India’s labor market and employment situation: Has the growth of our economy translated into domestic jobs?

Source: The post India’s labor market and employment situation has been created, based on the article “Has the growth of our economy translated into domestic jobs?” published in “Live mints” on 9th April 2024.

UPSC Syllabus Topic: GS Paper 3-economy-employment

News: The article discusses how India’s job market is recovering, especially in non-farm sectors. It mentions improvements in manufacturing jobs, a rise in skilled youth employability, and a shift from agricultural to non-agricultural work.

What are the two recent assessments of India’s labor market and employment situation?

1. The International Labour Organization (ILO) and the Institute for Human Development (IHD) released the India Employment Report 2024, focusing on youth employment. It highlights the improvements in job creation, especially for the younger population. The report shows a significant drop in graduate youth unemployment, from 35.4% in 2017-18 to 28% in 2022-23.
2. The World Bank’s South Asia Development Update (SADU) focuses on employment in India

For more information on India Employment Report 2024 read here

What are the major findings of World Bank’s South Asia Development Update (SADU) assessments?

The report shows a decline in the overall employment ratio from 64.1% in 1999-00 to 58.2% in 2021-22, mainly due to reduced agricultural jobs.

However, there’s an increase in non-farm employment, with the ratio rising from 25.7% to 33.3%.

SADU highlights the growth in larger non-agricultural firms. The number of factories with over 100 workers rose, indicating a shift towards more substantial employment sources.

The workforce in larger factories (100+ workers) has been growing faster than in smaller factories, suggesting a trend towards larger-scale employment.

What are the significant setbacks to the Indian labor market?

The Indian labor market faced significant setbacks due to:

Bad debts in the banking system, affecting investments and job creation in the corporate sector.

The COVID-19 pandemic, leading to economic slowdown, job losses, and reverse migration, especially impacting agricultural employment.

The manufacturing sector experienced a trough in job creation between 2012 and 2019, linked to these economic challenges.

A sluggish phase in manufacturing employment was observed, particularly from 2011-12 to 2016-17, as the sector grappled with these issues.

What are the future prospects for India’s labor market?

The future prospects for India’s labor market appear promising due to several factors:

Continued growth in the manufacturing sector, as seen with 3.74 million jobs added in 2021-22.

Improvement in tertiary education leads to higher employability among graduates. The National Employability Test score increased from 33.9 in 2014 to 51.3 in 2024.

A decline in youth unemployment rates, with graduate unemployment dropping from 35.4% to 28% from 2017-18 to 2022-23.

Increased focus on skilling the youth, enhancing labor productivity, and creating more secure jobs with benefits and social protection.

Question for practice:

Discuss the recent assessments of India’s labor market and employment situation, highlighting the major findings from the India Employment Report 2024 and the World Bank’s South Asia Development Update (SADU).