The government should focus on six things needed to make India a job magnet — three need a partnership with state governments (infrastructure, urbanization, and labour laws) and three are in the hands of centre (48% salary confiscation via poor value schemes like EPFO, ESI etc, apprenticeships and macroeconomic stability).
The urbanization agenda is urgent because the divergence of real wages and nominal wages in cities is killing labour migration off farms. The infrastructure deficit is killing manufacturing jobs and ensuring most companies are dwarfs rather than babies. Labour law reform will lower contract employment from 29% of the labour force, reduce capital and skill intensity, and allow India rather than Vietnam to benefit from China’s exploding wages.
Trade unions are only 5% of India’s labour force and have positioned their narrow self-interest as national interest. Just preservation is not job creation. The centre needs to urgently change the Apprentices Act of 1961 that treats an apprenticeship as a job. India can raise the 3 lakh apprentices to 50 lakh given that Germany, Japan and China have 30 lakh, 1 crore and 2 crore apprentices respectively.
Fixing our 48% salary confiscation regime is purely in the hands of the centre; we should abolish the 12% employee Provident Fund contribution, shut down the bankrupt Employee Pension Scheme and create competition for EPSO and ESI from NPS and insurance firms.
Finally, inflation is a horrible tax on the poor that needs to be addressed. The government can create a stable macroeconomic outlook by committing to live within its means. Jobs will surely follow.