- Introduction – depict a picture of continuing jobless growth.
- Write the associated concern.
- Explain the reasons.
The unemployment rate in India has been hovering around 7%-8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy (CMIE). At the same time, the workforce shrank as millions of people pulled out of the job market due to weak prospects since the pandemic.
The labour force participation rate has dropped to just 40% from 46% six years ago, according to the CMIE. Between 2010 to 2020, the number of working women in India dropped to 19% from 26%, according to data compiled by the World Bank. According to CMIE, the female labour force participation has plummeted to 9% for January-April 2022 period. CMIE estimated the unemployment in the 20-24 age group was 43.7% in June 2022.
Why is it a concern ?: India has the advantage of youth, half the population is under 30, who will start ageing in the coming decades. Therefore a significant number of jobs are desired to reap this demographic dividend. What is more worrisome is that the rate of unemployment among the youth (20-24 years) is much higher than the overall unemployment rate. In the absence of meaningful livelihood opportunities, the society will be susceptible to social unrest. Unemployment also undermines their right to a dignified life. So, to sustain the growth and attract global investments, India needs to ensure there’s a trained workforce for the industry.
Causes behind jobless growth:
- India has failed to create enough jobs in the manufacturing and services sector. For an emerging economy, the path to higher incomes, productivity and growth must lead workers away from agriculture. However the transition has failed to happen in India. In fact, the share of manufacturing in employment has been declining.
- According to CMIE, manufacturing sector employed 51 million Indians in 2016-17, which had come down to 6 million in 2020-21. Manufacturing sector in India has been capital intensive rather than employment intensive. Moreover, most of the jobs in the manufacturing and services are limited to skilled or semi-skilled professionals.
- India has not witnessed an export boom of low-skill, labour-intensive products. India’s economic growth has been largely services led in contrast. A leap from the primary to the tertiary sector hasn’t been able to generate sufficient jobs.
- Further, the bulk of the jobs in the service sector are in petty retailing, small eateries, domestic help, sanitation, security staffing, transport and similar other informal economic activities. They seldom provide reasonable pay and adequate social security
- India’s poor system of education and job-training means that graduates have limited skills and are not valued by the employers. In large-scale surveys, employers have said that less than 50% of the college graduates entering the workforce have the cutting-edge skills they need or the ability to pick them up in the workplace.
- Government has made efforts to generate jobs but these are hindered by legacy issues of poor infrastructure, complex and variable rules, skill deficiencies, hidden costs, etc.
- India’s growth elasticity of employment is on decline. It is a measure of how output expansion generates jobs. A 10% growth in gross domestic product is associated with only a 1% rise in employment.
- Many women are opting for unpaid work at home. In most Indian families, care work is the exclusive responsibility of the female members.
- Enhanced adoption of new technologies like AI, Automation etc. is decreasing the demand for manpower. With these technologies, the companies are able to generate higher revenues with minimum manpower.