Let’s step up strategic efforts to mobilize India’s labour potential

Source: The post is based on an article “Let’s step up strategic efforts to mobilize India’s labour potential” published in Live Mint on 18^th October 2022.

Syllabus: GS 2 – Governance

Relevance: ways to utilize demographic dividend in India

News:  India is at a stage where population growth is expected to slow down in the next two decades along with a significant increase in the share of the working-age population.

This will provide India with a demographic dividend opportunity window. Therefore, India needs policies for its majority working age population to ensure labour force mobilization.

What does the data say?

As per the National Sample Survey Office’s Periodic Labour Force Survey 2020-21, India’s labour force participation rate for all age groups is around 41.6% (57.5% for males, 25% for females).

It is also expected that India’s working age population will grow roughly by 9.7 million per year from 2021 to 2031 and 4.2 million annually in the 2031-41 period.

However, mobilizing the demographic dividend into the workforce is major issue. Therefore, the competitiveness framework can act as a base for India to understand the drivers of labour force mobilization.

What is competitiveness approach and how can it be beneficial?

The competitiveness approach defines national competitiveness in terms of the expected level of output per potential worker.

The ‘output per potential worker’ indicates a larger productivity. It includes the productivity of the employed as well as the ability of a country to mobilize its working-age population.

The term ‘potential’ indicates the economic growth by not only including the employed workforce but also including the total workforce that can be utilized in an economy.

Therefore, competitiveness is linked to both components of output per potential worker – a) output per employed person and b) the ability of a country to mobilize its workforce.

This competitiveness approach could be useful for understanding drivers of labour mobilization and it would also help in utilizing the country’s demographic dividend and formulate policies accordingly.

However, the potential to mobilize the labour force depends on multiple factors. One of the most important factors is the creation of jobs. Jobs should increase with the increasing working-age population.

What steps have been taken by India to ensure job creation?

As per Finance minister Nirmala Sitharaman, the Production-Linked Incentive (PLI) scheme across 14 sectors has the potential to generate 6 million jobs over the next five years.

Around 55.6 million people have undergone skill training since 2015 under the Skill India Mission and through various skill development programmes.

However, out of these workforces the participation of women is not up to the mark.

What are the problems with the women in labour force market?

As per the Periodic Labour Force Survey Annual Report 2020-21, the all-India female labour force participation rate (LFPR) has increased to 25.1%, as compared to 22.8% a year ago.

However, female workforce participation continues to remain at a low level in India due to a number of factors such as lack of jobs, the burden of unpaid care work, and cultural norms.

What is the way forward for India?

First, India needs efforts to promote greater labour force mobilization that facilitates multiple entry points for an individual into the labour force.

Second, skilling should not only be limited a working age (20 to 65) but it should be a lifelong task along with the regular upgradation of skills.

Third, India also needs to make efforts for greater labour mobilization in different states as the working-age population varies across Indian states.

• According to the Economic Survey 2019-20, the size of the working-age population will start to decline in 11 out of 22 major states (Punjab, Maharashtra, West Bengal, etc.) during 2031-41.

Therefore, it is important to take account these variations and come up with a holistic and robust policy for mobilizing labour force participation.