The Macro Level Manpower Planning

Published Date: 02 Nov 2017

INTRODUCTION

HRP AT MACRO LEVEL

Importance of Macro Level Manpower Planning in India

Institutional arrangements at macro level

APPROACHES TO MACRO LEVEL MANPOWER PLANNING

The Manpower Requirements Approach

Rate of Return Approach / Cost Benefit Analysis

Social Demand Approach

LABOUR MARKET ANALYSIS

Labour Market Characterstics

Labour Market Information Systems (LMIS)

MACBETH Model

Labour Market Signalling

Labour Accounting Matrices

LABOUR ECONOMICS

EMERGING TRENDS & ISSUES IN HRP

EFFECTIVENESS OF MACRO LEVEL MANPOWER PLANNING AND POLICY

CHAPTER SUMMARY

DISCUSSION QUESTIONS

INTRODUCTION

Human Resources constitutes both on the demand side as well as the supply side of production of goods and services, in any economy. On the demand side, Human Beings consume produced goods and services leading towards poverty alleviation, health improvement and enhancement of educational level and so on and so forth. By that they generate better living conditions. Thereby optimum utilisation of goods and services leads to an improvement of quality of Human Resources and Human Resource development in the economy. On the supply side, Human Resources too constitute important factor in fact considered as the primary factor of production system along with other capital which transform natural and physical resources into consumable goods and services. However, Human Resources and capital are complementary to each other and the degree of complementarities between Human Resources and capital is so close that optimal increase in output and thereby optimal economic growth is not possible by increasing any one of them at the cost of the other. Although Theodore W. Schultz (1962) has observed that, some growth can be possible by increasing additional conventional capital even though the labour is lacking in terms of skill and knowledge. But the rate of growth will be very limited. So to reap the fruits of modern agriculture and the benefit of modern industry without making required investments in Human Beings is simply not possible. By studying the per capita income differences among many countries, Anne O. Kmegar (1968) came to the conclusion that an optimal ratio of Human Resources to capital is absolute necessary in order to achieve and accelerate the production process and maintain the attainable rate of economic growth. Growth of Human Resources needs to be proportionately maintained with that of the pattern of accumulation of capital and other material resources. Unprecedented growth in Human Resources, disproportionate to capital and other material resources could obstruct the tempo of economic growth and development which necessitates Human Resource Planning at Macro level.

HRP AT MACRO LEVEL

Manpower Planning is largely concerned with labour supply. Employment planning is more concerned with the demand for jobs than that of supply side of the employment equation. HRP is interested to know the number of people coming into the labour market, their education and training levels, age etc. HRP is largely concerned with determining the training needs to reconcile the labour supply with that of labour demands in the economy. This activity is undertaken by the Ministry of Labour and/or Education, Ministries of Planning or Finance. Since the focus is on the supply side of the equation, the demand for labour has been treated inadequately in most of the Manpower Planning activities till date. Therefore, Manpower Planning is becoming a critical issue for developing countries like India.

Manpower planning must be carried on taking into consideration of macro-economic phenomena. The part of macro-economics interested in creating jobs must take care of who are for the jobs in terms of age, sex and skill. Because, the determinants of economic growth are related to labour force characteristics in terms of its skill set, level of education, flexibility so on and so forth.

Manpower is the primary resource of an economy. Without manpower resources, physical and financial and all other resources cannot be put into use. HRP are both macro and micro level issues. At the macro level, it is influenced by the environmental factors like employment, unemployment situation, demographic changes, legal control and organizational policies where as the factors like technological changes, trade union pressure, gap in skill and competency and recruitment and selection affect the process of manpower planning at the micro level. However, macro level manpower planning is uncontrollable and micro level manpower planning is controllable.

HRP Need at Macro Level: HRP at macro level are to address the following factors as follows:

Employment-Unemployment Situation: on one hand the number of educated unemployed is increasing in the economy, on the other hand there are acute shortages for a variety of required skills. Therefore an intensive macro level manpower planning can help in this direction in order to bridge the gap between employments –unemployment Scenario.

Technological Changes: The rate of change of technologies in production, marketing methods and management techniques has been extensive and rapid in outside world. In order to adopt the change of technology in accordance with gobal trend, necessitate high degree of extensive Macrolevel Manpower Planning.

Organizational Changes: The turbulent business environment affected by global economic cycle and discontinuities, the nature and pace of changes in organizational environment both in terms of its activities and structures affect manpower requirements. For which strategic considerations at Macro level is required.

Demographic Changes: The changing profile of the work forces in the economy, in terms of age, sex, literacy level, technical competency and social background have implications on macro level HRP.

Skill Shortages: There are acute skill shortages in labour market. On one hand there is a widespread unemployment. On the other hand labour market is not a buyer’s market in spite of large scale unemployment. Growing complexity of the organisations require a wide range of specialist skills that are rare and scarce. These skill gaps can be bridged by proper Macro level Manpower Planning.

Government legislation: Macro level manpower planning must go hand in hand in a very systematic way in accordance with Government control and changes in legislation.

Lead Time: The long lead time is the gestation period required to provide education and training and deployment of the employees to handle new knowledge and skills successfully can be avoided by Macro level Manpower Planning.

Macro Level Manpower Planning in India

Development of Human Resources is primary objective of any country for long term economic growth. For a developing economy like India this is more visible from our economic planning as governments over the years have been giving increasing priority to population planning and control, education, health, housing etc.

Population Planning and control:

Population planning and control measures have been initiated by the Government of INDIA to enforce control over population explosion and to curb economic imbalances. Such control has been enforced in a planned manner and been successful in arresting the growth of unproductive population of the Nation. The Government of India has adopted National Policy 2000 to ensure population stabilisation. The policy put emphasis on affordable reproductive health care, increased quality of life by enhancing services of primary and secondary education, sanitation, drinking water, housing, transport, communication and empowering women as part of the macro level manpower planning. Such planned efforts have helped us to achieve the goal in a very fair way, if not in absolute terms. There is a significant rise in population control awareness among people resulting in phenomenenal increase in averting birth rate over the decades.

Literacy and Education:

To develop Human Resource at the macro level, the Government of India has adopted National Policy on Education in 1986. The policy provides a broad framework for complete eradication of illiteracy in the country by declaring basic primary level education up to standard V, free and compulsory. The government of India has initiated lot of schemes to promote elementary and secondary education as follows:

Sarva Shiksha Abhiyan (SSA) – It is also known as right to education (RTE). Under the umbrella of RTE Act 2009, free education is fundamental right for all children between 6 and 14 years of age.

Rashtriya Madhyamik Shiksha Abhiyan (RMSA): The RMSA was launched by Government of INDIA, in March 2009. The objective of the scheme is to improve quality of secondary education by enhancing access to it.

National Programme for Education of Girls at Elementary Level (NPEGEL): This is a focused intervention by Government of India. The programme is specifically meant to educate girls.

Model Schools Scheme: The objective of the scheme is to set up 6000 model schools as benchmarks of excellence at block level. With one model school per block to provide quality education to rural talents. It was launched in November 2008.

National Programme of Mid Day Meals in schools: Under this Programme, cooked midday meals are provided to all children attending Classes I to VIII in government school, local body, government-aided, and National Child Labour Project schools are also entitled to get the benefit of the scheme.

Saakshar Bharat (SB)/Adult Education: The National Literacy Mission is re-casted as Saakshar Bharat (SB). It was launched on 8 September 2009. It focuses on enhancement of female literacy.

Inclusive Education for the Disabled at Secondary Stage (IEDSS): This scheme was launched in 2009-10. It replaces Integrated Education for Disabled Children (IEDC) scheme.

Vocational Education: Vocationalisation of Secondary Education Scheme aims to strengthen vocational education in Classes XI-XII.

Indian Higher Education System: Indian higher education system is one of the largest in the world. National Mission in Education through Information Communication Technology (ICT) is the major initiatives taken during 2011-12 for promoting higher and technical education. Above all, the Gross Enrolment Ratio (GER) in higher education is targeted to increase from nearly 18 per cent at present to 25 per cent by 2016-17.

Health and Medical-care:

The National Health Policy was implemented by Government of INDIA in 2002. It is an important initiative for the development of Human Resources at the macro level. National Health policy seeks to provide preventive and curative health-care facilities. The major objective of the policy is to open up and enhance accessibility to the decentralized public health system and threby achieve an acceptable standard of good health amongst the general population of the country. As a result of which, diseases such as small pox, leprosy, polio, and TB has been eliminated or controlled successfully. Overall sex ratio in the country has gone up from 933 in 2001to 940 as per census 2011 (prov.). The health indicators in Table depict all the progress that has been made by India over the years. Despite progress has been made on many fronts, there are areas of concern as progress has been quite uneven across regions. Large-scale inter-state variations are also there. Moreover, rural and remote areas continue to have deficit in health facilities. At the state level the situation is not fairly well. At state level only few positive changes such as change in life expectancy ratio, infant mortality rate, child mortality rate etc are there.

Housing:

In housing sector, Government of INDIA has brought National Housing and Habitat Policy in 1998. The basic thrust of this policy is to achieve sustainable development of housing infrastructure through public -private partnership. Over the years, the Government of India has been giving high priority for building rural infrastructure. The objective is to facilitate a higher degree of rural-urban integration, to bridge the existing unevenness between rich and poor by fostering even pattern of growth and opportunities for the poor and disadvantaged sector of economy. Bharat Nirman is such programme. This programme launched in 2005-6. It aims at building up infrastructure and basic amenities in rural areas along with other components like rural housing, irrigation potential etc. To provide better urban infrastructure and housing facilities, there are various central government programmes as follows:

Jawahar Lal Nehru National Urban Renewal Mission (JNNURM): This scheme has four components. Two of them are meant to provide shelter and basic service needs of the poor. One is Basic Services to the Urban Poor (BSUP) concern for 65 selected cities. The other is Integrated Housing & Slum Development Programme (IHSDP) work for other cities and towns. Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) supplement the efforts of the government through the JNNURM to address the housing shortages.

Rajiv Awas Yojana (RAY): RAY extend support to the states in providing shelter, redevelopment and creation of affordable housing stocks , which are willing to assign property rights to slum dwellers. Apart from these, other social sectors schemes of the Government are in operation to enhance social security and overall quality of life are as follows:

The MGNREGA: This is a flagship programme of the Government of India and is instrumental in financial inclusion. The objective is to enhance livelihood security of rural households of the country. The scheme provides guaranteed wage employment of at least one hundred days in a financial year to every household whose adult members are ready to extend unskilled manual work.

The Swarnjayanti Gram Swarozgar Yojana (SGSY): It is a self-employment programme. The objective is to help poor rural families to cross the poverty line by assisting them to take up income generating economic activities. For which it provides bank credit and government subsidy.

The Swarna Jayanti Shahari Rozgar Yojana (SJSRY): This programme was launched by the Government of India on 1st December1997. The urban unemployed and underemployed get benefit out of it. It provides gainful employment to them by promoting self-employment ventures and provision of wage employment.

In addition to the above centralised strategy for Human Resource Planning and development, state planning boards are there at the state level. At the district level also manpower planning generation councils have been setup to help in this direction. Macro level HRP is a complex and dynamic process. It sincerely requires rigorous longitudinal study to understand the resultant effect of various policy measures and actions.

Institutional Arrangements At Macro Levels:

The followings are the agencies and institutions that provide required macro level data at the appropriate level.

The Planning Commission: Employment Manpower Planning Division of the Planning Commission is at the apex of the institutional machinery. It formulates employment plans.

The Ministry of Labour: The Labour Ministry gathers employment data through the Directorate General of Employment and Training.

The National Sample Survey Organisation: National Sample Survey (NSS) and the Annual Survey of Industries are also engaged to collect Employment data

The Institute of Applied Manpower Research: The Institute of Applied Manpower Research conducts various studies to know about employment strategies of different sectors of economy as well at project levels.

The National Labour Institute: The National Labour Institute established in 1974. It conducts major studies on institutional conditions on rural employment and other related labour issues at the sectoral and project levels.

Universities and other institutions at the state level: Researchers in the Universities and other state level research bodies also participate and work in this direction collect data on local labour markets.

APPROACHES TO MACRO LEVEL MANPOWER PLANNING ---

The approaches to Macro-level Manpower planning are as follows:

The Manpower Requirements Approach (MRA)

Rate of Return Approach / cost benefit analysis

The Social Demand Approach

The Manpower Requirements Approach (MRA)

The manpower-requirements approach (MRA) is a dominant model of manpower planning (Youdi, 1985). It came to widespread prominence in the Organization for Economic Co-operation and Development’s (OECD) Mediterranean Regional Project (MRP) in 1960s. Manpower forecasting by MRA approach is basically comprises of the following three steps:

1. Projection of the demand for educated manpower

2. Projection of the supply of educated manpower

3. Balancing projected supply with that of projected demand.

1. Projection of the demand for educated manpower

Basically, by following the MRP methodologies there are five main steps to assess the number of workers by educational level over time.

Estimation of the future level of GDP or output (X)

Estimation of the structural transformation of the economy as expressed by the distribution of output by economic sector (Xi/X) over time.

Estimation of the labour productivity by economic sector (Li/Xi) over time.

Estimating the occupational structure of the labour force within economic sectors (Lij/Li) over time.

Estimating the educational structure of the labour force for a given occupation within economic sectors (Lijk/Lij) over time.

Hence the demand function for educated labour is:

LDijk = f (X, Xi/X, Li/Xi, Lij/Li, Lijk/Lij). --------------------- (1)

Where i=economic sector, j=occupation, k=educational level, a=age, s=sex;

(b) Projecting the supply of educated manpower: Projection of supply of educated manpower basically comprises of four basic steps:

Estimation of the population Pa,s,k by age, sex and educational level.

Assessment of the number of graduates, school dropouts by age, sex and educational level, Ea,s,k.

Finding the labour force participants (LS) by applying age, sex, educational level, labour force participation rates to the number of graduates, la,s,k.

Estimation of the occupational supply based on the labour supply by education level. It can be done by using education to occupation matrix Mk,j

Hence the supply function for educated labour is:

LSj,k = f(Pa,s,k, Ea,s,k, la,s,k, Mk,j). … (2)

(c) Balancing labour supply to demand

According to Youdi, (1985), there are two ways for this adjustment. First, if the demand function LD.j, is very different from the supply LSj, due to poor data quality and lack of proper reasoning, then the manpower planner will use an ad hoc adjustment mechanism in balancing it. It can be done by revising one or more of the key assumptions. For example, if there is too much optimism on labour productivity, it could result in reducing the demand for labour. On the contrary, if there is too much optimism for labour force participation rates, this could result in increasing the supply of labour. Therefore, to deal with such paradoxical situations, it is necessary to reconcile labour supply and demand.MRA helps to project the demand for manpower at the macolevel and for the educational planning at the National level.

MRA is a simple technique for macro level manpower planning as well as educational planning. First it establishes a linear relationship between employment and output and then extrapolates different categories of manpower requirements for years to come. At the beginning, manpower co-efficient is calculated on category wise based on past data. Then it is applied on the hypothesized growth pattern of different industry groups. Thereafter aggregate manpower requirement of different categories are calculated. These inputs are then converted to different type of educational requirements.

Limitations of MRA

Psacharopoulos and Blaug (1970) and Ahamad and Blaug (1973), criticised MRA by evaluating ten manpower-forecasting studies in different countries . Considerable forecasting errors have been identified by them with projections of employment by occupation using manpower requirements approach (MRA) methodology.

Primarily the errors in the model are ascribed to the fixed-coefficients model as well as to assumed labour-productivity.

It does not cater for labour market flexibility for which the approach is not very dynamic.

Technology output relationship is considered as stable under this approach, which in reality is not.

Inter occupational job mobility, man machine substitution cost is also not considered while computing aggregate manpower requirement of different categories.

Forecasting errors go parallel with the time-horizon of the forecast.

Lack of evidence or no evidence that links manpower forecasts to any real educational policy decision.

There are also cases where manpower forecasts corroborate wrong decision. Therefore, forecasting does not improve policy decisions always. One such crucial assumption according to Youdi in MRP-type manpower-forecasting methodology is that, the elasticity of substitution between different kinds of labour is almost zero or nearly equal to zero. The elasticity of substitution is:

e = - d Log (Lk1/Lk2)/d Log (Wk1/Wk2)

Where k1 and K2 are two different kinds of labour such as mechanical or electrical engineers,

W, is their wage level, as determined during the forecasted period.

The elasticity of substitution cannot be zero. It varies depending upon the degree of substitutability of one type of job for another. Elasticity of substitution is also get affected by the amount of training and / or additional education, that is needed to substitute one job with other.

Rate of Return Approach (RRA) / Cost Benefit Analysis

The Rate of Return (ROR) approach is radically different from the MRA approach. In this approach the net returns of educational expenditure is calculated (ILO, 1984). It is measured as the increase in net income that an individual will be able to command during his productive life with respect to the income he would have earned, if he had not reached a given level of education. The present value of the flow of future net income is calculated for each specific educational programme. The rationality of ROR approach is that those programmes which show positive returns should be promoted, while those show zero or negative net present value should not be promoted or possibly abandoned.

If the income is calculated as the difference between the income of the individuals benefited after tax, and the cost include both the direct costs paid for the education and the indirect costs in terms of income that would have earned if there have been non-participation in educational programmes, for a given discount rate, yields the private rate of return. Whereas, if the income is calculated before payment of tax and the costs include all the resources utilised to implement the education programme, for a given discount rate, gives the social rate of return.

Limitations of ROR approach

It does not consider the external effects on earnings. The only gains quantified are income due to education. Hence applicable to the individuals who had received education.

The analysis undermines households’ needs and decision to undertake "human capital investments" on education. For example, school drop-outs with high private rates of return could be caused either by a family decision on the relative priorities of work or schooling, or by adequate government resources for primary or elementary education.

The basic assumption in ROR approach is that wages reflect the marginal product of labour. Marginal increase in income is attributed to the content of the marginal years of schooling an individual undertakes. Which itself is questionable.

According to this approach, the total employment remains constant. Most rate-of-return studies of manpower-development programmes implicitly assume that the old post of a trained individual is not filled by an unemployed worker and that the trained individual does not displace any other worker.

It does not shed light to the quality of education currently being given. One would have to wait for the future to see whether the quality of the education has some impact on wages or not. Therefore hardly it makes a basis for improving the quality of education today.

George Psacharopoulos (1995) noted that ROR does not allow market "segmentation" and "screening" hypotheses of today’s labour market models. That ascribes earnings differences to the superior ability of the educated, rather than to their extra education.

Paul Bennell (1996a) pointed out that, a comparative evaluation of general academic and vocational education indicates that the rate of return of the general academic is much higher than the vocational education. Thereby added another controversy to ROR approach.

The Social Demand Approach

Social demand approach relies on assessing society’s requirement for education. It is an aggregate demand for education in respect of all individuals within the society. In practice, social demand approach relies on projection of past trends in demographic aspects of population and the enrolment at different levels of education. Therefore, social demand approach is capable of revealing the number of students with different types of professional preparation that is expected with a given target data, based on past experiences. Projections of social demand for education rest upon the levels of:

Incomes of educated people

Tastes and preferences of households for education

Demographic characteristics such as fertility and mortality

Direct costs of education

Student grants if any

Existing standards of taking admissions to various levels of education

Limitations of social demand approach

It is argued that the decision to choose more or less of education, beyond a legal school-learning age, is made by an individual who attaches a positive value to the present as well as the future benefits of education. Since, the essence of the theory of the rate of return approach to education looks upon education as the primary contributor to productivity, it facilitate investment decisions in education.

LABOUR MARKET ANALYSIS

Labour market analysis is considered as one of a principal instrument of Human Resources Planning. It helps in identifying skill shortages and also gets into the reason of market failure to match labour supply with demand since the demand for human resources crucially depends on the functioning and flexibility of labour markets. In the context of the state of the art of manpower planning and the characteristics of economies of developing countries, labour market analysis serves as an alternative to manpower forecasting. Such countries would be best served by a manpower planning and analysis programme that puts more emphasis on analysis of the operation of various aspects of the labour market at all skill levels and less emphasis on manpower projections. Since, the labour markets in developing economies are relatively flexible and the need for long term manpower projections of demand and supply is relatively limited, all purported forecasting techniques to assess manpower requirements are dubious in nature. For which it needs emphasis on labour market analysis and labour market signalling. Labour market analysis helps in identifying shortages at more disaggregated levels of occupations and geographical locations. It also enables to have a diagnosis of market failure in order to match labour supply with demand.

Demand, supply and institutions interact in labour markets and labour economics studies the operation of labour market considering all these issues. Analysis of labour markets is carried out for different occupational segments of markets such as blue collar workers, markets for white-collar workers, for professionals etc. Investigating markets for knowledgeable and skilled workers, differentiating supply and demand forces in the market, geographic and industrial mobilities, wage pattern etc. are the areas of concern of the labour markets. It is also concerned with the macro changes in wages and unemployment over a given period of time, both within the country and across countries. Labour market analysis is facilitated by a comprehensive and regularly updated labour market information system.

Labour market characterstics

Labour markets are more of social matters. Sociological and demographic changes like social class movements, gender awareness, youth cultures, family size, employment heritage, ethic and cultural background may influence who enters, leaves, or is restricted from taking up and keeping particular kinds of employment. However, labour is one important factor of production. The supply of labour is determined by the number of able people in the population and their willingness to work with due cognizance of existing labour laws and regulations, health of economy and firms along with labour price and availability of other factors of production.

In a perfect market, wages would be determined directly by supply and demand of labour. But the labour market is often far from perfect. Wages are less flexible than other prices. Wages rarely fall, when demand for labour declines or supply increases. This wage rigidity can be considered as the major cause of unemployment.

Labour Market Information Systems (LMIS)

The seeming failure of above approaches has led some authors to concentrate on the preparation and organisation of labour which is known as Labour Market Information Systems (LMIS). This serves as an alternative to forecasting. As noted by Richter (1989) "labour market information means nothing more or less than information about labour markets". LMIS promote collection of data sets without prescribing any analytical framework within which to collect and analyze data for planning or policy formulation. For which this model is of very little use. Hence suffer from the following criticism.

Criticism of LMIS

Manpower forecasts suffer from lack of appropriate data whereas lack of proper analytical framework is the measure drawback of labour market information systems (LMIS). Another disadvantage of LMIS as described by the ILO is that, it ignores the demand side of the equation to a large extent i.e. the macro-economics. This is because data on macro-economic planning is largely the preserve of non-labour market specialists in Departments of Planning, Finance, and Statistics etc. Since demand projections for labour depend on the economic growth rate and this is the single most important variable for manpower planning LMIS should not ignore it.

MACBETH Model

MACBETH is a recursive simulation model of the labour market. It is outcome of evolution of occupational mismatches. The MACBETH (MACro Compter Based EmploymenT Heuristic) model is a flexible tool to examine the alternative future scenarios of the manpower planning problem. The main use of MACBETH is learning-by-doing as a heuristic. Heuristic is the core of MACBETH. Heuristic is a system of education under which the pupil is trained to find out things for himself. It is a tool with the help of which complexities of the labour market and its underlying factors are understood and the alternative scenarios are examined.The purpose of the model in the context of labour market analysis and human resource policy analysis is to project and examine different scenarios of:

population by age and gender

number of school going students and school leavers

cost of the schooling system

labour supply by occupation and education level

value addition and growth by economic sector

employment demand by occupation and education wise

employment mismatches by occupation and education wise

impact of occupational mobility of labour on employment of mobility

training implications

costs of occupational mobility of labour

The model is robust and straightforward enough to be applied in the context of developing country like INDIA. The model serves as tool to ensure data consistency for the purpose of projections. Therefore is most useful for perspective planning purposes.

Labour Market Signalling

Labour market signalling (LMS ) is useful for short-term assessment of training needs. It serves as a tool that could help to improve the training centres’ ability. There by the centres respond quickly to changes in market circumstances and reduce inefficiencies ( Middleton,1993).

"Labour market signalling requires manpower planners to focus more on education and training qualifications rather than on occupational classifications. It also advocates the need to focus on wage and employment trends, as this trend will serve as a guide for schooling and training decisions. It will also help in evaluating the functioning of labour market. The essence of signalling is that, it can estimate whether there will be upward or downward pressure on the economic returns to invest in specific skills. Manpower Planners can monitor labour market conditions and evaluate training programs. They can also focus upon building up particular skills that are of strategic importance for economic development, even though it takes a long time to acquire. The main indicators of labour market signals are wages, employment trends by education and training and occupational classifications, unemployment rates by education, skill, training and occupation. Costs of specific education and training programs, institutional enrolment data, programs of study, courses offered, advertisements in newspapers and professional journals are also indicators of labour market signalling. Labour market signalling technique also helps in identifying the types of skills that are required in the labour market. Because demand for occupations is considered as a poor predictor of future labour market requirements since the types of occupation change rapidly with change of technologies. However, any forecasting technique can compensate through by different scenario analysis. Different circumstances under different scenario can provide a number of alternative forecasts under different assumptions.

Labour accounting matrices (LAM'S)

Labour accounting matrices provide a useful tool to organise demographic and labour market information in an internally consistent manner. The framework of LAM is set in the tradition of social accounting matrices (SAM's). The labour accounting system (LAS) provides a complete mapping, from activities in the economy to jobs and earnings and at the end to households receiving such earnings. SAMs and LAMs are static pictures or photographs of the economy at any given point of time time. They can be used for simulation experiments of comparative statics in an economy. Clearly, a collection of SAMs or LAMs over time provide a near moving picture of events over time. Therefore, LAM is a manpower matrix. It shows the average number of hours that each type of person is available for work. The matrix of activities can depict either for supply or a demand for labour statement. It shows the number of hours each type of individual spends in productive activities and the number of hours that are lost due to unemployment.

LABOUR ECONOMICS

Labour economics seeks to understand and explain the functioning and dynamics of the labour markets. It is concerned with workers who are suppliers of labour services as well as employers, who demands labour services and endeavours to understand the resulting pattern of wages, employment and income etc. Labour market is characterised by the interaction of employers and workers. Marshal and Smith are the two pioneering economists who first recognised that the study of market for labour is not possible without understanding the social relations of production, long term contractual arrangements, problem of motivation, institution like unions and internal labour markets etc. All these characterstics requirements differentiate the market for labour from other markets.

Labour Economics is defined as the study of the organizations, institutions and behaviour of the labour market in an industrial economy". As defined by Dole Yoder, "Labour economics or manpower economics is basically concerned with efficient utilization and necessary conservation of manpower and human resources. Labour economics attempts to study and understand the processes by which manpower is utilized in modern economy". Labour economics deal with manpower planning, labour organization, labour relations and public policy. Wage and employment theory, collective bargaining theory, practice of social security and social welfare are also areas that fall under the preview of labour economics.

Labour economics has two sides. One is the application of microeconomic technique and the other is application of macroeconomic techniques to the labour market. Microeconomic technique deals with the role of individuals as well as individual firms in the labour market whereas macroeconomic technique is concerned with the interaction and interrelationship between labour market, money market, goods market, as well as the foreign trade market. Macroeconomics also looks into the resultant effect of these interactions on macro variables such as employment levels, aggregate income and gross domestic product etc.

The most important development in modern labour economics is the development of the concept of human capital. Human capital approach analyses the individual decision making with regard to supply of labour and other behavioural areas which are more related with sociology than economics. Before the development of the concept of human capital, labour supply decisions were considered more as an economic rationality. By making such decision as an inter- relational variable of education, skill, investment, wages, working hours etc, the subject of labour economics has been demarcated from the traditional economic analysis.

EMERGING TRENDS & ISSUES IN HRP

HRP is a holistic process of organizational strategy to gain competitive advantage. However, shortages of skills are now global phenomena. For the developed countries, this is primarily because of ageing population, whereas in developing countries like India, the problem is due to absence of proper initiative at the national level. Some of those are described below:

1. The shift in skill requirements in India was witnessed from 1981 census reports. Indian economy has encountered massive shift in employment from secondary & primary sectors to tertiary or science sector.

2. Labour market authority in India should perform in the line with the practices prevailing in Europe and other industrialized advanced countries. The authority does the job of matching labour requirements of firms & helping in placements. Hence it is the look out of the authority to ensure that labour is not mismatched redundant.

3. The Institute of applied Manpower research under the planning commission has done some studies in the same Sectoral and occupational categories. Decisions on skill development at the national level cannot be taken in isolation of social sector spending both planned nonplaned which including education budget. In India, average percentage of total expenditure on education shows a decline trend.

4. In order to achieve the desired result, initiative at the national level should be reinforced by organizations at the micro level, through regular skills renewal efforts.

5. Another important aspect which deserves the attention of HRP is demographic change process.

Indian organizations are witnessing a significant change process in systems, management culture &

philosophies and management practices which is the outcome of global aligning of Indian organization. Other emerging issues like restructuring, TQM Practices, changing process, systems, culture & management practices need attention of HRP.

THE EFFECTIVENESS MACRO LEVEL HUMAN RESOURCE PLANNING AND POLICY

Human Resource Planning is concerned with the utilisation of human resources in a controlled manner to achieve both short-term as well as long-term objectives of the organisation that are preset. Thereby, planning process endeavours to balance manpower supply with that of manpower demand at the levels most consistent with the needs of the projected requirements by assessing of the prevailing and expected economic and social environment of the business.

Effectiveness of manpower planning and policy at the macro level is highly dependent on the quality and reliability of labour market information. Whereas the existing sources of statistical information suffer from serious gaps, inadequacies and redundancies that hinders in meaningful manpower research affecting effective National Employment Policy.

Thus, the quality and effectiveness of future macro level manpower policies depend most significantly on the accuracy and adequacy of the information inputs. Therefore, the apex level institutions referred above need to work in this direction to fill up the gap. They need to improve the quality of current bench-mark data sources, build extensive computer generated data banks in order to support data adequacy and accuracy.

SUMMARY

Macro level manpower planning is an important objective of the Government for long-term economic growth. However, the art of manpower planning is in a mess. After decades of manpower forecasting practices, it has been suffering from repeated and sustained criticism. The planners practicing the art of manpower planning might rightly be confused with its mandate. The methodology and overall usefulness of manpower planning is also questionable. Therefore, Manpower Planning at its core is suffering from the problem of mismatch between labour supply and demand resulting in unemployment.

DISCUSSION QUESTIONS

What is Macro level Manpower planning? Discuss the importance of Macro level Manpower planning in India.

Discuss the Manpower Requirement Approach of Manpower Planning.

Discuss the Rate of Return Approach to Manpower Planning.

Discuss the emerging trends and Issues in HRP and illustrate how to improve the effectiveness of Macro level Human Resource Planning and policy.

Write short notes on :

Social Demand Approach

Labour Market Analysis

Labour Market Characterstics

Labour Market Information System

MACBETH Model