Unemployment situation in India: THE SKILL HANDICAP

Source: The post unemployment situation in India has been created, based on the article “THE SKILL HANDICAP: It is not really a case of jobless growth, just that job creation is more for the low-skilled” published in “Business standard” on 12th April 2024.

UPSC Syllabus Topic: GS Paper 3- Economy- Employment

News: The article discusses how in India, joblessness has decreased since 2017-18, especially for less educated workers. However, graduates and those with higher qualifications still face high unemployment rates, which declined slower compared to others. Changes in job data collection methods also affect unemployment figures.

For details information on Present Status of Unemployment In India read here

What is the current unemployment situation in India?

From 2011-12 to 2017-18, unemployment rates increased for all levels of education. Graduates and those with higher qualifications experienced a significant rise from 19.9% to 35.4%.

Since then, unemployment has generally been decreasing, with rates for highly educated individuals dropping to 28% by 2022-23.

Meanwhile, those with less education saw even steeper declines, such as those with below primary education, where unemployment fell from 6.7% to 1.7%.

How reliable is the unemployment data?

The unemployment data in India has faced reliability issues due to changes in survey methods.

The switch from the Employment and Unemployment Surveys (EUS) to the Periodic Labour Force Survey (PLFS) in 2017-18 has raised concerns about comparability.

The EUS was linked to household consumption data, whereas PLFS started fresh methodologies.

Critics, including researchers at meetings called by NITI Aayog, suggested releasing older EUS data with caveats to better assess trends, but this was not done.

These differences complicate direct year-on-year comparisons, affecting the analysis of long-term employment trends in India.

Why is there a mismatch between education and job market needs?

1.The mismatch between education and job market needs is partly due to rapid economic changes that education systems struggle to keep up with.

2.Technical qualifications often do not align with industry demands, resulting in higher unemployment among those with technical degrees compared to general graduates.

3.There is a lack of proper planning in the supply of skills, leading to overproduction in some areas and shortages in others, as seen in the example of Bihar producing more carpenters than the local demand requires.

4.These issues highlight the need for better coordination between education providers and industry needs.

Question for practice:

Discuss the reliability of unemployment data in India and its impact on analyzing long-term employment trends.