Unemployed Indians: For a country in the midst of a demographic transition, this is the biggest challenge

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Context: India has an employment problem which has been exacerbated by the pandemic.

For a country of the young, in the midst of a demographic transition, this problem is perhaps the most formidable challenge before the government.

What are some indicators of rising problem of unemployment in India?

Increase in work demanded under MGNREGA: One indication is the continuing increase, over the years, in work demanded by households under the MGNREGA.

YearHouseholds which got work under MGNREGA
2014-154.13 Crore
2019-20 (just prior to COVID)5.48 Crore
2020-217.55 Crore
2021-227.26 Crore (still higher than pre-pandemic level)

Sharp fall in LFPR: Over the years, there has been a sharp fall in the labour force participation rate in India.

Data from CMIE suggests that the labour force participation rate has fallen to around 40%. For comparable countries, it is significantly higher.

This decline suggests that despite India’s young population, many have simply opted out of the labour force, perhaps feeling let down by the absence of remunerative, productive jobs.

The situation is even more dire for women, who had a considerably lower participation rate to begin with. India’s female labour force participation is lower than the global average, and also lower than countries like Bangladesh.

High unemployment rate: Even as the unemployment rate has declined from the highs observed during the initial phase of the pandemic, it remains elevated, suggesting that among those looking for jobs, those unable to find jobs remains high.

The unemployment rate is higher among the younger and more educated. As per the periodic labour force surveys, the unemployment rate is higher among those in the 15-29 age group (22.5 per cent in September 2019), and those educated up to at least the secondary level (11 per cent).

While there are signs of increasing formalisation as indicated by the EPFO data, a substantial share of the labour force continues to remain employed in the informal sector, lacking a safety net.

What are some negative consequences of lack of jobs?

This demand supply gap b/w the number of job-seekers and the amount of jobs available in an economy is ultimately manifested in the following ways:

Demands for reservation in the public sector by various caste groups, and for including the private sector in its ambit

State governments exploring ways to ensure job quotas for locals.

All this is indicative of a wide and deepening anxiety over employment prospects.

Source: This post is based on the article “Unemployed Indians: For a country in the midst of a demographic transition, this is the biggest challenge” published in The Indian Express on 28th Apr 22.

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