State of employment in India: What a new report says about youths and women, concerns and caution

 

The improvement has coincided with periods of economic distress, both before and during the Covid-19 pandemic, says the India Employment Report 2024 released by the Institute for Human Development and International Labour Organisation on Tuesday.

There have been “paradoxical improvements” in labour market indicators such as the labour force participation rate, workforce participation rate, and unemployment rate in India in recent years after long-term deterioration from 2000-2019. The improvement has coincided with periods of economic distress, both before and during the Covid-19 pandemic, says the India Employment Report 2024 released by the Institute for Human Development and International Labour Organisation on Tuesday (March 26).

The big picture

The report has flagged concerns about poor employment conditions: the slow transition to non-farm employment has reversed; women largely account for the increase in self-employment and unpaid family work; youth employment is of poorer quality than employment for adults; wages and earnings are stagnant or declining.

The ‘employment condition index’ has improved between 2004-05 and 2021-22. But some states — Bihar, Odisha, Jharkhand, and UP — have remained at the bottom throughout this period, while some others — Delhi, Himachal Pradesh, Telangana, Uttarakhand, and Gujarat — have stayed at the top.

The index is based on seven labour market outcome indicators: (i) percentage of workers employed in regular formal work; (ii) percentage of casual labourers; (iii) percentage of self-employed workers below the poverty line; (iv) work participation rate; (v) average monthly earnings of casual labourers; (vi) unemployment rate of secondary and above-educated youth; (vii) youth not in employment and education or training.

Employment quality

Informal employment has risen — around half the jobs in the formal sector are of an informal nature. Self-employment and unpaid family work has also increased, especially for women. Almost 82% of the workforce is engaged in the informal sector, and nearly 90% is informally employed, the report said.

Self-employment remains the primary source of employment — 55.8% in 2022. Casual and regular employment accounted for 22.7% and 21.5% respectively.

The share of self-employment remained almost stable around 52% between 2000 and 2019, while regular employment increased by almost 10 percentage points, to 23.8% from 14.2%. This reversed by 2022, with self-employment increasing to 55.8%, while the share of regular employment declined to 21.5%. Casual employment consistently declined to 22.7% in 2022 from 33.3% in 2000.

Regular employment is generally seen as providing better-quality jobs due to the regularity of employment and associated social security benefits, while casual work is linked with relatively poor-quality jobs due to its irregular nature and lower daily earnings.

Participation of women

The female labour force participation rate (LFPR) in India remains among the world’s lowest. Female LFPR declined by 14.4 percentage points (compared to 8.1 percentage points for males) between 2000 and 2019. The trend reversed thereafter, with female LFPR rising by 8.3 percentage points (compared to 1.7 percentage points for male LFPR) between 2019 and 2022.

There is a considerable gender gap — women’s LFPR (32.8%) in 2022 was 2.3 times lower than men’s (77.2%). India’s low LFPR is largely attributed to the low female LFPR, which was much lower than the world average of 47.3% in 2022, but higher than the South Asian average of 24.8%, as per ILO data.

Structural transformation

There has been a reversal of the slow transition towards non-farm employment after 2018-19. The share of agriculture in total employment fell to around 42% in 2019 from 60% in 2000.

This shift was largely absorbed by construction and services, the share of which in total employment increased to 32% in 2019 from 23% in 2000. The share of manufacturing in employment has remained almost stagnant at 12-14%.

Since 2018-19, this slow transition has stagnated or reversed with the rise in the share of agricultural employment.

Youth employment

There has been a rise in youth employment, but the quality of work remains a concern, especially for qualified young workers.

Youth employment and underemployment increased between 2000 and 2019 but declined during the pandemic years. However, unemployment among youths, especially those with secondary-level or higher education, has intensified over time.

In 2022, the share of unemployed youths in the total unemployed population was 82.9%. The share of educated youths among all unemployed people also increased to 65.7% in 2022 from 54.2% in 2000.

The unemployment rate among youths was six times greater for those who had completed secondary education or higher (18.4%) and nine times higher for graduates (29.1%) than for persons who could not read or write (3.4%) in 2022. This was higher among educated young women (21.4%) than men (17.5%), especially among female graduates (34.5%), compared to men (26.4%).

The unemployment rate among educated youths grew to 30.8% in 2019 from 23.9% in 2000, but fell to 18.4% in 2022.

The way forward

• There are five key policy areas for further action: promoting job creation; improving employment quality; addressing labour market inequalities; strengthening skills and active labour market policies; and bridging the knowledge deficits on labour market patterns and youth employment.
• The rise of artificial intelligence (AI) could have an impact on employment, the report said, noting that the outsourcing industry in India could be disrupted because some back-office tasks would be taken over by AI.
• Investment and regulations are required in the emerging care and digital economies, which could be an important source of productive employment. The lack of job security, irregular wages, and uncertain employment status for workers pose significant challenges for gig or platform work.
• Economic policies are required to boost productive non-farm employment, especially in the manufacturing sector, with India likely to add 7-8 million youths annually to the labour force during the next decade.
• More support needs to be provided to micro, small and medium-sized enterprises, especially by providing tools such as digitalisation and AI and a cluster-based approach to manufacturing.

Written by Aanchal Magazine

Source: Indian Express, 28/03/24

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

 India has an employment problem which has been exacerbated by the pandemic. One indication of the building crisis is the continuing increase, over the years, in work demanded by households under the MGNREGA. In 2014-15, 4.13 crore households got work under the scheme. By 2019-20, just prior to the pandemic, this had risen to 5.48 crore. In 2020-21, at the peak of the economic distress, the number of households that worked under the scheme had risen to 7.55 crore. While that figure declined to 7.26 crore in the subsequent year, it remains considerably higher than the pre-pandemic level, indicating perhaps the continuing absence of alternatives. This growing divergence between the demand and supply of jobs manifests in a myriad of ways — from louder demands for reservation in the public sector by various caste groups, and for including the private sector in its ambit, to state governments exploring ways to ensure job quotas for locals. All this is indicative of a wide and deepening anxiety over employment prospects.

The deterioration in the employment scenario can be tracked at many levels. One, 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 per cent. 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 not only lower than the global average, but also lower than countries like Bangladesh. Two, 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. Three, 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). Four, 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.

While successive governments have taken steps to address the issue, the jobs crisis is in large part the result of the absence of a labour intensive manufacturing sector which can not only absorb the millions entering the labour force each year, but also those moving out of agriculture. For a country of the young, in the midst of a demographic transition, the employment problem is perhaps the most formidable challenge before the government.

Source: Indian Express, 28/04/22

The many layers of our unemployment problem

 Last month witnessed protests in several parts of north India by students who had appeared for the Non-Technical Popular Categories exam conducted by the Railway Recruitment Board. This was to fill up 35,000 posts for which 12.5 million candidates had applied. While the RRB’s decision to set up a committee to examine the issue may have pacified students for the time being, it is unlikely to offer any solution for the bigger problem of employment and earnings in the Indian economy.

As an employer, the Railways is our second largest after the defence ministry. But its problem is not with the recruitment process but the huge number of applicants for low-skill jobs. How big is 12.5 million? It is almost 10% of all those aged 20-25 in the country. So every tenth person in this age group was an applicant for the lowest category of employment in the Railways.

None of this is unknown and multiple data sources, including the government’s own estimates from Periodic Labour Force Surveys (PLFS), have shown the enormity of our employment crisis. Even by the PLFS, the 18-25 age group’s unemployment rate at 24.5% for 2019-20 is not only extremely high, it’s among the highest in the world if small and conflict-ridden countries are excluded. With a labour force participation rate of around 40%, it also means that every tenth young person in the country is unemployed by the official definition. While this may appear too high, even this is a gross underestimate of joblessness in the country. A significant majority of those who were on the streets protesting against the RRB are unlikely to be captured as unemployed by our official statistics. Most would be counted as students rather than as unemployed. A small minority of them would actually be working for private establishments but looking for a better job with security of tenure, better wages and social protection, which informal jobs lack. By the PLFS estimates, two-thirds of regular salaried workers in 2019-20 did not have a written job contract and most had no social security.

Underestimation of unemployment is as much a statistical issue as it is an economic reality. Despite improvements in standards of living and rising per capita income, a third of our population is poor by official estimates. For these households that must feed themselves, being jobless is a luxury they can hardly afford. By default, they tend to accept work at whatever wages are available. The social stigma attached to being unemployed also means that many would prefer the disguise of employment in agriculture and other enterprises even though they might not be contributing to production. For many others, being stuck in informal work arrangements at exploitative wages may be their only option. Even with the best of definitions and survey mechanisms, it is difficult to get a true estimate of unemployment, given the complexity and multitude of work arrangements that exist. But an effort at getting a better understanding of the problem by strengthening our statistical system should be a priority for the government.

Unfortunately, while this government has shown little regard for official data, the denial of unemployment as a major challenge for the economy is no longer a statistical issue. It has already become a public issue in almost all states that are in the midst of electoral battles to elect governments. Several political parties in the fray, including the Bharatiya Janata Party, have promised unemployment allowances to woo the electorate.

Recognition of the severity of India’s employment crisis is only the beginning for us to resolve the problem, which is arguably the economy’s biggest. Ideas like an unemployment allowance or an urban employment guarantee are unlikely to solve the problem in its entirety. Even as a temporary reprieve from the crisis, these are insufficient. However, the politicization of India’s job scarcity should lead to a discussion on long-term solutions.

The country requires a policy push not just for creating additional employment, but also to ensure that the jobs so created provide decent wages, security of tenure and social protection. Given that the incentive structure built into the current policy regime favours capital- intensive growth at the cost of labour utilization, a structural solution to the employment problem would require a close re-examination of the prevalent structure of production.

At a time our economy is struggling with low demand and a crisis of income in the rural economy, reviving rural demand through public expenditure is not just a necessity for economic revival, it is also the best way to increase the employment content of growth.

Himanshu is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi

Source: Mintepaper, 11/02/22

Tackling India’s unemployment wave

 

Trishali Chauhan, Christophe Jaffrelot write: Across sectors, age groups and gender, there has been an increase in joblessness, which cannot be blamed solely on the pandemic

Over the last few months, the Government of India and the mainstream media have highlighted the return of economic growth. However, very little attention has been paid to the job market. India’s unemployment rate has been soaring. It went up to 7.91 per cent in December 2021 from 6.3 per cent in 2018-2019 and 4.7 per cent in 2017-18, when the trend started to change — a sign that this phenomenon is not just due to Covid. In urban areas, this has gone up to 9.30 per cent in December 2021 from 8.09 per cent in January 2021. In rural areas, it has gone up to 7.28 per cent against 5.81 per cent.

Clearly, unemployment is more in the urban areas as compared to the rural areas. Between 2019-20 and December 2021, the manufacturing sector has lost 9.8 million jobs; by contrast, agricultural jobs jumped by 7.4 million. One probably needs to get back to the Raj years to see such a movement towards ruThe quality of jobs is also at stake. The percentage of salaried people has dropped from 21.2 per cent in 2019-2020 to 19 per cent in 2021, which means that 9.5 million people have left the salariat and become jobless or part of the informal sector. But the informal sector itself has shrunk, so much so that — to return to aggregate figures — the employed population, over the same period, has decreased from 408.9 million people to 406 million, at a time about 10 million young Indians were entering the job market. The age pyramid does not help, despite the belief in the so-called demographic dividend.

India’s Labour Force Participation (LPR) does not compare favourably with other emerging countries — a category that is vanishing quickly. According to the World Bank, it stood at 46 per cent in 2020 (it has not improved since then), while that of Brazil stood at 59 per cent, Chile’s at 57 per cent, China’s at 67 per cent, Ethiopia’s at 76, Ghana’s at 66, per cent, Indonesia’s at 66 per cent and Malaysia’s at 64 per cent.

Certainly, there are variations among Indian states. As per CMIE data, the unemployment rate in December 2021 was the highest in Haryana (34.1 per cent), followed by Rajasthan (27.1 per cent), Jharkhand (17.3 per cent) and Bihar (16 per cent).

There are also variations age-wise. Based on the data from CEDA-CMIE (between January 2019 and July 2021), the year 2020-21 saw 42.4 per cent fewer 15-19-year-olds employed in comparison to 2019-20. The age group of 20-29-year-olds saw the average monthly employment numbers go down by 15.6 per cent.ralisation: Workers are back in their villages even though urban jobs provide better wages.

In fact, according to the NSSO, in 2019, when India had the highest unemployment rate in the last 45 years, this rate was particularly high among India’s youth: 34 per cent for those between 20 and 24 years. For urban dwellers in this age group, this rate was 37.5 per cent. This figure is coherent with the CMIE figures: For the age group of 20-29 years old, the rate was around 28 per cent, meaning that nearly 30.8 million young people in this age group were jobless, compared to 17.8 million in 2017. An astonishing fact is that the more educated the people, the more unemployed they were — 63.4 per cent of graduates falling in the age bracket of 20-24 years were unemployed. This number has increased with time.

Variations according to gender are also important. Unemployment among women is higher than men, both in urban as well as rural areas. For women, the average unemployment was 14.28 per cent and for men, it was 7.88 per cent. Further, of the women willing to seek work in urban areas, 92.1 per cent don’t get any work. This count for rural women stands at 54.8 per cent.

To start with, the proportion of women who get employed and get paid is low and continues to decline over the years. This is happening even though more and more women are attending school and college in the country.

The absorption of women in the workforce, as compared to men, is much less for two main reasons. One, most women were involved in agricultural jobs in rural areas; the mechanisation of these jobs has had a huge impact on female labour force participation in the country. Two, India’s manufacturing sector is not labour-intensive. This has made it difficult to compensate women who got displaced from agricultural jobs.

There has been a lot of discussion about how women’s role as primary caregivers and ownership of domestic chores is a reason for the low participation of women in the workforce. The cultural norms and deep roots of patriarchy apparently limit women’s labour participation in India. In fact, young women tend to abstain from looking for a job when their own brothers cannot find one.

The employment scene will improve only if private investment picks up. At the moment, the situation is grim on that front. The investment rate is declining — almost in a linear manner — since 2011. It has dropped from 34.3 per cent then to 27 per cent in 2020. One of the reasons why companies do not invest is weak demand – which is partly due to joblessness — that dissuades enterprises from hiring more. This vicious circle is also fostered by growing inequalities, resulting in the shrinking of the middle class.

Unfortunately, investors will also be at an unfair disadvantage of more delicate access to credit in the coming weeks and months: Not only are Indian banks still badly affected by NPAs, but interest rates are bound to increase because of inflation — the rate has almost touched 5 per cent. In December, the State Bank of India raised its base rate for the first time in two years.

Unemployment in India has undeniably reached a critical stage and perhaps, raises serious questions on the quality of the economic recovery, which the third wave of the pandemic may affect anyway, making joblessness an even more acute problem.

Written by Trishali Chauhan , Christophe Jaffrelot

Source: Indian Express, 12/02/22