What's New

JOBS, STILL

Relevance: GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Why in the News?

• A report by the International Labour Organisation (ILO) revealed that over 80% of India’s unemployed workforce is comprised of youth.
• ‘The India Employment Report 2024,’ co-released by ILO and the Institute of Human Development (IHD), highlighted that the percentage of unemployed youth with secondary education or higher increased from 35.2% in 2000 to 65.7% in 2022.
  • However, A report released by Chief Economic Adviser V. Anantha Nageswaran indicated that youth unemployment and underemployment rose between 2000 and 2019.
• The youth unemployment rate more than doubled from 7% in 2000 to 17.5% in 2019. However, during the pandemic years, the rate decreased to 12.4% in 2022.

Indian Economy’s Growth Momentum

• Recent data indicates a robust growth momentum in the Indian economy.
• In February, the National Statistical Office revised its GDP growth forecast for 2023-24 to 6%, up from the previous estimate of 7.3%.
• The Reserve Bank of India, in its February monetary policy committee meeting, projected a 7% growth for the economy in 2024-25.

Concerns Over the Labour Market

• Despite positive growth projections, concerns remain about the state of the labour market and the ability of the economy to generate more productive employment.
• Data from periodic labour force surveys shows a consistent increase in the labour force participation rate.
  • The participation rate for individuals aged 15 and above rose from 49.8% in 2017-18 to 57.9% in 2022-23.
  • A significant part of this rise is attributed to more women joining the labour force, with the female participation rate increasing from 23.3% to 37% during this period.

Details from the India Employment Report 2024

• Post-2019, approximately two-thirds of the employment growth consists of self-employed workers.
• Among the self-employed, a majority are unpaid family workers, mainly women.
• Employment in the agricultural sector has seen an increase, while the share of employment in manufacturing has remained largely unchanged.
• Employment Trends in India (2000-2022): Between 2000 and 2022, employment in India was predominantly in the form of self-employment and casual labor, as per the report.
  • Nearly 90% of the workforce is involved in informal employment
• Shifts in Employment Types: The proportion of regular employment, which had been consistently increasing since 2000, started declining after 2018.
• Insecurities and Lack of Social Protection: The report emphasized widespread insecurities related to livelihoods. Only a small fraction of workers, particularly those in the non-agricultural organized sector, are covered by social protection measures.
• Central Issue of Job Creation in India
  • Job creation is a central concern for India’s development.
  • The challenge is to create more productive employment opportunities as current employment is mainly in the form of self-employment and casual wage labor.
  • The report estimates that 7 to 8 million new individuals enter the labor market each year.
• Youth Unemployment and Challenges
  • Youth unemployment decreased from 5% in 2019 to 12.1% in 2022.
  • However, unemployment rates are higher among:
    • Young people in urban areas.
    • Individuals with higher levels of education.

• Demographic Dividend and Employment Needs:
  • To leverage the demographic dividend, there’s a need to offer more productive employment to these specific groups.
• Changing Nature of Production and Skill Requirements:
  • The production process has become increasingly capital-intensive and labor-saving.
  • The skill intensity of employment in industry and services has risen, which is contrary to the current labor market needs of the country.

Stagnant Wages and Contractual Employment

• There has been a noticeable increase in contractual employment.
• Only a minority of regular workers have long-term contracts, leading to rising concerns about job security.
• Wage trends from 2012-22:
  • Wages for casual laborers showed a modest upward trend.
  • Real wages for regular workers remained stagnant or decreased.
  • Self-employed real earnings declined after 2019.

 Slight Improvement in Labour Participation

• The Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR) deteriorated from 2000 to 2018.
• There was a post-2019 improvement, with exceptions during economic distress and two peak Covid-19 quarters.
• The report urges caution in interpreting this improvement due to concerns about the underlying factors driving these changes.

Skills Deficiency Among the Youth

• Despite India’s significant youthful population, there is a notable deficiency in essential skills among the youth:
  • 75% struggle with sending emails with attachments.
  • 60% have difficulties with basic file operations like copy and paste.
  • 90% face challenges with handling mathematical formulas in spreadsheets.

India’s Youth Population and Employment

• The report predicts a decline in India’s youth population from 27% in 2021 to 21% by 2036.
• Approximately 7-8 million youths are expected to be added to the workforce annually.
• Youth employment in India generally offers lower quality compared to adult employment, with a higher prevalence of vulnerable occupations or engagement in the informal sector among young workers.

Required Policy Responses: The policy response should be multifaceted, focusing on:

• Quality Education and Skill Development: Ensuring access to quality education. Promoting skill development to meet the demands of the evolving job market.
• Facilitating Labor-Intensive Manufacturing: Encouraging and facilitating the growth of large-scale labor-intensive manufacturing sectors. Creating opportunities to absorb the millions of low and semi-skilled workers.
• Promote Job Creation: Implement policies aimed at creating more job opportunities.
• Enhance Employment Quality: Improve the quality of jobs to ensure they are productive and offer fair wages and job security.
• Mitigate Labour Market Inequalities: Address disparities in the labour market to ensure fair and equal opportunities for all.
• Strengthen Skills Development and Active Labour Market Initiatives: Enhance skill development programs to meet the demands of the evolving job market.
  • Implement active labour market initiatives to facilitate smoother transitions between jobs and reduce unemployment.
• Fill Knowledge Gaps on Labour Market Dynamics: Conduct comprehensive research to understand the intricacies of the labour market and devise targeted strategies for youth employment.
• Support MSMEs through Decentralised, Digitally-Enabled Approach: Provide support to micro, small, and medium-sized enterprises (MSMEs) through a decentralised and digitally-enabled approach to boost their growth and create more job opportunities.
• Invest in Key Employment Sectors for Young People: Focus on sectors expected to be significant sources of employment for young people, such as the care sector and the digital economy.
• Formulate an Inclusive Urban Policy: Develop an inclusive urban policy to address the needs of migrants, women, and economically disadvantaged youth in anticipation of increasing urbanisation and migration trends in India.
• Focus on Emerging Sectors:
  • Care and Digital Economies: Invest in and regulate the emerging care and digital economies, which could be significant sources of productive employment.
  • Support for MSMEs: Provide increased support to micro, small, and medium-sized enterprises (MSMEs) through digitalisation and AI tools and adopt a cluster-based approach to manufacturing to boost productivity and growth.

Source: https://indianexpress.com/article/opinion/editorials/express-view-on-employment-data-jobs-still-9236933/

Mains question

Discuss the challenges and strategies to address the complexities of the Indian labour market, emphasizing job creation and improving employment quality. (250 words)