Surge in Employment Generation Raises Debates in India

Context:

India has experienced a substantial increase in employment, witnessing the creation of over 80 million additional jobs from 2017-18 to 2022-23. This surge has ignited discussions regarding its root causes and the sustainability of this trend.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. Key Trends in Employment Growth
2. Trend in Wages and Salaries
3. Concerns Regarding Employment in India

Key Trends in Employment Growth:

• Consistent Growth: Principal employment has shown steady growth since 1983, with no instances of jobless growth.
• Period of Fastest Increase: The period from 2017-18 to 2022-23 witnessed the fastest increase, adding about 80 million jobs annually at a rate of 3.3%.
• Improvements in Labour Market Indicators: Despite long-term deterioration, recent years have seen improvements in indicators like labour force participation rate, workforce participation rate, and unemployment rate.
• Well-Distributed Growth: Employment growth has been evenly spread across rural and urban sectors as well as various industries.
• Significant Growth Among Women and Older Individuals: Employment growth has been highest among women (over 8% annually) and individuals aged 60 and above (around 4.5% annually).
• Possible Reasons: Factors contributing to this trend include increasing distress, improved access to resources, and greater flexibility in care-related work.

Evolution of Employment Quality:

• Informal Sector Dominance: Around 50% of formal sector jobs are informal, with approximately 82% of the workforce engaged in informal employment.
• Growth in Own-Account and Unpaid Family Workers: A significant portion of employment growth (44 million) is in the form of own-account workers and unpaid family workers.
• Government Schemes Influence: Government initiatives like Pradhan Mantri MUDRA Yojana (PMMY) have fueled this growth by providing substantial funding to this segment.
• Primary Sources of Employment: Self-employment constitutes the primary source of employment (55.8% in 2022), followed by casual employment (22.7%) and regular employment (21.5%).

Trend in Wages and Salaries:

• Relative Stagnation: Aggregate wages and salaries have experienced relative stagnation in recent years.
• Nominal vs. Real Growth: From 2017-18 to 2022-23, there was an average annual growth of 6.6% in nominal terms, but only 1.2% after adjusting for inflation.
• No Significant Improvement in Living Conditions: Despite no apparent wage distress, there hasn’t been significant improvement in living conditions, possibly due to factors like a large influx of workers and stagnating labour productivity.

Trends in Youth Employment:

• Pre-Pandemic Increase: Youth employment and underemployment increased between 2000 and 2019 but declined during the pandemic.
• Intensified Unemployment Among Educated Youths: Unemployment, particularly among educated youths, has intensified over time.
• Gender Disparities: The unemployment rate is higher among educated young women compared to men, especially among female graduates.

Concerns Regarding Employment in India:

• Growth of Informal Jobs: While the economy grows, many new jobs are informal, lacking security, benefits, or minimum wage.
• Quality of Youth Employment: Despite low overall unemployment rates, youth employment is often of poor quality, leading to over-education or precarious gig economy jobs.
• Gender Gap: Women’s participation in the formal workforce remains low, with many engaged in unpaid family work or low-paying self-employment.
• Misalignment with Education: The education system may not align with current job market needs.
• Informal Sector Dominance: A significant portion of the workforce remains in the informal sector, leading to lower tax revenue and limited social security benefits.
• Automation Threat: Automation poses a threat to certain sectors, potentially displacing jobs, particularly in manufacturing and outsourcing.
• Vulnerability to Shocks: Informal and casual workers are highly vulnerable to economic downturns or external shocks, as witnessed during the Covid-19 pandemic.
• Demand for Government Jobs: There is significant demand for government jobs due to limited job creation in the private sector, highlighting the appeal of stable government employment.

-Source: The Hindu