The principal objective of governments in the developing world has to be the generation of employment, says Dr Nirmal Jain, the managing director of Tata Infotech, who contends that this can be achieved by encouraging entrepreneurship, innovation and business expansion

More than 500 million jobs will be created in the developing world over the next 10 years. Individual countries will have to dedicate at least 10 per cent of their GDP every year towards achieving this end.

Some of the common characteristics of most countries in the developing world are: a large population that is growing rapidly, a population that is primarily agrarian, low levels of literacy, poor-quality education and meagre infrastructure.

There are inherent constraints to entrepreneurship in the developing world, some of them cultural. Minds are not easily swayed from traditional practices and beliefs, and the past is more real than the present. Due to the insecurities associated with making a living in the developing world, it is much more difficult for people there to secure the freedom to innovate and take risks. A regressive political environment, unstable governments and inconsistent administrative policies are compounded by insufficient attention being paid to basic needs such as education and health. Political interference adds to the constraints.

The governments of developing countries have an important role to play in education. They should recognise the value of brainpower and ensure basic education for all up to a certain level. They should provide options for vocational training, and the environment and infrastructure for sufficient numbers of adequately trained people. And they should put in place policies that bridge the gap between demand and supply.

The new century has highlighted the interdependence of the developed, developing and underdeveloped worlds. It is impossible for the developed world to sustain and increase its levels of prosperity without making developing countries their partners in progress.

Developing countries have a huge potential to generate large-scale employment through the ‘emerging services’ sector, such as IT and IT-enabled services. There are other sectors, too, that hold much promise: textiles, engineering, manufacturing and others.

In developing countries, finding a full-time or part-time job is the only option available to poor people, because they have neither the stamina nor the resources to become entrepreneurs. Therefore, if more members of a family work, the more the income for the family.

Employment generation has to become the government’s primary goal. This should not happen by way of employing people in government, but by encouraging new businesses and promoting fresh ideas.

In India 70 per cent of the population is involved in agriculture-based activities. The government must provide fiscal incentives to entrepreneurs, help cover risk, and promote micro-financing schemes. About 7,000 micro-finance institutions have helped over 15 million people become entrepreneurs, and they have an excellent track record of repayment (over 95 pr cent). Approximately 500 million people could generate their own income if this is done properly.

In India the organised sector is very small (6 to 8 per cent), therefore most employment opportunities will be in the unorganised sector. Big business will not be big employers. For the organised sector to generate more employment, we need to encourage organisations to face up to their ‘corporate social responsibility’ (CSR) — by sharing their skills with the underprivileged, by training and developing them, and by encouraging entrepreneurship among their employees so that they can generate more employment.

A conglomerate of about 80 companies, the Tata Group, of which my company is a member, is India’s largest and best-known business house. Tata Sons is the principal investment and holding company of the Tata Group and it has an investment in each Tata company.

Tata Sons adheres to a philosophy of trusteeship and philanthropy. Approximately 70 per cent of Tata Sons is held by philanthropic trusts involved in education and social welfare. Each company promoted by Tata Sons runs as a professional organisation, with clear expectations of growth and profit. Each company is required to have a clear community and CSR objective, and this operates under the umbrella of the Tata Council for Community Initiatives.

Each company has to have a CSR policy, a budget for it, an annual plan and clear objectives. These must be communicated to all employees in the company. Programmes undertaken by member companies must be aligned to the core competence and capabilities of the company, and will involve NGOs to help in their completion. The CEO and operational heads operate as facilitators.

This is a model that could be followed by corporations in developing countries. Such sharing of expertise will promote innovation and entrepreneurship.

This is an edited version of the speech delivered by Dr Jain at the Global Employment Forum, arranged by the International Labour Organisation in Geneva from November 1 to 3, 2001. The forum’s theme was ‘Creating decent work in the 21^st century’ and the keynote speakers included United Nations Secretary General Kofi Annan and Paul Nyrup Rasmussen, the prime minister of Denmark. Dr Jain’s presentation was titled ‘Overcoming constraints to entrepreneurship and business growth’.