Associate Economist, Japan Macro Advisors

Naman Mishra

Associate Economist

Concise and Insightful Analysis on Japan Economy

Japan Macro Advisors

Our mission is to provide a concise and timely analysis on the Japanese economy for the benefit of global audiences. Communication, especially in foreign languages, has always been a weakness for the Japanese, which was fine when Japan's economic might attracted foreign media and various other institutions to study and report on Japan - such days are long gone. In the last two decades, we saw foreign institutions reallocating their resources from Japan to other more exciting parts of the world. As a result, when we read reporting on Japan in foreign media, we sense a subtle but noticeable decline in the depth of understanding what is actually happening in Japan.

Macroeconomics

<p>As with any emerging countries, employment in India has been moving from agriculture to other industries in the past few decades. Between 1981 to 2016, agriculture sector’s share in employment has fallen from 70% to 42%.  In the case of India though, the role of manufacturing industry was limited. Its employment share barely rose from 10% in 1981 to 12% in 2016. In India, it was the service sector, and more recently the construction sector that absorbed the expanding labour force in India. The employment share of the service sector rose from 17% to 31% between 1981 and 2016, and that of construction rose from 2% to 14% in the same period. For the latter industry, the rural construction boom in 2000-12 added quite a few jobs.</p><p>While more jobs are certainly better, the productivity growth in the construction sector has unfortunately been falling in the 10 years to 2015 and the per person value added is falling close to that of the agriculture sector. While the productivity growth in the service sector is decent, its employment growth has been slowing in recent years. We believe that the prevalence of low value adding jobs and a slower growth in high-productivity jobs has started to hurt the overall growth the economy. India needs to produce high productivity employment along with high-skilled labour to reap the chances of a favourable demographic dividend.</p>

As with any emerging countries, employment in India has been moving from agriculture to other industries in the past few decades. Between 1981 to 2016, agriculture sector’s share in employment has fallen from 70% to 42%.  In the case of India though, the role of manufacturing industry was limited. Its employment share barely rose from 10% in 1981 to 12% in 2016. In India, it was the service sector, and more recently the construction sector that absorbed the expanding labour force in India. The employment share of the service sector rose from 17% to 31% between 1981 and 2016, and that of construction rose from 2% to 14% in the same period. For the latter industry, the rural construction boom in 2000-12 added quite a few jobs.While more jobs are certainly better, the productivity growth in the construction sector has unfortunately been falling in the 10 years to 2015 and the per person value added is falling close to that of the agriculture sector. While the productivity growth in the service sector is decent, its employment growth has been slowing in recent years. We believe that the prevalence of low value adding jobs and a slower growth in high-productivity jobs has started to hurt the overall growth the economy. India needs to produce high productivity employment along with high-skilled labour to reap the chances of a favourable demographic dividend.

Low-Productivity Jobs Are Hurting India’s Growth