existing
jobs and assisting transfer of employment to high value added sectors. Effort will
be made to reduce risk of each of stakeholders. As elsewhere in world this
would call for a shift in employment to tertiary sector and hence will result in
temporary and structural unemployment. Government will evolve a risk
management plan to reduce hardships due to these adjustments.

Various stages in risk management are Risk reduction where action is taken to
reduce incidence of risk, mitigation of risk where focus is on mitigating risk after
the incidence and last coping with shocks by framing suitable mechanisms.
Each of these stages involve activities by Individual and house hold, Group
based, Market based and Publicly provided as described in Figure 9-11.

                    Figure 9-11 Risk Management Mechanism

     Informal Mechanism                   Formal Mechanism
Objective     Individual and Group based            Market based           Publicly Provided
              House hold
   Risk       Migration,       Occupational         Savings        with    Active       Labour
              More      secure Associations         Financial              Market Policies
Reducti income                                      Institutions,          Education,
    on                                              Microfinance,          Training,
                                                    Various                Employment
                                                    Insurances             search Mechanism
Mitigation    Income source Occupational            Sale of assets,        Pension System,
of Risk       diversification, associations,        Loans         from     Insurance
              Investment in Rotating savings Institutions                  Programmes
              Human capital, and             credit
Coping        Seasonal         Assistance from                             Cash transfer,
with          Migration        mutual     support                          Workfare,
Shocks                         Groups                                      Life and Accident

    The major components of the action plan are as under :

    1.   Training
    2.   Labour Reforms
    3.   Social Security Measures
    4.   Unemployment Insurance
    5.   Employment Search and Counseling Mechanism

                                 9.9.1 Training
                              Training – Approach
    Training is to be used as a strategic weapon to attract investments and retain
    existing investors and facilitate expansion of existing industries. Training should
    also play an important role in increasing the productivity levels of home based
    workers. The approach is summarised in Figure 9-12.

               Figure 9-12 Training-Approach

    Fresh                                    Investment
                                            Expansion of
                                            existing                       Growth in
    Home based
                                            New          self

Focus areas for training will be identified through assessment of potential of
each industry. Demand of each industry will be compared with trained
manpower available and gap will be filled by organizing training programmes.
A continual analysis of demand –supply gap will be carried out by making use of
proposed information management system.

1. Fresh Training: Half of the fresh entrants to workforce will be trained every
year in secondary and tertiary sectors. It will start with a capacity of 50,000 in
secondary and 1.35 lakhs in tertiary in 2000 and go on to a capacity of 1.00 lakh
in secondary and 2.50 lakh in tertiary sector. A total of 28.6 lakhs,8 lakhs in
secondary and 20.6 lakhs in tertiary, will be trained to satisfy industry demand.

2. Multiskilling: Industry demands are quick to change in this fast paced
economic change. Skills become outdated and demand for new skills crop up on
a regular basis. Multiskilling training helps employees attain necessary skills by
undergoing short to medium term training programmes. Training facilities will be
created both in secondary and tertiary sectors starting with a capacity of 1.16
lakhs in 2000 and will go up to a capacity of 1.91 lakhs. A total of 16.5 lakhs
employees,6.71 lakhs in secondary sector and 9.8 lakhs in tertiary sector, will
be trained over 10 years.

3. Home Based Workers: A sizeable portion of population is employed as
home based workers. This gives an additional income to the household and is a
very important component to sustain quality of life. This segment is suffering
from lack of productivity due to prevalence of old techniques. Training will be

imparted so that they can adapt to new methods and increase their productivity
and take up new skills which can generate a better return.

•   Salient Features
       •   Training will be skill based rather than syllabus based
       •   Matching demand to Training
       •   Mix of long term and short term courses
       •   Emphasis on quality of skill acquisition
       •   Certification of self acquired training and skills
       •   Increased women participation
       •   Improved training techniques
       •   Increasing involvement of Private sector

• Vision to Action
Training fifty lakh people over 10 years is a huge task and it calls for a shift from
the current strategy of depending on Government owned facilities. Greater
involvement of private agencies will be encouraged which will improve quality of
education and bring it more in line with market demand. Government will
assume role of a facilitator.

Increased demand for training will be met by increasing the number of seats in
ITIs from current 68,000 to 1,40,000 by 2010.This will be executed by opening
more facilities and increasing number of seats. Capacity utilisation of existing ITI
s will be increased. Self financed institutes will be encouraged to expand their
sphere of activities by opening new facilities ,increasing number of seats and
identifying new areas and mode of co-operation. For instance existing
infrastructure could be leased out to private parties. Seats in self financed
institutes will be increased from current 16,000 to 50,000 by 2010. Short term
courses constitute an important part of training and their capacity will be
increased to 2.85 lakhs by 2010 from current 2 lakhs. This will be carried out
through private parties and with active involvement of industry. This will enable
adoption of a practical approach to training in contrast with theory oriented
approach. An important feature of the strategy will be leveraging existing
infrastructure whether in the form of vacant classrooms or operating in various
shifts to increase capacity. Schools would play an important role in training of
home based workers.

An important feature of the proposed training methodology will be need based
training. Training will be provided where it is required at a price. This ensures
that trained manpower is not wasted and training is imparted to people who
wants it and are interested in it. Free training results in many who are not
interested in it taking up facilities and those who need and interested being
deprived of it. User fee ensures a steady source of income which can be utilised
to improve facilities. Care will be taken to ensure that unfortunate in the society
are not deprived of training for want of money by arranging scholarships and
educational loans.

Women will be imparted training at a lesser fee which will be supported by
Government through various means.

Even though the approach will be to maximise private participation the state will
have to bear a substantial part of required expenses, mainly in following

•   Creation of new infrastructure
•   Upgradation and maintenance of existing infrastructure
•   Salaries and staff related expenses
•   Study material and necessary supplements
•   Payment to private training providers
•   Certification and skill testing
•   Counseling and promoting self employment

The following assumptions have been made for calculating the resource
requirement for training of the workforce

•   The total training budget cannot encompass the resource requirements of
    the training of the whole workforce. The increase in the workforce as the
    economy grows due to the trend based projections will be around 53 lacs
    from 2001 to 2010. The percentage of the total workforce that would be
    trained by Government institutions is assumed to be 50% of the workforce
•   The net average cost per head of training is Rs.7500/-.
•   There is a need for alternative training avenues like home based training.
    This would enable the workforce to acquire skills at the same time requiring
    less resources from the Government. This has an additional advantage in
    terms of the flexibility offered, the spread of the training programme.
•   An additional resource requirement from the Government is for development
    of a safety net for the unemployed. The aim of the safety net is to provide
    relief to sections of the workforce unable to find employment. The provision
    for such a safety net is Rs. 1000 crores.

Approximate estimate of state investment is provided below.

                Table 9-11 Resource Requirements for Training
Head                       Training Requirement in lacs Cost(Rs.Crores)
Fresh Training                         28.60
Multi Skill Training                   16.50
       Sub Total                       45.10                  3500.00
Training-Home based                     5.00                   50.00
Information Centre                                             100.00
Safety net measures                                           1500.00
Total                                  50.10                  5150.00

9.9.2   Labour Reforms

•   Focus of labour reforms will be to reduce complexities in the system and to
    facilitate industrial advancement of the state. It will adopt a pro-industry
    approach and ensure protection of employees.

•   Compensation paid to employees on retrenchment will be increased in all
    sectors and will be arrived at after consultation with relevant parties.

•   Most importantly there will be conscious intervention on behalf of
    Government to mitigate disparities.

•   Procedures will be systematized and Information Technology will be used to
    ensure fast, easy and transparent functioning of the department. This will
    reduce complexities and ensure faster response to concerned parties.

•   Working hours for women will be extended in necessary cases on employer
    providing required facilities, arranging for travel, providing congenial work
    environment and considering law and order situation.

•   Existing system of inspections will be revamped. Inspections will be carried
    out according to a predetermined schedule and will be informed in advance.
    Surprise inspections will be resorted to only in case of complaints.

•   Labour Department will be reset to cater to demands of the market. In
    essence activities of department will be demand based.

•   Quality of legal process will be improved to increase percentage of punished
    in cases taken up by the department.

9.9.3 Social Security Measures

An important component of creating a pro-active labour market is appropriate
Social security measures. This saves employee and family from destitution and
supports them during difficult times. Government intervention is all the more
important when asset values of employee and income are covariant triggering
collapse of informal insurance and poor cannot accumulate enough assets to
prevent disaster. It can be provided in various forms and can take following

1. Existing schemes

At present 72 lakh unorganized workers are provided formal social security
under following schemes.
1. Rs.20,000/- for accidental death for complete disability

2. Rs.10,000/- for partial disability
3. Rs.1000/- for death of the head of the family

The above mentioned schemes are proposed to be modified as follows
combining with a popular scheme

Proposed Scheme

•   Eligibility
        - Employees in the age group of 15-58
        - Groups will be identified and notified by co-ordinating agency
        - Group should consist of a minimum of 25 people.

•   Benefits
    - In the event of natural death a sum of 20,000/- will be paid to the nominee.

    - In the event of accidental death/partial disability/total disability
        a.     On accidental death a sum of 50,000/- will be paid to nominee.
        b.     On permanent disability due to accident, a sum of 50,000 /- will
                   Be paid to the member
        c.     On loss of two eyes or two limbs or one eye and one limb
                    Member will be paid a sum of 50,000/-
        d.     On loss of one eye or one limb in an accident, member will be
                  Paid a sum of 25,000/-.

•   Premium
    A premium of 200/- will be charged.
      a. 25% of the premium will be paid by employees/employers/nodal
      b. 25% by State Government
      c. 50% by Central Government

    Employee associations, Self-help groups, NGOs etc. can act as nodal
    agency and will co-ordinate all related activities.

•   Claim Procedure
    Beneficiary of deceased member in case of deaths or member in case of
    accidents should produce necessary documents to nodal agency which will
    arrange to forward the claim to the beneficiary.

9.9.4 Unemployment Insurance

A necessary feature of a progressive market is the freedom it enjoys in the
labour market. Smooth functioning of labour market requires that employers are
able to make structural adjustments with ease. This results in incidence of
unemployment which is of temporary nature. To ensure that employee is able to

withstand the pressure and acquire skills to get back into employment market, a
financial security has to be provided in terms of unemployment insurance.

Unemployment insurance is extended to employees who lose their job due to
retrenchment. Unemployed receives 6 months of unemployment insurance of
which three months is paid by the employer and rest by co-ordinating agency.

• Funding
Unemployment insurance will be funded by State, Employer and Employee. The
State contributes through a corpus and employer and employee contributes rest,
proportion of which has to be worked out later.

• Requirements
1. Worker must register with employment exchange, declare his earnings from
   the job and should claim insurance amount.

2. Worker should have been employed under one of the categories listed by
   Government and must have been paying a portion of his earnings regularly
   for past 12 months.

3. Worker must be willing and able to work.

4. The worker must not have:

   a. Quit his or her job voluntarily

   b. Been discharged for misconduct in connection with his or her work.

   c. Refused or failed, without good cause, to apply for or accept an offer of
      suitable work.

Become unemployed because of a stoppage of work as the result of a labor
dispute, in which he or she is interested or participating, that occurred at the
establishment where last employed.

• Alternative Schemes
Alternative schemes can be evolved by infusing Government help in informal
mechanisms so that usual risk of group falling part under strenuous
circumstances is brought down.

      •   Alternative Scheme 1

A group of people together can be registered and each saves a fixed sum every
day. After a period of 6 months he will be eligible for a loan at zero or nominal

interest (Interest may be subsidised by Government) upon receiving
authorisation from three others in his group who are currently not availing loan.
Loan amount would be paid monthly and would be equal to one third of his
otherwise salary. Loan amount would be adjusted against the final repayment.

      •   Alternative Scheme 2

This scheme may be partly financed by Government and depend upon self-
declared daily income of the employee. Every employee will be saving a part of
his earnings, which is to be declared by the employee, in unemployment
scheme and can be structured as follows

Self   Declared      daily Payment                  by Payment                 by
Income(Rs.)                Employee(%)                 Government(%)
Below 50                   25                          75
50-75                      50                          50
76-100                     75                          25
Above 100                  100                         -

9.9.5 Employment Search and Counseling Mechanism

All economies in the transition stage face inability of obtaining right people for
the job. This happens due to absence of information exchange between
prospective employer and employee. This can be avoided by a computerised
information system which can store details of employees, needs of employers,
updation of employee details and real time matching of prospective employee
with available jobs. This helps administration to keep track of skill requirement,
change in demand of skills and effectiveness of training.

Perception, attitudes, prejudices, social status and religion are playing an
important role in selection of work, occupation, trade, business and self-
employment venture. In Gujarat there are a lot of employment opportunities
available in Fisheries, Labour works at Alang and Textile processing at Surat but
unemployment are not making use of these opportunities. Many an available
opportunity is missed out due to lack of awareness and initiative. Experience of
“Pandit Din Dayal Sankalit Swavlamban Yojana” shows that even after
motivational and counseling shibirs many candidates are not coming forward to
avail benefits of bank schemes. Hence emphasis should be on counseling by
well-trained counselors assisted by NGOs, educational institutions etc.

9.9.6 Delivery Mechanism

Considering the existing mechanisms all over the world it is clear that any
programme undertaken by Government without local community participation
has failed to achieve desired results in most cases.

It is more relevant in case of employment considering the inputs local
community can bring into. This is represented in exhibit 9-8

   •   Better information on needy people
   •   Building up social capital
   •   Decentralized administration which is more efficient and faster
   •   Adaptation of scheme to local need
   •   Innovative methods of delivery

   •   Might be used to serve interest of elite
   •   Externalities may not be considered
   •   Personal preferences of dominant group may take precedence

Disadvantages listed can be prevented through proper intervention of
Government when necessary.

Figure 9-13 demonstrates a Delivery Mechanism.

                   Figure 9-13 Delivery Mechanism

(Incentives       for
action,     Political                               Organizational
Support)                                            Streamlining,
                                                    Political and Economic
                                                    incentive structures,
                                                    Strategic      use    of

   Information and Support
♦ Stimulate      local     development
♦ Raise aspirations, generate demand
♦ Offer information on services          Local Public Agencies and grass
                                         root workers
                                         (incentives for action: public image,
                                         material benefits)

 (Incentives           for                              Pressure      for
 action:Development and                                 quality services
 political empowerment)                                 and         peer

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