The Employment Crisis in India

Source-This post on The Employment Crisis in India has been created based on the article “Filling public employment vacancies & regularising all workers, especially women, should be new government’s priority” published in “Down to Earth”on 1 June 2024.

UPSC Syllabus-GS Paper-3– Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context– The article highlights the issue of unemployment in India. As per Periodic Labour Force Surveys, India has one of the lowest employment rates globally, with only 30.5% of people above the age of 15 years receiving remuneration for their work in 2022-23. Among men, the ratio was 48.1%, while shockingly, it was only 13% for women, one of the lowest employment rates for women worldwide.

What is the impact of this rising unemployment?

1) In a rapidly expanding economy with growing inequality, this situation is a crisis. It’s a significant issue in a nation where many people still lack adequate living conditions, and the development efforts are incomplete.

2) It is also becoming a socio-political problem due to an aspirational younger generation being denied opportunities to live up to its potential.

What approach has the government adopted to deal with the issue of unemployment?

 The government’s approach was to incentivize big business in the hope that it would result in more private investment, boosting the real economy and creating employment through a “trickle-down” effect.

What is the impact of this approach?

1) Employment hasn’t grown, and real wages haven’t gone up in the past decade.

2) According to the 2024 India Employment Report by the ILO, certain workers, such as those in construction and regular employment, have experienced declines in their wages.

3) The majority of employment positions are informal, with more than 90% of workers not receiving the advantages of formal legal and social safeguards. Additionally, over half of the workforce are self-employed, earning modest incomes.

4) Women are particularly disadvantaged, whether they’re paid or unpaid workers or self-employed.

Read more- Employment status in India

What are immediate measures for employment generation?

1) There are about 1 million job openings in the central government and likely many more in state governments combined. Filling these vacancies would not only increase employment but also enhance public services in areas like health, education, and sanitation, improving everyone’s quality of life.

2) Regularizing millions of women working in essential public service delivery schemes would benefit them and provide a fillip to domestic demand.

3) Greater emphasis on public spending for care activities would have positive multiplier effects on demand and employment.

4) Reviving the rural employment scheme by clearing arrears, ensuring proper funding, and avoiding partisan approaches that have denied resources to states ruled by Opposition parties.

5) Implementing an urban employment guarantee scheme with components for urban rejuvenation, skill training, and apprenticeships.

What are the medium-term measures?

1) There is a need to develop a package to revive and strengthen micro, small, and medium enterprises (MSMEs), including access to credit, technology, inputs, and marketing, and providing incentives like those for large firms.

2) There is a need to focus on agriculture by ensuring viable cultivation through policies like legal MSP, public investment in relevant technologies, access to water and inputs, pos-harvest storage and processing etc.

3) The government should consider the influence of increasing temperatures and climate change in all policy decisions.

These employment generation measures are likely to have a positive impact on output and lead to a more sustainable, equitable, and just economic growth trajectory.

Question for practice

What are immediate and long-term measures for employment generation?