Finding Okun’s Law Amidst the Economic Data of India’s Economic Growth
Okun’s Law asserts that an increase in economic growth is directly proportional to an increase in the employment rate. Does this hold true for the Indian economy? The data procured from a FICCI survey when tallied against the data of demand for middle level managers says yes.
The Economic Growth Story So far and the Road Ahead
India's GDP will grow at 5.6 percent during 2014-15 and economic activity is expected to continue with this momentum in the second half of the current fiscal, FICCI said Sunday. "The new government guided by the objective of restoring growth and governance has given very positive policy signals in its first 100 days. We see the confidence amongst investors slowly returning and hope that going ahead, the momentum on implementation front will build up," said the Federation of Indian Chambers of Commerce and Industry's (FICCI) latest Economic Outlook Survey. While agricultural growth is expected to remain steady despite a delay in monsoon, the industrial sector is expected to grow by 4.7 percent in 2014-15 fiscal.
This is 1.6 percentage points more than the growth estimate in the previous survey round conducted in June 2014, the chamber said. Retail inflation is expected at 7.8 percent this fiscal, in sync with the Reserve Bank of India's (RBI) target indicated earlier this year. The economists who participated in the survey also felt that the RBI will consider a cut in policy rates only in the first quarter of the next calendar year. The RBI will wait and watch until there were definite signs of inflationary pressure abating, they said.
The minimum and maximum range for GDP growth in the current fiscal is indicated at 5.3 and 6 percent respectively, as against 5.3 estimated in the previous round, reflecting optimism, FICCI said. The projection by the economists regarding exports and the current account deficit (CAD) reflected no imminent risks. The CAD to GDP ratio for the fiscal was projected at 1.9 percent.
Surge in Demand for Managerial Talent in India
The economists also identified some priority areas for the government like developing a world-class infrastructure, ensuring uninterrupted power supply, resolving labor issues and minimizing procedural hassles and fast-tracking approvals. The country is likely to see high growth in the job market as 70 percent employers plan to expand their team, a recent survey said. "India's business market is currently primed for expansion, with the recruitment market being driven by significant industry sectors such as FMCG, retail, healthcare, manufacturing and real estate. About 70 percent of employers surveyed plan to expand their team," Michael Page's 'India Salary & Employment Forecast' for 2014-15 said. In addition, many employers seek highly competent professionals at the mid to senior management level, with 45 per cent of surveyed employers indicating that mid-level professionals will be in highest demand in the coming year, the survey report said.
Companies are realizing the value of developing employee skills and offering internal career opportunities, as senior level executives and human resources teams recognize the importance of retention strategies, the report said. "Managing turnover will continue to provide a major challenge for employers in the next 12 months, with 51 per cent of surveyed employers expecting staff to leave their business in the coming year," it said. Companies are also implementing full-fledged diversity programs to ensure equal opportunity for candidates irrespective of their background or gender. In the past few years, employers made strong headway when it comes to corporate responsibility, including implementing diversity policies to provide equal opportunity to candidates from all backgrounds and genders. About 79 percent of employers surveyed indicate that women in their organization are provided equal opportunity to progress to executive level roles as men, the survey report said. In terms of hiring strategies, 68 per cent of employers invest in digital assets to attract new candidates to the recruitment process, the survey said.