Despite the government seeking to deflect criticism that higher economic growth is not creating jobs, the labour department data shows employment generation has been declining, says a report of brokerage JM Financial.



As per the labour department data collated by JM Financial, the ratio of the number of degree-holders (undergraduates and above) to new jobs created has worsened from 9x for the three-year period FY11-13 to 27x for FY14-16.



Further, according to the latest employment surveys, job creation at 0.19 million (excluding banks) in the first nine months of FY17 is much short of the 8.8 million who graduated in FY16.



"Clearly, the gap between demand for labour and its supply can only increase as the number of graduates far outnumber the jobs being created," says the JM Financial report titled 'What do I do with my degree?'



Notably, Niti Aayog vice-chairman Arvind Panagariya, while addressing an event at the RBI last week, had termed the jobless growth criticism by a section of economists and the opposition as "bogus" and had claimed that the 7-8 per cent growth rate was benefiting the labour market a lot.



"The whole point we continuously make about jobless growth is a little bit bogus. There is some substance to it, but a little bit bogus," Panagariya had said.



"If 7-8 per cent growth happens, it cannot happen that labour market is not getting any benefit out of it. When such growth happens it cannot be jobless...Jobs are being created," he said without substantiating with supporting numbers except that the unemployment rate is only around 3 per cent.



The report cites some reasons for this assumption. It says traditionally public sector, manufacturing, IT/ITeS and BFSI used to be the largest employment generators but of late these sectors have been hiring far less, leading to overall waning demand for trained hands.



Secondly, the domestic jobs market is very slow in adopting unconventional sources of employment such as personal and social service, and finally there is a rapid supply of qualified labour with inherent mismatch for labour demand.



This will lead to higher outsourcing in services sector benefiting flexi-staffing companies, says the report.



Based on the quarterly employment survey and RBI data on banking employment, a total of 2.5 million jobs were created in the nine labour intensive sectors that contribute to over 65 per cent of GDP during FY11 to FY13, while as many 22.7 million earned higher education degrees in the same period, which is a ratio of nine students per new job created, notes the report.



In the following three-year period of FY13-15, the corresponding numbers stood at one million jobs and 25.9 million higher degree holders, which is a ratio of 27 students per job created, or more than three times the previous period, says the report.



As per the new quarterly employment series, only 0.19 million jobs (excluding banks) were created in the first nine months of FY17 while 8.8 million students passed out in FY16.



"The rate of labour supply far exceeded that of the demand. Especially of concern is that textiles, IT/BPO and banks, which contributed to about 90 per cent of these new jobs, are showing signs of increasing sluggishness," it says.



"The misalignment between the education imparted and high growth areas of job creation further complicates the problem," says the report.



The main reason for it is that the private sector, which was the main job creator since 2000, has gone really slow as a result of which the ratio of organised public/ private jobs has fallen from 2.4x in FY01 to 1.6x in FY12.



The number of central employees declined at a CAGR of 2.3 per cent.



In the private sector, it grew by a CAGR of just 3 per cent with finance, insurance and real estate generating employment at the fastest clip (16 per cent) because of the increase in labour productivity and decline in private capex, which will continue to hit their ability to hire more.