• UGI USER
  • May 06, 2024
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YOUTH UNEMPLOYMENT: THE PRINCIPAL CHALLENGE IN INDIA

SYLLABUS:

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

Focus:

  • Recently, the Institute for Human Development (IHD) and International Labour Organisation (ILO) have released a report titled- ‘India Employment Report 2024’
Source: ILO

Overview of the India Employment Report 2024

  • The India Employment Report 2024, by the Institute for Human Development (IHD) and the International Labour Organisation (ILO), examines India’s labor market trends.
  • The report relies on data from the Employment and Unemployment Surveys (EUS) and the Periodic Labour Force Surveys (PLFS), which are comparable due to high precision.
  • The analysis focuses on four years (2000, 2012, 2019, and 2022), offering insights into changes over 22 years, including the COVID19 period.
  • Despite misunderstandings surrounding its findings, the report highlights significant positive labor market developments and emerging challenges.
  • It assesses labor market trends, structural transformations, and the shift towards nonagricultural employment.
ILO

·   Tripartite UN Agency: The International Labor Organization (ILO) is a tripartite agency of the United Nations, bringing together governments, employers, and workers from 187 member states, including India.

·   Mission: The ILO sets labor standards, develops policies, and designs programs to promote decent work for all women and men.

·   Nobel Peace Prize: The organization received the Nobel Peace Prize in 1969 for its efforts in promoting social justice and peace through labor rights.

·   Establishment: Founded in 1919 by the Treaty of Versailles as an agency of the League of Nations, it became the first specialized agency of the UN in 1946.

·   Headquarters: The ILO is headquartered in Geneva, Switzerland, serving as the central hub for its global operations.

Positive Labor Market Developments

  • There has been a significant improvement in employment quality across all states, as shown by the Employment Condition Index.
  • The shift towards nonagricultural jobs and the decline in agricultural employment signals structural economic transformation.
  • The steady rise in regular employment and the decline in unorganized sector jobs were temporarily halted only during COVID19.
  • Female workforce participation increased remarkably from 24.5% in 2019 to 37% in 2023, although still primarily concentrated in agriculture and unpaid family work.
  • Despite pandemicinduced challenges, wages for casual workers rose, particularly among lowerincome groups, reducing poverty and deprivation.

Persistent Challenges in Employment

  • Employment remains disproportionately skewed toward agriculture, which employs 46.6% of the workforce.
  • The increasing capital and skill intensity of production has led to a labor market mismatch, with an abundance of unskilled and semiskilled workers despite higher educational attainments.
  • Female workforce participation remains low, with women predominantly in less remunerative jobs like agriculture and unpaid work.
  • The report stresses the need for more nonagricultural job creation and infrastructure investment in rural areas, especially childcare and transport.
  • Labor market distortions necessitate a shift towards laborintensive manufacturing.

Youth Unemployment as the Principal Challenge

  • Youth unemployment remains a central challenge, with educated youth representing nearly twothirds of the unemployed.
  • The unemployment rate is highest among graduates and above, peaking at 28% in 2023, though it has improved from 35.4% in 2018.
  • Skills mismatch is prevalent, particularly at higher education levels, highlighting the need for better education quality and industryaligned skill development.
  • The proportion of youth not in employment, education, or training (NEET) remains high at 28%, with females five times more likely to be NEET than males.
  • This group requires targeted policy interventions to improve training, employment, and opportunities.

Paradoxial Improvement

  • Labor Market Developments: While there have been positive shifts in some labor indicators over the past two decades, India’s overall employment scenario continues to face significant hurdles.
  • Limited Non-Farm Growth: Despite faster growth in non-farm employment compared to farm employment before 2018, the non-farm sectors have not expanded enough to absorb the transition of workers from agriculture.
  • Prevalence of Informal Work: Approximately 90% of workers in India are in informal employment, and the trend of increasing regular employment from 2000 reversed after 2018.
  • Skill Gap Challenges: India’s young workforce, considered a demographic dividend, confronts obstacles due to insufficient skill development.
  • Digital Literacy Deficit: A large portion of the youth lacks essential digital literacy skills; 75% struggle with sending emails with attachments, 60% cannot copy and paste files, and 90% face difficulty with basic spreadsheet tasks like using mathematical formulas.

Policy Recommendations for a Better Future

  • Prioritize laborbased manufacturing and employmentgenerating services, aligning production and growth with job creation.
  • Improve job quality through robust wage growth and social protection, particularly for casual and lowerincome regular workers.
  • Address labor market inequalities, focusing on enhancing women’s employment and reducing NEET rates through targeted policies.
  • Bridge the supplydemand gap in employment by making skills training and active labor market policies more effective with private sector involvement.
  • Develop a robust statistical framework to better capture labor market complexities, helping to guide responsive policymaking.

By implementing these measures, India can leverage its demographic advantage and achieve sustainable and inclusive economic growth.

Source:Indian Express

Mains Practice Question:

“Discuss the paradoxical improvements in India’s job market over the past two decades, highlighting the challenges of the informal sector and the lack of necessary skills in the young workforce. What measures can be taken to improve the quality of employment and address the skill gaps in India?”

Associated Articles:

https://universalinstitutions.com/unemployment/

https://universalinstitutions.com/define-unemployment-and-various-forms-of-unemployment-and-discuss-the-various-reasons-for-unemployment-in-india-150-words/