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Rapid Aging of India’s Workforce: Concerns Amidst Youthful Population


India, despite having the world’s largest youth population, is experiencing a rapid aging of its workforce, as indicated by CMIE’s  (Centre for Monitoring Indian Economy) Economic Outlook data. This trend is concerning as it signifies a decline in the proportion of young workers and an increase in those nearing 60 years of age among the employed population.


GS I: Population related issues

Dimensions of the Article:

  1. Key Insights from the Analysis
  2. Factors Influencing an Ageing Workforce
  3. Concerns and Implications of an Ageing Indian Workforce

Key Insights from the Analysis

Workforce Composition Across Age Groups
  • Categorized into Three Age Groups: The analysis segments the workforce into distinct age groups to analyze the trend of an aging workforce.
  • Aged 15-29 Years: The percentage of workers in this age bracket within the total workforce has dwindled from 25% in 2016-17 to 17% in the financial year 2022-23.
  • Aged 30-44 Years: Individuals falling within this age range also witnessed a decline in their share, decreasing from 38% to 33% over the same period.
  • Aged 45 Years and Older: Notably, this category’s share has observed a significant growth, escalating from 37% to 49%.
Declining Employment Rates Among Youth
  • Youth Population Growth: Despite an increase of 2.64 crore in the youth population (from 35.49 crore in 2016-17 to 38.13 crore in 2022-23), the number of employed individuals within this group has plummeted by a substantial 3.24 crore.
  • Plummeting Employment Rate: Consequently, the employment rate for this age group has experienced a sharp drop from 29% to 19% over a span of seven years.
Varied Impact on Different Age Categories
  • Across Age Groups: The reduction in employment rates is most pronounced among the youth, yet the trend is also noticeable in other age groups, albeit to a lesser degree.
  • Oldest Age Group: Intriguingly, the oldest age segment (45 years and above) has faced a comparatively minor decline in employment rates and has even seen an upturn in the absolute number of employed individuals.

Factors Influencing an Ageing Workforce

Limited Job Opportunities
  • Insufficient Job Openings: A major driver of diminishing youth employment is the scarcity of available job opportunities.
  • Population Growth vs Job Growth: The rapid expansion of the youth population hasn’t been met with a proportional increase in job openings, resulting in intense competition for limited positions.
Skill Mismatch
  • Skills Gap: Disparity between the skills possessed by youth and those demanded by the job market can lead to elevated unemployment rates.
  • Education’s Role: The education system might not adequately prepare young individuals for the evolving job landscape, causing underemployment or joblessness.
Informal Sector Predominance
  • Informal Employment: A significant portion of India’s workforce engages in the informal sector, where stable employment and social security benefits are often lacking.
  • Lack of Formal Opportunities: Entering the job market, youth might struggle to secure steady formal employment, resulting in instability and underutilization of skills.
Educational Mismatch
  • Educational Attainment Increase: Although youth are achieving higher education levels, a discrepancy could exist between acquired education-based skills and those demanded by employers.
  • Aspirations and Waiting: A desire for higher-level positions might lead youth to wait for suitable jobs, contributing to a decline in their employment rates.

Concerns and Implications of an Ageing Indian Workforce

Reduced Productivity and Economic Impact
  • Health-related Issues: Older employees might experience decreased productivity due to health concerns and declining physical capabilities, affecting overall economic output.
Healthcare Demand and Strain
  • Healthcare Demand Increase: An ageing workforce could lead to heightened demand for healthcare services, potentially straining both public and private healthcare systems.
Lack of Innovation and Dynamism
  • Fresh Perspectives and Innovation: Younger workers often bring novel viewpoints and technological expertise, fostering innovation in various industries.
  • Aging Workforce Limitation: An ageing workforce may lack the dynamic qualities and innovation potential that younger employees offer.
Impact on Economic Growth
  • Declining Workforce Contribution: A shrinking working-age population contributes less to both production and consumption, affecting economic growth potential.
Labor Shortages in Certain Sectors
  • Labor Shortages: Industries relying on manual labor, like construction and manufacturing, might face shortages if younger workers are unavailable to replace older ones.
Skill Shortages and Impeded Progress
  • Skill Deficits: An ageing workforce can result in skill scarcities, particularly in sectors requiring specialized knowledge, potentially hindering technological advancement.
Altered Consumer Patterns and Demand
  • Different Consumption Patterns: Older individuals often prioritize savings and essential goods, influencing consumer demand and affecting industries catering to luxury goods.

-Source: Indian Express

September 2023