Unemployment is when people above a specified age (>15years) are not in paid employment or self-employment but are currently available for work. It is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the labour force
According to latest Periodic Labour Force Survey, unemployment is on a declining trend in India
- 2020 – 21 : 4.2%
- 2021 – 22 : 4.1%
- 2022 – 23 : 3.2%
Although the declining rate might seem like a silver lining, there are major economic problems associated with unemployment which needs to be addressed.
Causes of unemployment in India:
- Major cause of unemployment is the rapid increase in the population. The current population of India (2024) is 145Cr with a workforce of 56.5Cr. The increase in the population will put extra burden on the limited resources available leading to a lot of capable workforce being unemployed or underemployed.
- Basic requirement for a person to be employed is adequate education and relevant skills. Lack of education and required vocational skills will result in underemployment.
- The standards of the education system in India is not in par with the current requirements of the capitalistic society which demands higher specialisations and skills.
- According to the latest economic survey, nearly 45% of the workforce of India is dependent on the agricultural sector. However, this sector is underdeveloped and provides only seasonal employment
- Immobility of local labour and migration of skilled labour to foreign economies causes disturbance in the economic structure of the country by creating a void in the workforce
- Nearly 20% of the workforce is dependent on the manufacturing sector. Lack of growth in infrastructure, policies which often do not penetrate the grassroot level and lack of investments will create unemployment in the labour intensive sector
- Regressive social norms deter women from taking up jobs to support their livelihood. The social evil of thinking that a girl child is a burden to the family and not providing her with the basic education will make her dependent on family curtailing her from a life of financial freedom and from being a major part of the economy in monetary terms
- As the world moves towards globalisation , small and informal sectors are often overlooked. Lack of awareness and policy gap in these sectors will negatively impact the people who are dependent on these sectors leading to loss of employment.
Types of Unemployment:
Amidst the seven major types of unemployment in India, Vulnerable unemployment is very prevalent. Vulnerable unemployment refers to the type of employment where people are employed but informally with the lack of necessary job contracts and securities.
The other types of unemployment are :
- Disguised unemployment : Usually found in the unorganised or agricultural sector, this type of unemployment is when there are more people employed for a job than needed.
- Structural unemployment : A type of involuntary unemployment when there is a mismatch between the skills of the workers with that of the skills needed by the economic sector
- Frictional unemployment : A type of voluntary unemployment where people are unemployed for a short span of time while searching for a new job. Also called as search unemployment, it can be considered as a time lag between jobs.
- Technological unemployment : Loss of employment due to advancement in technology
- Seasonal unemployment : People do not have work during certain seasons of the year
- Cyclical Unemployment: Unemployment caused due to the business cycle, where the number of unemployed heads rises during recessions and declines with the growth of the economy. Cyclical unemployment figures in India are negligible.
Impact of Unemployment
- Unemployment takes away the financial freedom from the people leading to increase in poverty levels in the economy.
- As the proverb goes , ‘An idle mind is the devil’s workshop’ ; lack of a job will make people, particularly youth, divert to antisocial elements, which will lead to increase in crime in the country. One of the factors for increase in Left wing extremism or naxalism is the lack of employment which is due to lack of infrastructural development. This creates a vicious cycle of unemployment and crime
- Unemployment causes decrease in production, with the consumption pattern remaining same or increasing, creating burden on the resources and the government
- A recent survey by The Hindu Data Team showed that Indians who move abroad are likely to earn double their income and the residents would approximately need 20 years to catch up. Lack of relevant opportunities will create brain drain in the country, leading to migration of skilled workforce harming the domestic economy
- Without employment, it is difficult to achieve desired standard of living, thereby reducing the Human Development Index, which inturn creates a negative image on the global stage
Current scenario : Economic Survey 2023 – 24:
India’s workforce is nearly 56.5 crore, with more than 45 percent employed in agriculture, 11.4 percent in manufacturing, 28.9 percent in services, and 13.0 per cent in construction, highlights the Economic Survey.
As per the survey, In terms of employment status of workers, 57.3 per cent of the total workforce is self-employed, and 18.3 percent is working as unpaid workers in household enterprises.
Casual labour comprises 21.8 per cent of the total workforce and regular wage/salaried workers are 20.9 per cent of the total workforce. Gender-wise, it is the female workforce, which is shifting to self-employment, while the male workforce’s share has been stable.
Initiatives Taken:
Integrated Rural Development Programme (IRDP) : was launched in 1980 to create full employment opportunities in rural areas. [The rural unemployment rate rose to 9.3 percent in June 2023 from 6.3 percent in May]
Training of Rural Youth for Self-Employment (TRYSEM) : This scheme was started in 1979 with the objective to help unemployed rural youth between the age of 18 and 35 years to acquire skills for self-employment. Priority was given to SC/ST Youth and Women.
RSETI/RUDSETI : With the aim of mitigating the unemployment problem among the youth, a new initiative was tried jointly by Sri Dharmasthala Manjunatheshwara Educational Trust, Syndicate Bank and Canara Bank in 1982 which was the setting up of the “Rural Development And Self Employment Training Institute” with its acronym RUDSETI near Dharmasthala in Karnataka.
Jawahar Rozgar Yojana (JRY) : By merging the two erstwhile wage employment programme – National Rural Employment programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) the Jawahar Rozgar Yojana (JRY) was started with effect from April, 1, 1989 on 80:20 cost sharing basis between the centre and the States.
MGNREGA : It is an employment scheme that was launched in 2005 to provide social security by guaranteeing a minimum of 100 days paid work per year to all the families whose adult members opt for unskilled labour-intensive work.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY) : Launched in 2015 has the objective of enabling a large number of Indian youths to take up industry-relevant skill training that will help them in securing a better livelihood.
Start Up India Scheme : launched in 2016 aims at developing an ecosystem that promotes and nurtures entrepreneurship across the country. It also aims to facilitate bank loans between Rs 10 lakh and Rs. 1 crore to at least one SC or ST borrower and at least one women borrower per bank branch for setting up a greenfield enterprise.
Support for Marginalised Individuals for Livelihood and Enterprise (SMILE)
PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi)
Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Some of the initiatives focusing on Employment & Skilling in the 2024-25 budget (Viksit Bharat) :
- One-month wage to new entrants in all formal sectors in 3 instalments up to ₹15,000, expected to benefit 210 lakh youth.
- Government will reimburse EPFO contributions of employers up to ₹3000 per month for 2 years for all new hires, expected to generate 50 lakh jobs
- Facilitate higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishing creches.
- 20 lakh youth will be skilled over a 5-year period.
- 1,000 Industrial Training Institutes will be upgraded in hub and spoke arrangements with outcome orientation.
Way Forward :
- Decentralising and promoting labour intensive industries
- Encourage youth to take up entrepreneurship
- Encourage women to become financially independent by devising women centric schemes
- Improve quality of education in order to reduce brain drain
- Create policies which are multidimensional in nature covering social, economic and political spheres to reduce unemployment
