Present Status of Unemployment In India – Explained Pointwise

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Recently released report “State of Working India 2023” has higlighted the present status of unemployment in India. The report has been prepared by Azim Premji University’s Centre for Sustainable Employment. The report highlights the trends of Unemployment in India over the decade.

Present Status of Unemployment in India according to “State of Working India 2023” report

Rate of Unemployment- The overall unemployment rate has reduced to 6.6 per cent in 2021-22 from 8.7 per cent in 2017-18.

Unemployment based on education and age group – Over 42 per cent of India’s graduates under 25 were unemployed in 2021-22. Unemployment figure stands at 21.4 per cent for those who have completed higher secondary education under the age of 25. Notably, with lower educational qualifications, the rate of unemployment also decreased.

Women Employment scenario – After the coronavirus pandemic, 60 percent of women are self-employed, as compared to 50 percent before the pandemic. However, there has been decrease in the earnings of Women, as their earnings in 2022 was only 85% of what they were earning before the pandemic.

Inter generational mobility in employment – There has been inter-generational mobility of employment in the casual labour generation. But more number of general castes have moved out of casual labour as compared to SCs/STs. In 2021, 40 percent of SC workers were involved in casual employment, as compared to 13 percent of general caste workers. Furthermore, around 22 per cent of SC workers were regular wage workers as opposed to 32% of general caste workers.

Nature of economic growth in India – Economic growth has not guaranteed employment in India. With every percentage increase in GDP, the capacity to generate formal sector jobs has systematically declined. Even though the workers have moved out of the agricultural sector, they have been absorbed in the informal and contractual employment as opposed to formal employment.

What is Unemployment, and what are the different types of Unemployment?

Definition- Unemployment refers to a situation where a person who is able and willing to work is not able to find a job. It is often used as a measure of the health of an economy, as high levels of unemployment can indicate a lack of available jobs, which in turn can lead to reduced economic growth and increased social and economic inequality.

Types of Unemployment

Frictional unemploymentThis type of unemployment occurs when workers are in between jobs or are searching for a job. It is a temporary and natural part of the labour market.
Structural unemploymentThis occurs when there is a mismatch between the skills that workers have and the skills required for available jobs. Structural unemployment can be caused by changes in the economy, such as the decline of certain industries or technological advancements.
Cyclical unemploymentThis type of unemployment is caused by changes in the business cycle, such as recessions or economic downturns. When the economy slows down, companies may cut jobs to reduce costs, leading to increased unemployment.
Seasonal unemploymentSeasonal unemployment occurs when workers are employed only during certain times of the year, such as during the holiday season or during harvest time in agricultural sectors.
Technological unemploymentThis occurs when technological advancements make certain jobs obsolete, leading to job losses in those sectors.
UnderemploymentThis refers to a situation where workers are employed but are not able to work as much as they would like, or are working in jobs that are below their skill levels.

Read More- Unemployment Forum IAS

Pesent status of Unemployment In India
Source- MoSPI and Business Today

What are the reasons for present high unemployment in India?

The reasons behind the present status of unemployment in India are the following-

Education and Skills Reasons

Failure of Indian Education system – Although literacy rates have risen in the last few decades, there still remains a fundamental flaw in the education system in India. The degree-oriented system fails when it comes to producing skilled human resources for specific job profiles in the economy.

Higher educational level among youth – Youth unemployment has increased significantly from 2011-12 to 2021-22, nearly doubling during this period. As educational attainment improves, more educated individuals are less inclined to accept unskilled and informal jobs. This is the reason behind high unemployment among graduate youth.

Social Reasons

Joint Family System – It has encouraged disguised unemployment. In big families having large business establishments, many persons don’t do any work and are dependent on the joint income of the family. The joint family system is more prevalent in rural areas, with families employed in the agricultural sector.

Rush for government jobs for social prestige and security – Many educated youth are running behind government jobs due to social pressure, socially respected job profile and social security. This has to a situation where many students choose to remain unemployed during preparation for government jobs.

Low mobility of Labour due to social reasons – People generally avoid migrating to far-off areas of work due to factors like diversity of language, religion, customs and family loyalty. This low labour mobility has contributed to the high unemployment in India.

Expansion of social security measures – The government has increased the distribution of food under the National Food Security Act. This has reduced the pressure on individuals to immediately seek employment. It allows them more time to “search for work,” which has also contributed to the increase in the unemployment rate.

Economic Structure reasons

Economic growth model promoting informal job creation like Gig Economy – Economic growth model of India has been tilted towards gig economy which is based on informal and contractual jobs. Thus, even though the workers have moved out of the agricultural sector, they have been absorbed in the informal and contractual employment as opposed to formal employment. Ex- Delivery boys, service providers.

The decline of Small Scale and Cottage Industries- Independent India’s preference to large scale industry and new industrial policy of the 1990s has resulted in the decline of small scale industries. This has resulted in high unemployment in rural areas.

Huge dependence on agricultural sector- Agriculture remains the biggest employer in the country. The seasonal nature of employment in the agricultural sector has led to recurring cycles of unemployment for the rural population.

Why addressing the present status of unemployment is crucial for India’s development?

Reaping the demographic dividend – India could get old before it becomes rich if the present status of unemployment is not addressed. The high unemployment in India will prevent us from reaping the benefits that our demographic dividend may provide.

Women’s Empowerment- Increasing the female formal job opportunities will lead to socio-economic upliftment of women in different fields.

Poverty alleviation- Increasing formal employment and addressing the flaws in the informal sector jobs will help India alleviate poverty. This will improve the socio-economic position of the vulnerable sections of the society.

Lead India into the league of developed nations – Addressing the present status of unemployment is indispensable for leveraging the contribution of women and the youth. Both are crucial population segments which will propel India towards becoming a developed economy.

What should be the way forward for addressing the present status of unemployment in India? 

Need for National Employment Policy (NEP)- There is a need for formulation of National Employment Policy (NEP) that would encompass a set of multidimensional interventions ranging from social to economic issues.

Special packages for Labour Intensive Industries – Government must provide special packages for labour intensive industries like leather and footwear, food processing, furniture and home decor, textiles and apparel. These industries have high potential for generating more jobs per capital spent.

Focus on resource based development-  Decentralisation of Industrial activities based on resources will address the problem of labour mobility and provide employment opportunities in backward regions of the country like Jharkhand, Odisha.

Proper Implementation of New Education Policy – The proper implementation of New Education Policy will reduce the distance between Industry and academia. Incubation centers need to be promoted to cultivate original business ideas that will be financially viable for employment generation.

Removal of social barriers for more women participation- SHGs led women employment schemes like Kudumbashree must be promoted to break the social barriers for entry of women in job market.

Greater public investment – The government must make greater public investment in sectors like health, education, police and judiciary to create many government jobs and associated employment opportunities.

Proper Implementation of the government employment schemes – Government schemes like Atma Nirbhar Bharat Rojgar Yojana (ABRY), Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) etc. must be properly implemented for reducing the present levels of unemployment in India.

Source- Indian Express

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