By Our Correspondent
NEW DELHI—The International Labour Organisation (ILO) has painted a grim picture of the unemployment scenario in India, highlighting that nearly 83% of the country’s unemployed are its youth and the share of youngsters with secondary or higher education in the total unemployed youth has almost doubled from 35.2% in 2000 to 65.7% in 2022. The ILO has highlighted these facts in a latest report prepared in association with the Institute of Human Development (IHD).
The report was released by Chief Economic Adviser V. Anantha Nageswaran in New Delhi earlier this week. The “India Employment Report 2024: Youth Employment, Education and Skills” is the third in the series of regular publications by the IHD on labour and employment issues. Undertaken in partnership with the ILO, this report examines the challenge of youth employment in the context of the emerging economy, labour market, educational and skills scenarios in India and the changes witnessed over the past two decades.
The Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR) and the Unemployment Rate (UR) showed a long-term deterioration between 2000 and 2018, the study said, but witnessed an improvement after 2019. The study added that the improvement coincides with periods of economic distress, both pre and post-COVID-19 with the exception of two peak COVID-19 quarters.
“This improvement needs to be interpreted cautiously as jobs generated in the slowdown period raise questions about the drivers of these changes,” the authors of the report said during the release. The youths have experienced much higher levels of unemployment in the country during the period after the Narendra Modi government came to power at the Centre in 2014.
The report largely looked at the changes in India’s labour market over the span of nearly two decades, from 2000 to 2019. However, it also delves into the impact of the COVID-19 pandemic on employment, using available data for 2020 and 2022. The pre-pandemic period was broken into three time periods – 2000, 2012, and 2019 – to highlight the changes and continuities from a long-run perspective.
The report said India’s job story over the past two decades had seen some paradoxical improvements in labour market indicators, while the basic long-term feature of the employment situation in the country continued to be insufficient growth of the non-farm sectors and the ability of these sectors to absorb workers from agriculture.
“This is notwithstanding the fact that non-farm employment grew at a higher rate than farm employment over the different periods prior to 2018,” the report said. Labour from agriculture was mainly absorbed by the construction and services sectors.
Also, almost 90% of workers remain engaged in informal work, while the share of regular work, which steadily increased after 2000, declined after 2018. There are widespread livelihood insecurities, the report said, with only a small percentage being covered with social protection measures, precisely in the non-agriculture, organised sector.
“Worse, there has been a rise in contractualisation, with only a small percentage of regular workers covered by long-term contracts,” the report said. While India’s large young workforce is a demographic dividend, the report noted that they do not appear to have the skills to deliver, with 75% of youth unable to send emails with attachments, 60% unable to copy and paste files, and 90% unable to put a mathematical formula into a spreadsheet.
The lack of quality employment opportunities is reflected in the high level of joblessness among young people, especially among those who have achieved higher education, the report noted. Many highly educated young people are unwilling to take on low-paying, insecure jobs which are currently available and would rather wait in the hopes of securing better employment in the future, according to the study.
The country is also facing the challenge of a substantial gender gap in the labour market, with low rates of female labour force participation. “The unemployment challenge among young women, especially those who are highly educated, is enormous,” the report said.
Throwing light on the growing social inequalities, the report said despite affirmative action and targeted policies, the Scheduled Castes and Scheduled Tribes still lag in terms of access to better jobs. “Scheduled Castes and Scheduled Tribes have greater participation in work due to economic necessity but they are engaged more in low-paid temporary casual wage work and informal employment,” it said. Despite improvement in educational attainment among all groups, the hierarchy within social groups persists, the report added.
The minimum wage was higher for workers in bigger cities and towns, according to the report, while among the various categories of workers based on their level of skill and sector or industry of work, the minimum wage for unskilled workers in the agriculture sector was the lowest. At the all-India level, 40.8% of regular workers and 51.9% of casual workers did not receive the average daily minimum wage prescribed for unskilled workers in the agriculture sector. Among the workers engaged in the construction sector, 39.3% of regular workers and 69.5% of casual workers did not receive the average daily minimum wage.
The 340-page report is a comprehensive analysis of employment scenarios from 2000 to 2022 and relies heavily on government surveys. The ILO and IHD said the Employment and Unemployment Survey of the National Sample Survey Office (NSSO) was the foundation for their study of the employment situation in India for 2000 and 2012. In addition, it used the Periodic Labour Force Survey data, also made available by the NSSO from 2018 up to 2022, along with unit-level data.
The IHD is a non-profit autonomous institution under the Indian Society of Labour Economics (ISLE). Established in 1998, it majorly undertakes research in areas of labour and employment, livelihood, gender, health, education and other aspects of human development. The institute is a knowledge partner with NITI Aayog and monitors the national works of the Ministries of Rural Development, Panchayati Raj and Drinking Water.
Nageswaran said while unveiling the report that it was incorrect to think that the government intervention could solve every social and economic challenge, and added that a diagnosis was easier than the solution when it concerned problems like unemployment. He asked what the government could do on the employment front short of hiring more itself.
“In the normal world, it is the commercial sector which needs to do the hiring,” he pointed out, while listing out the facilitative actions taken by the government to spur job creation in recent years, such as the skill development efforts and the National Education Policy of 2020, which he said should not become hostage to political considerations.
The CEA also pointed to the corporate income tax breaks for salary payments as well as subsidies towards provident fund contributions, while pointing out that the tax code no longer favours capital accumulation over employment generation. He also questioned whether governments worldwide were reducing the incentive to work through welfare policies intended to ameliorate the negative consequences of unemployment, which ended up disrupting the labour market for the worse.
“In every public policy intervention, there is always the law of unintended consequence. In general, humans change their lifestyles and habits only when doctors read the riot act on behalf of the human body. Does it not apply to our youth and others in respect of their willingness to work or efforts to equip themselves with skills and attitude towards work?” Nageswaran commented.
However, Youth Affairs Minister Anurag Thakur has disputed the findings of the report and affirmed that the data collated by Indian agencies painted a different picture. Thakur said at a youth conclave organised by a television news channel that 6.4 crore people had registered with Employees’ Provident Fund Organisation (EPFO). It is a bigger number than the population of Australia, New Zealand, and many other countries, he said.
“The 34 crore mudra loans that were given out, these are also creating job opportunities. Now they are job givers from being job seekers,” Thakur said. Elaborating on the ILO report, he said India has been relying on international rating agencies for years, but it should now go by the data from domestic ones which are now equally equipped.
Thakur said that Prime Minister Narendra Modi, since taking office in 2014, had also made policies to aid entrepreneurs, which is another way the government is generating employment. “Now people do not hesitate while launching a start-up. I have met so many people who studied at prestigious universities and took up jobs outside India. They have come back and are now running a start-up in India,” he said.
The economic experts, on the other hand, have pointed out that it is the government’s duty to look after the entire population, rather than supporting a few politically pliable millionaires. Since being elected to power in 2014, the Bharatiya Janata Party government has only increased inequality and helped the small number of India’s super rich people to capture 40% of its wealth, while wages are stagnant and the unemployment situation is worsening.
