“Economic growth in the recent past has been led by increase in labour productivity”. Explain this statement. Suggest the growth pattern that will lead to creation of more jobs without compromising labour productivity. (Answer in 250 words)

Labour productivity is output per worker or hour. Recent growth has been driven substantially by capital deepening, technology, formal-sector expansion and movement of labour from low-productivity agriculture to services and industry.

Why productivity-led growth occurred

• Mechanisation, digital technology, better infrastructure and skills raise output without proportional employment.
• High-productivity services, finance, IT and organised manufacturing have grown faster than labour-intensive sectors.
• Agriculture has released workers, but many move into low-productivity informal services, creating a gap between output and employment.
• Productivity gains improve competitiveness and wages when supported by human capital and formalisation.

Job-rich productivity growth

• Promote labour-intensive manufacturing in textiles, footwear, food processing, tourism, logistics, construction and renewable-energy value chains.
• Support MSMEs with affordable credit, technology, quality infrastructure and market access so productivity rises without excessive automation.
• Invest in foundational learning, apprenticeships, skilling, women’s employment, childcare and safe mobility.
• Expand care, health and education services, which are employment-intensive and socially valuable.
• Use infrastructure and urbanisation to connect workers to productive firms and global value chains.

Balance

• Technology should augment workers, not simply displace them; social security and portable benefits can ease transitions.

Labour productivity; capital deepening; labour-intensive manufacturing; MSMEs; skilling; formalisation; job-rich growth.