Highlight the fundamental reasons behind the employment problem that India is facing currently. Also, suggest a way forward.
Unemployment is defined as a situation when a person actively searching for employment is unable to find work. It is often used as a measure of the health of the economy. According to recent data from the Center for Monitoring Indian Economy (CMIE), India’s unemployment rate rose to 7.83% in April 2022.
India employment problem:
- Large unemployed youth in the country.
- Skewed against gender justice ideals – labour force participation ratio of males is higher than females.
- Informal nature of employment. Approximately 90% of India’s workforce is employed in informal sector.
- Temporary and contractual nature of employment.
- Lack of social security measures for major portion of India’s workers.
- Skewed in favour of non-manufacturing sectors, e.g. ~45% of India’s workforce is employed in agriculture sector.
Reasons behind India’s unemployment problem:
- Structural:
- Service sector led growth since LPG reforms.
- Employment intensive manufacturing sector lags in growth.
- Agriculture still dominates India Employment share while contributing little to output (~10%).
- Supply side issues:
- Less than 2% of India’s workforce is formally skilled.
- According to skill India report of 2020, only ~40 % of India’s youth is employable.
- Lack of Vocational skills certification.
- Demand side challenges:
- Labour market rigidities.
- Rise of disruptive Technologies, like artificial intelligence, big data, is causing job losses.
- Impact of global slowdown in wake of Covid-19 pandemic.
Way forward:
- Promotion of labour intensive industries.
- Giving boost to entrepreneurship.
- Emphasize on vocational training.
- Enhancing human capital with the help of skill development.
PM-Daksh, Pradhanmantri Kaushal Vikas Yojana, Stand Up India, Start up India, Skill India and new education policy focusing on vocational training, are the steps in right direction.
Originally written on
December 7, 2023
and last modified on
October 27, 2024.