India’s Employment problem predates COVID. The pandemic has deepened the faultlines

News: Data from the Periodic labour force survey (PLFS) suggests that urban unemployment during January-March 2021 had declined to the pre-Covid level of around 9%, after peaking at 20.8% during the first wave.  

Various other estimates also point towards the same. However, it necessarily does not reflect an expansion of more productive forms of employment.  

What has been the pandemic’s effect on the job market in India? 

The unemployment issue in India date back to even before the pandemic began, but the pandemic has definitely made the situation worse. 

India has witnessed a decline in the labour force participation rate. This implies that many have simply opted out of the labour force, perhaps due to absence of jobs. 

Unemployment rates are significantly higher among the youth, and the more educated sections. 

There has been formalization of labour, but there are two problems with this.

– First is that this employment is more likely to be concentrated among low-income jobs in the larger industrial regions.

– Second, there is also the casualisation of employment to contend with. Casual wage labour employment lacks the social security framework that formal employment provides.

The per capita income levels are very low currently, so many people are simply forced to opt for less productive jobs at lower wages. So a decline in unemployment rate may not be an accurate gauge of labour market distress. 

Heightened demand for work under MGNREGA, despite large parts of the economy having recovered to their pre-pandemic levels, is also a sign of economic distress. 

What are the main issues concerning the Indian labour market? 

There is a lack of adequate and remunerative employment generation in the country . 

– This is highlighted by the incidents like recent protests in North India by those who had appeared for the non-technical popular categories exam and the demands by various caste groups for increasing reservation. 

There has also been a lack of a labour-intensive manufacturing sector that can absorb the surplus labour force in agriculture.

Source: This post is based on the article “India’s Employment problem predates COVID. The pandemic has deepened the faultlines” published in The Indian express on 11^th Feb 2022.