Analysing The India Employment Report 2024

Context:

Titled ‘The India Employment Report 2024’ and authored by the Institute for Human Development/International Labour Organization, this recent report presents a grim outlook for the roughly 7-8 million young individuals entering the workforce annually, with youth comprising nearly 83% of India’s unemployed population.

Relevance:

GS3-

• Employment
• Growth and Development
• Poverty
• Education
• Skill Development
• Human Resource

Mains Question:

With reference to the recently released India Employment Report 2024, discuss the challenges faced by youth entering the Indian workforce annually. What can be done to create better opportunities of employment in a technologically evolving economy like India. (15 Marks, 250 Words).

Findings of the Report:

Increasing Proportion of Educated Unemployed Youth:

• The report, unveiled by Chief Economic Adviser V. Anantha Nageswaran, highlights an increase in youth employment and underemployment between 2000 and 2019, which subsequently declined during the pandemic years.
• Of particular concern is the increasing proportion of educated young people among the unemployed, with those having completed secondary education or higher constituting 65.7% as of 2022, up from 35.2% in 2000.
• Even more alarming is the fact that graduates among the youth face an unemployment rate nine times higher (29.1%) than those who are illiterate or have basic literacy skills (3.4%).
• These troubling statistics highlight both the scarcity of jobs suitable for educated young individuals seeking better-paying employment opportunities and deficiencies in the quality of education, which leave a significant portion of educated youth unqualified to meet job requirements.
• Additionally, wages, adjusted for inflation, have either stagnated or declined, exacerbating the challenges faced by the youth in securing decent employment.
• India’s opportunity to capitalize on its substantial youth population for broader socio-economic benefits is rapidly diminishing, as projections indicate that the proportion of young people will decrease to 23% by 2036, down from 27% in 2021.
• The authors of the report emphasize the pressing challenges: “Unemployment rates are high, and a significant portion of youth are not engaged in employment, education, or training.
• Furthermore, many employed youths endure poor working conditions, despite the economy’s robust growth. These factors severely hinder the realization of the demographic dividend potential.”

Gender Disparity:

• Additional trends, such as the significant gender disparity in the Labor Force Participation Rate (LFPR)—with women’s LFPR at 32.8% in 2022, approximately 2.3 times lower than men’s LFPR of 77.2%—and the prevalence of informal employment among 90% of workers, underscore the absence of a cohesive overarching policy vision aimed at securing better employment opportunities for all.
• Contrasting the Chief Economic Adviser’s concerns about the government’s limitations with the primary policy mandate of the U.S. Federal Open Market Committee, which prioritizes “promoting maximum employment along with stable prices,” highlights the need for a focused policy approach.

Employment Landscape:

• The report highlighted paradoxical improvements in India’s job market indicators over the past two decades, despite the persistent challenge of insufficient growth in non-farm sectors and their capacity to absorb workers from agriculture.
• Despite non-farm employment growing at a faster rate than agricultural employment until 2018, the fundamental feature of the employment landscape remained unchanged. Labor from agriculture primarily transitioned to the construction and services sectors.

Informal Employment:

• Additionally, the report emphasized that nearly 90% of workers continue to engage in informal employment. While the proportion of regular employment steadily increased after 2000, it began to decline after 2018.
• The prevalence of livelihood insecurities is widespread, with only a small percentage of individuals covered by social protection measures, particularly in the non-agricultural organized sector.
• Furthermore, there has been a rise in contractualization, with only a minority of regular workers benefiting from long-term contracts.

Lack of Essential Skills:

• Despite India’s sizable young workforce being deemed a demographic dividend, the report pointed out that many lack essential skills.
• A significant portion of youth is unable to perform basic digital tasks, such as sending emails with attachments (75% unable), copying and pasting files (60% unable), and inputting mathematical formulas into spreadsheets (90% unable).
• The report highlighted the significant lack of quality employment opportunities, particularly among young people, especially those with higher education.
• According to the study, many highly educated young individuals are hesitant to accept low-paying and insecure jobs currently available, opting instead to wait for better employment prospects in the future.

Social Inequalities:

• In addressing growing social inequalities, the report underscored that despite affirmative action and targeted policies, Scheduled Castes and Scheduled Tribes continue to face obstacles in accessing better job opportunities.
• Despite their higher participation in the workforce due to economic necessity, these groups are more likely to be engaged in low-paid temporary casual wage work and informal employment.
• Moreover, despite improvements in educational attainment across all demographic groups, social hierarchies persist within these groups, as noted in the report.

Way Forward:

• The report underscores five primary policy domains requiring additional attention, which are applicable both broadly and specifically for youth in India:
  • Fostering job creation.
  • Enhancing the quality of employment.
  • Tackling disparities within the labor market.
  • Reinforcing skills development and implementing active labor market policies.
  • Closing knowledge gaps concerning labor market dynamics and youth employment.
• The advent of artificial intelligence (AI) is poised to impact employment, as highlighted in the report. It suggests that the outsourcing industry in India may face disruption as AI assumes some back-office tasks.
• To harness opportunities for productive employment, investment and regulatory measures are deemed essential in the emerging care and digital economies.
• The report underscores significant challenges posed by gig or platform work, including job insecurity, irregular wages, and uncertain employment statuses for workers.
• Economic policies must prioritize bolstering productive non-farm employment, particularly in the manufacturing sector, given India’s projected addition of 7-8 million youths annually to the labor force over the next decade.
• Additionally, greater support is needed for micro, small, and medium-sized enterprises (MSMEs). This support could entail providing tools such as digitalization and AI, alongside adopting a cluster-based approach to manufacturing.

Conclusion:

As the country enters the general election cycle, politicians face the imperative of prioritizing job creation and enhancing the quality of education and training to align with the demands of a technologically advancing economy. These priorities should not only feature prominently in their election campaigns but also guide policy formulation post-election.