Green growth intervention and job creation

11 Dec 2018
Dr Anandajit Goswami
Mr Saswata Chaudhury

Sufficiently skilled workers will be needed for employment in renewable energy and green building job markets in India

Green growth
Green building and renewable energy sectors are two important components of green growth intervention and also have a huge potential for skilled job creation.

Green growth entails a growth path that addresses ecological, economic, environmental and societal needs of a country. Green growth policies with special focus on employment generation are a challenging target for most developing countries. This is because employment generation is expected to reduce inequality and address the social dimension of sustainability, apart from creating a holistic development path by ensuring the trickle-down impacts of income generation. The need for such an integrated development path was first recognised by Thirteenth Finance Commission of India in 2009) (article 3.12, page 23).

Skills for a greener job market

Lack of availability of a sufficient number of skilled workers in India makes the issue more challenging. Along with lack of availability, there is also a mismatch between skill requirement and availability (Handle, M. J., 2005)1. Traditional vocational training schemes have proven to be inadequate in addressing this issue2. Over time, the skill shortage has aggravated the existing voluntary, involuntary and frictional unemployment challenges within the Indian economy. The differential nature as well as demand of various skill requirements in organised and un-organised sectors has created a disparity in incomes across and within sectors, leading to rising inequality in the country.

Currently, only about 5% of the workforce has formal skills, as compared to more than 50% in many developed countries such as USA and Japan (Qazi, 2018)3. The recent initiative of ‘Skill India’ under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 2018 by the Central government has given rise to a hope that this challenge will be addressed. The enormity of this challenge is going to increase in the backdrop of an expected addition of 12 million people to the workforce every year in India (IMACS, 2010). This establishes the need for creating both jobs and skill within the Indian economy to address future developmental goals. The question is to identify the intervention sectors where skilled and unskilled job creation can happen to address the long term goal through a green growth and development path.

Green building and renewable energy sectors are two important components of green growth intervention. These sectors have a huge potential for skilled job creation, and thus policy makers need to focus on them. Investment and targeted intervention can create multiplier impact on the whole economy.

Renewable energy

Green growth
The expected investment push in renewable energy sector is also meant to generate demand for new goods and services.

India needs to transit away from its larger dependence on fossil fuel-based energy supply. Due to financial and technological challenges, 100% dependence on renewable energy may not be a feasible solution in the short and medium term. Thus, countries should focus on a diverse portfolio of energy supply from both fossil fuels as well as renewable energy resources. This will also address the country’s long-term energy security. So a green growth and development path will address both the social and environmental domains of sustainability with co-benefits of job creation and inequality reduction.

The Union Ministry of New and Renewable Energy (MNRE) is expected to commission 15.62 GW of new renewable energy capacity in 2018-19, including a target of 11 GW of solar capacity. This investment push in the renewable energy sector is also meant to generate demand for new goods and services, which has the potential social co-benefit of employment generation and the environmental co-benefit of emission reduction in the medium and long term. However, this can happen only in the presence of effective institutional and governance mechanisms. As per a recent article (Tyagi 2017)4, investment in renewable energy can create direct and indirect, skilled and un-skilled as well as full-time (long term) and part-time (temporary) jobs. As per a recent estimate by CEEW and NRDC, the solar sector alone can create one million full-time-equivalent jobs by 2022 to achieve 100 GW grid connected solar power. However, if rooftop solar gets priority, job creation can touch 1.3 million. While direct jobs may be created in design/ development, construction/ installation, and management/maintenance phase of the project, indirect jobs can be created in manufacturing of equipment, supply chain, banking/financial sectors other than induced job creation to cater to the local demands of employees. Thus, relevant skills related to all the above categories will be required if India wants to focus on renewable energy.

Green buildings

Green growth
With maturity of green building projects, the potential for more and more skilled (as well as unskilled) workers usually increases.

The green building sector is another area of intervention which requires more unskilled than skilled workers in the initial stage. However, with maturity of building projects, the potential for more and more skilled (as well as unskilled) workers usually increases. Hence, an investment in the green building sector also has a spillover effect in terms of enhancing its job creation potential and impact in rural and urban household classes. As per a recent estimate (Goswami & Chaudhury 2017), investment in green building and renewable energy sector can create 6.1 million skilled and 2.4 million un-skilled jobs by 2020.

The National Skill Development Corporation emphasises on development of the skills required for employment generation. In order to generate employment and skill, the council indicates a focus on sectors receiving state and Central government support. It also indicates that it will generate skill and jobs in the area of services required for green building sector. Other than job creation in the installation and commissioning of energy efficient appliances in green buildings, and the production and maintenance of those appliances will also create significant skilled and unskilled employment in the economy.

Urban and rural impact

Job creation in the urban sector from the green building construction sector can also entail some possible migration from rural to urban areas. This can happen due to the creation of unskilled jobs through investments in the sector (assuming that green buildings largely come up in urban areas in the near future, say by 2030). The spillover effect in terms of job creation can be higher for rural households in comparison to urban households due to a skill shortage in rural India in terms of the identified green sectors. Therefore, skill generation in the rural sector has larger implications for the rural households. However, this requires the existence and functioning of effective institutional framework.

Currently, the rural-urban migration complemented by a large scale informalisation in the organised sector, along with the tapering of the growth of the organised sector poses a barrier for the trickle-down effect of new skill generation within both urban and rural households. Return on investment in skill development in rural India is higher due to its scarcity, enabled by large-scale migration, organised and unorganised sector divide, a large-scale unorganised segment and even informalisation within the organised sector.

Green growth and development interventions are expected and can create more employment for people from the agriculture sector, raise their skill levels and generate more skilled and unskilled jobs for them in the industry and service sector of the growing economy. This in a way will create larger economic and social sustainability in the long term and will help in moving towards a peaceful society by addressing the SDG 16 of peaceful society with equitable justice.

Dr Anandajit Goswami is Coordinator, Management Development Programme, TERI and Faculty and Course Instructor at TERI School of Advanced Studies.

This article is based on the paper 'Goswami, A., & Chaudhury, S. (2017). Green Growth Intervention on Employment Generation in India: Dynamic CGE Model Approach. International Journal of Sustainable Entrepreneurship and Corporate Social Responsibility (IJSECSR), 2(2), 39-60'. The paper has emerged due to constant research guidance from Ms. Shailly Kedia, Dr. Prodipto Ghosh, Dr. Pronab Sen, Dr. Sanjib Pohit and Mr. Nitya Nanda and funding support from Global Green Growth Institute for a research project of TERI titled - "Green Growth and Development Initiatives in India" during 2013 - 2016.

[4] Tyagi, B., 2017. Akshay Urja (pp. 32-36)