Jobless Growth in Indian Economy

The Periodic Labour Force Survey (2017-18) makes the following  two important observation about Indian economy:

  • Shrinking share of the labour force.
  • Rising unemployment.

Unemployment Rates

  • The labour force participation rate has shrunk to 49.7% in 2018 against 55.5% in 2012. This roughly translates into an absolute decline in the number of workers from 467.7 million in 2012 to 461.5 million in 2018.
  • The overall unemployment rate at 6.1% is 2.77 times the unemployment rate at 2012. The unemployment rate for men stood at 6.2% which was higher than among women at 5.7%.
Gender Gaps
  • The unemployment rate for urban women stood at 10.8%; followed by urban men at 7.1%; rural men at 5.8%; and rural women at 3.8%.
  • There was a sharp decline in women’s labour force participation rate which decreased from 31% to 24%.
  • Indian women are losing out heavily due to the double whammy of exclusion from the labour force and an inability to access employment when included in the labour force.

Educated Unemployment

  • The educated unemployment defined as unemployment among those with at least a secondary school stood at 11.4% compared to the previous survey’s figure of 4.9%.
  • The unemployment rates go up as levels of education go up. The unemployment rate for those with secondary school education, it is 5.7% but jumps to 10.3% when those with higher secondary-level education are considered.
  • The highest rate of unemployment was among the diploma and certificate holders (19.8%); followed by graduates (17.2); and postgraduates (14.6%).
Gender Gaps
  • Educated unemployment is the highest among urban women (19.8%) followed by rural women (17.3%), rural men (10.5%) and urban men (9.2%).

Youth Unemployment Rates

  • The youth unemployment rate (unemployment among those in the 15-29 years age category) has reached a high 17.8%.
Gender Gaps
  • Women were disadvantaged even here.
  • The unemployment rate Urban youth women at 27.2% is more than double the 2012 figure of 13.1%.

Conclusions

  • Educated persons are likely to have aspirations for specific jobs and are economically less deprived. Hence they are likely to go through a long waiting period than their less-educated counterparts.
  • India’s inability to absorb the educated into gainful employment is indeed an economic loss and it is also a demoralising experience both for the unemployed and those enthusiastically enrolling themselves for higher education.

The trend of ‘jobless growth’ until recently was largely confined to the organised sector has now spread to other sectors of the economy, making it more generalised. This necessitates a thorough re-examination of the missing linkages between growth and employment.

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