Highlight the fundamental reasons behind the employment problem that India is facing currently. Also, suggest a way forward.
Unemployment is defined as a situation when a person actively searching for employment is unable to find work. It is often used as a measure of the health of the economy. According to recent data from the Center for Monitoring Indian Economy (CMIE), India’s unemployment rate rose to 7.83% in April 2022.
India employment problem:
- Large unemployed youth in the country.
- Skewed against gender justice ideals – labour force participation ratio of males is higher than females.
- Informal nature of employment. Approximately 90% of India’s workforce is employed in informal sector.
- Temporary and contractual nature of employment.
- Lack of social security measures for major portion of India’s workers.
- Skewed in favour of non-manufacturing sectors, e.g. ~45% of India’s workforce is employed in agriculture sector.
Reasons behind India’s unemployment problem:
- Structural:
- Service sector led growth since LPG reforms.
- Employment intensive manufacturing sector lags in growth.
- Agriculture still dominates India Employment share while contributing little to output (~10%).
- Supply side issues:
- Less than 2% of India’s workforce is formally skilled.
- According to skill India report of 2020, only ~40 % of India’s youth is employable.
- Lack of Vocational skills certification.
- Demand side challenges:
- Labour market rigidities.
- Rise of disruptive Technologies, like artificial intelligence, big data, is causing job losses.
- Impact of global slowdown in wake of Covid-19 pandemic.
Way forward:
- Promotion of labour intensive industries.
- Giving boost to entrepreneurship.
- Emphasize on vocational training.
- Enhancing human capital with the help of skill development.
PM-Daksh, Pradhanmantri Kaushal Vikas Yojana, Stand Up India, Start up India, Skill India and new education policy focusing on vocational training, are the steps in right direction.