Labor quality rose by 0.7% annually over 40 years

Current Context: According to recent research conducted by RBI officials, the average labour quality in India increased by 0.7% per annum from 1980-81 to 2021-22.

• This improvement is noteworthy, especially considering the challenges faced by India Inc. in finding skilled labor.

• Let’s delve into some key points from the study:

• General Increase in Education Levels: The research highlights a general increase in education levels among workers, particularly in capital-intensive manufacturing and service sectors. Sectors like chemicals, machinery, and transport equipment saw the fastest growth in labor quality.

• Sector-Specific Trends:

• Capital-Intensive Manufacturing: Labor quality improved significantly in capital-intensive manufacturing sectors.
• Services: Subsectors such as health, social work, and telecommunication also recorded notable growth in the labor quality index.
• Business, Education, and Financial Services: These sectors grew slower due to their already high share of skilled workers.
• Dip in Quality Between 2000-2022: While the overall trend was positive, labor quality growth slowed down between 2000-2022 compared to the previous two decades. During 1980-81 to 1999-2000, the growth rate was 0.72% per year, whereas it decreased to 0.60% per year between 2000-01 and 2021-22.
• Contribution to Output Growth: Labor quality, combined with employment, accounted for 30% of overall output growth during the entire period (1980-81 to 2021-22).

Question:

1 What was the average annual increase in labor quality in India from 1980-81 to 2021-22?

• A) 0.5%
• B) 0.6%
• C) 0.8%
• D) 0.7%

Answer: D) According to recent research conducted by RBI officials, the average labour quality in India increased by 0.7% per annum from 1980-81 to 2021-22.