Unemployment in the fastest growing economy India

India is the fastest growing economy in the world. GDP growth of the country is getting higher despite of this fact India’s employment is still low. India is currently facing huge job crisis.  

The Reports of OECD Economic Survey

The economic growth in the last two decades failed to create opportunities for gainful employment. Last year, the OECD Economic Survey found that over 30% of the India's young people aged 15-29 are neither employed nor in education or training

Nearly 20 million women lost their jobs between 2004 and 2012. The GDP growth failed to trickle down in the lower segments of economy as inequality expanded. 

As per the 2018 World Inequality Report, the income inequality has reached at historically high point.

More than 90% of the Indian labour market remains informal, undermining socio-economic mobility. Just around 2.3% of the workforce has undergone formal skills training, compared to 75% in Germany and 30% in china.

 A majority of university graduates are unemployable and lack basic work skills, leading to serious skills imbalance between demand and supply in the labour market. 

This skills gap and technological illiteracy make it difficult for firms to find desired workers. Unemployability evolved into a bigger problem than unemployment itself.

Fighting the fake news

Status of Job Crisis

According to the GDP, the Job creation is lesser in India

World Bank, in its publication South Asia Economic Focus, Spring 2018: jobless Growth, says that over the long-term, India has been creating 7,50,000 new jobs for every 1% rise in gross domestic product (GDP); at an average of 7% growth, India should be creating at least 5.25 million jobs.

The Agriculture and Job Connectivity 

According to Centre for Monitoring Indian Economy data the number of youth (15-29 years) employed in agriculture fell between 2004-5 and 2011-12. However, after 2012, as non-agricultural job growth slowed, the number of youths in agriculture increased significantly.

Manufacturing - Jobs reduced

Manufacturing jobs also reduced in absolute terms, from 58.9 million in 2011-12 to 48.3 million in 2015-16.

 The leaked NSSO 2017-18 data have shown that while the open unemployment rate (which does not measure disguised unemployment and informal poor-quality jobs that abound in the economy) by the usual status has jumped to 6.1% in 2017 -18 that never went over 2.6% between 1977-78 and 2011-12.

 

Unemployment among educated youth is risin

Unemployment among educated young people is rising which is a cause of concern. India is categorized into ‘Not in Employment, education and training category’. This is called as NEET category. NEET is relatively new concept.

 According to the OECD, youth's inactivity presents the share of young people are not in employment, education or training (NEET) as a percentage of the total number of young people in the corresponding age group.

Job creation has slowed since 2011-12, the year of the last published National Survey Office (NSSO) labour force survey 2015-16 dat

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Drastic Drop in manufacturing jobs

Jobs in manufacturing sector fell drastically down, from 58.9 million in 2011-12 to 48.3 million in 2015-16; it means 10.6 million differences in four-year period. 

This is consistent with slowing growth in the index of industrial production, which consists of manufacturing, mining, and electricity. 

The Index of Industrial Production had sharply risen from 100 in 2011 in the later series to 107 in 2013-14 and to 125.3 in 2017-28. This is also consistent with exports forts falling after 2013, and then barely recovering to levels still lower than 2013. 

It is also consistent with investment – to-GDP ratio falling sharply since 2013, and still remaining well below 2013 levels. This holds for both private and public investment.

 Growth without Jobs

India’s growth creates fewer jobs than before. Fixing India’s job crisis is impossible unless the government decides to increase investment in public services, education and health. Together these sectors can compensate for the bulk of the work demand in India.

The challenge of fixing India’s job crisis is an unachievable task for any-term government. The country’s private sector has done well in battling the unemployment challenge so far, and improving the ease of doing business is step in right direction. 

The youth is getting more and more educated but the growth of employment is not satisfactory. 

People lost jobs because of cash crunch after demonetization. There is no correlation between GDP growth and employment rate.

Falling Female Participation

Female participation in workplace has been declining since 1977, and continued falling to 2015-16. According to Centre for Monitoring Indian Economy (CMIE), a think tank, only women suffer when there’s an employment problem, while jobs for men increased by 0.9 million, 2.4 million women fell off the employment map in first four months of 2017. 

The trend for this year points to a continuing story of Indian women increasingly clocking out of the workplace. It might not seem like it at first glance. You see Women employed everywhere, in ad agencies and start-ups, on construction sites and in fields, in shops and restaurants, in schools and anganwadis, flying airplanes and driving taxis. However, the data contradict about recruitment.

First, female enrolment at secondary level (15-16 years old) rose to 85% within matter of five years (to 2015). Second, as these older girls entered secondary school, younger siblings care in the family had to be now performed by adult women rather than the eldest girl. In the household income with rapid growth in agriculture, the demand for female women increased. 

A very important reason for rural female workforce falling 2004-05 was the decline in household level animal farming, which has rationally been performed by women. 

India Slipped in World happiness

Solutions

If India wants to absorb large number of labour force, it should be more focused to increase in expenditure to create more opportunities. 

There is a need to execute well planned schemes and a huge infrastructure has to be created. Economy cannot run on single engine that is on public sector alone, so private sectors should come forward. Agriculture sector have to sustain the growth of poor people.

Education system needs to be re-oriented towards vocational and practical teachings. Huge chunk of women participation in workforce is needed. 

Government should give chance to youth in government jobs like judges, teachers, doctors etc. there is a need to generate more jobs in public sector. 

There should be cluster development to support job creation in micro, small and medium enterprises. 

The growth of population should be checked in order to solve unemployment problem. Family planning programme should be implemented widely and effectively. The link between good urbanization and jobs growth is positive, and unless India’s urbanization is concentrated in narrower areas and serviced by good infrastructure, job creation will be sub-optimal.

Indian government has failed to fix India’s job crisis, high unemployment and slow employment growth have been a historical reality of the country’s labour market. India’s jobless growth since the 1990s only made it worse. 

More than half of India’s population depends on the agriculture sector for work.