How India is becoming a young country but with an ageing workforce

Source– The post is based on the article “How India is becoming a young country but with an ageing workforce” and “Express View on CMIE data: A dissonant note” published in “The Indian Express” on 23rd August 2023.

Syllabus: GS3- Indian economy and employment

Relevance: Employment statisticss of Indian economy

News– While addressing the nation on Independence Day, Prime Minister Modi made a special mention to India being a youthful nation and highlighted the opportunities that lay before India’s youth.

How India workforce is ageing?

The proportion of India’s youth in workforce has declined from 25% in 2016-17 to a mere 17% by the end of the previous fiscal year in March.

The percentage of individuals in workforce within the middle age group has decreased from 38% to 33% during the same timeframe. The oldest age bracket above 45 years has expanded its share from 37% to 49%.

Just in the past seven years, the share of people 45 years and older has gone from one-third to almost one-half.

The overall count of employed individuals has decreased from 41.27 crore to 40.58 crore. The most significant reduction has been observed in the engagement of young individuals.

During 2016-17, the workforce included 10.34 crore people below the age of 30. However, by the end of 2022-23, this figure had declined by more than 3 crores. It is just 7.1 crore.

The employment level of those aged 45 and above increased, despite an overall decline in employment levels.

Which factors explains the ageing workforce?

The youth are being pushed out of the job market.

An effective method to monitor this trend is by examining the metric known as the “Employment Rate.” The Employment Rate for any specific population or age group provides insight into the proportion of that age group or population that is employed.

The population falling under the youth category saw an expansion from 35.49 crore in 2016-17 to 38.13 crore in 2022-23.

While the “young” population grew by 2.64 crore, the count of employed youth declined by 3.24 crore. The youth of India encountered a significant 31% decrease in employment over the past seven years.

This decline is evident in the considerable drop in the Employment Rate for this particular age group. It went from 29% to a mere 19%.

The decrease in employment rates is the most modest among the oldest age category. Remarkably, this is the only age group where the total count of employed individuals has actually increased.

In the age bracket of 25 to 29 years, the employment rate has seen an upward trajectory over the last seven years.

However, this rise in the ER is not attributed to a greater number of individuals from this age group gaining employment. Instead, it is primarily due to a significant decline in the overall population within this cohort.

Why this outcome is hardly unexpected?

India has observed a surge in youth unemployment in recent times. This implies that a considerable proportion of the youth who enter the job market struggle to secure jobs.

India experiences a limited rate of labor force participation, particularly among women. India ranks among the countries with one of the lowest female labor force participation rates globally.

The combined impact of a low labor force participation rate and elevated unemployment rates results in a deteriorating employment rate for India’s youth.