Jobs play a significant role in paths of economic development
how to enhance productivity and employment simultaneously in labour-intensive service sectors. That means adopting measures with many of the same features of ‘modern industrial policy,’ whereby the state, in exchange for job creation, pursues close iterative collaboration with firms to remove obstacles to their expansion. There are already some examples of this model.
Consider the Indian state of Haryana’s partnership (begun in 2018) with the ride-hailing services Ola and Uber. Established with the goal of increasing employment for young people by making it easier for these firms to identify and hire drivers, this public-private partnership is based on a clear quid pro quo. Haryana has eased regulations that hampered the services’ growth, shared databases of unemployed youth and held exclusive job fairs for the firms, which in turn have made soft commitments to employ a meaningful number of young people.
The agreement is dynamic. Allowing for the terms to adapt to changing circumstances helps build mutual trust without binding the firms to rigid conditions. In less than a year, the partnership has created over 44,000 new jobs for Haryana’s youth.
Of course, services are a hodge-podge of different activities, with great heterogeneity in the size and shape of firms. Any realistic programme to expand productive employment in services will have to be selective, focusing on those firms and subsectors that are more likely to be successful. There will need to be experimentation, and local governments will often be in a better position than national officials to carry out pilot schemes.
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