Indians see the lack of employment opportunities as the biggest challenge facing them, says a survey by the US-based Pew Research Center—findings that resonate in a second report by Azim Premji University published. As many as 76% of those surveyed said the absence of jobs was a major problem and that little had changed on that front over the past year.

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State of Unemployment in India:

• CMIE database on “Unemployment Rate in India” is based on the panel size of over 1,58,000 households in the country.
• The unemployment rate in December 2018 rose to 7.38% from 6.62% in November 2018 and 4.78% in December 2017, highest since September 2016 when it stood at a high of 8.46%, the CMIE data showed.
• The total number of people employed fell by about 1.09 crore, about 83% or 91.4 lakh jobs were lost in rural areas.
• There has been a decline in the estimated Labour Participation Rate— the proportion of working-age people who are willing to work and are either actually working or are actively looking for work, in line with a fall in the unemployment rate.
• The estimated labour participation rate also dropped from 43.57 in December 2017 to 42.47 in December 2018. The rate was at 45.15 in December 2016 and at 47.84 in September 2017, the data showed.

The reasons for issue of unemployment in contemporary India:

• The labour force is the sum of the employed and those unemployed who are seeking employment.
• A shrinking of the labour force is most unusual in an economy with a growing population, and thus a growing working age cohort.
• Low education and lack of skills lead to loss of many job opportunities.
• Discouraged-worker effect: A section of those hitherto willing to work may have simply dropped out of an already challenged labour market.
• Demonetization has caused demoralisation among a section of the already unemployed who may have given up all hope of finding employment.
• About 90% of Indian Workforce is in the unorganized sector which was majorly affected during Demonetization and GST introduction.
• Declining Capital formation which is not backed by Public and Private Investment.
• Low female LFPR to the tunes of 24% also adds to high unemployment rate.
• Automation and IR4.0 is a looming threat to many jobs which have repeated work or sequential work.
• Socially disadvantaged groups do not get enough exposure in the job market like the general castes and Other Backward Classes.
• Labour laws in India are complex and relatively strict. Employment protection legislation is restrictive, compared with other emerging economies and OECD countries. Thus, corporates in India tend to rely more on temporary contract labour, stay small or substitute labour for capital to avoid strict labour laws.

Way Forward:

• Increase public spending in education:
  • At 3.8% of GDP, public spending on education in India is lower than countries like Brazil and Malaysia.
  • The focus of the government needs to shift to spending on enhancing the quality of education and vocational training.
• Similarly, allowing foreign investment in sectors like legal and accountancy services will create employment as more foreign firms will move to India.
• Infrastructure investment can also be utilised as an engine of job-creation.
• Investing in people through healthcare, quality education, jobs and skills helps build human capital, which is key to supporting economic growth, ending extreme poverty, and creating more inclusive societies.
• Besides promoting technical education, the government needs to focus more on creation of jobs and demand for workers since industries are unable to create sufficient job opportunities for all the technically educated people
• Policies should ensure that the education systems prepare young people for the skill demands of employers through outreach programmes, training, apprenticeships, and access to job-search assistance measures
• There should be cluster development to support job creation in micro, small and medium enterprises (MSMEs). Most of the unorganised sector employment is in MSMEs, which tend to be concentrated in specific geographic locations.
• Private sector leaders should build capacity among unskilled and semi-skilled workers to ensure sustainability of renewable energy projects and provide opportunities to rural communities.
• Government officials should create public training programmes to prepare the poor and less educated people especially semi-skilled and unskilled for employment in the clean-energy sector.

Conclusion:

India has one of the youngest populations in an aging world. By 2020, the median age in India will be just 28. Demographics can change the pace and pattern of economic growth. While China’s spectacular growth has already benefited from a demographic dividend, India is yet to do so.