IANS | 12 Mar, 2024
India’s demographic trend of a younger workforce positions it
positively as most large economies face shrinking working-age
populations and tight labour markets, global brokerage, Morgan Stanley
said.
Per UN estimates, India's working-age population will continue to
grow until 2037, with age dependency falling until 2032, and India will
account for 21 per cent of the incremental increase in global
working-age population in the next 10 years.
“As such, we envisage
that over the next 10 years India's economy will be driven by
manufacturing, exports, and capex with implications for employment
generation,” Morgan Stanley said.
Over the past 4 years, policy
reform momentum has moved in that direction wherein policymakers have
taken steps to reorient India's growth model with a push for capex-and
manufacturing-led growth. This move will have implications for the way
India's labour force is employed.
Unleashing labour productivity
potentially creates further tailwinds for India's growth outlook and the
economy's competitiveness, Morgan Stanley said.
India's labour
force is characterised by a high degree of informality with 89.1 per
cent of labour force in the informal sector -- exhibiting the highest
among key economies. Further, in terms of sectors, agriculture continues
to dominate the labour force with 45.8 per cent share in employment.
Currently
India's wage growth (manufacturing wage) remains among the lowest in
the region, and while labour productivity has improved over time, it
continues to remain weaker than most EMs. As such, as the economy
formalises at a faster pace in the coming decade and share of
manufacturing and services increases further in the labour force, labour
productivity should see a meaningful uplift, Morgan Stanley said.