Context:
India, despite having the world’s largest youth population, is experiencing a rapid aging of its workforce, as indicated by CMIE’s (Centre for Monitoring Indian Economy) Economic Outlook data. This trend is concerning as it signifies a decline in the proportion of young workers and an increase in those nearing 60 years of age among the employed population.
Relevance:
GS I: Population related issues
Dimensions of the Article:
- Key Insights from the Analysis
- Factors Influencing an Ageing Workforce
- Concerns and Implications of an Ageing Indian Workforce
Key Insights from the Analysis
Workforce Composition Across Age Groups
- Categorized into Three Age Groups: The analysis segments the workforce into distinct age groups to analyze the trend of an aging workforce.
- Aged 15-29 Years: The percentage of workers in this age bracket within the total workforce has dwindled from 25% in 2016-17 to 17% in the financial year 2022-23.
- Aged 30-44 Years: Individuals falling within this age range also witnessed a decline in their share, decreasing from 38% to 33% over the same period.
- Aged 45 Years and Older: Notably, this category’s share has observed a significant growth, escalating from 37% to 49%.
Declining Employment Rates Among Youth
- Youth Population Growth: Despite an increase of 2.64 crore in the youth population (from 35.49 crore in 2016-17 to 38.13 crore in 2022-23), the number of employed individuals within this group has plummeted by a substantial 3.24 crore.
- Plummeting Employment Rate: Consequently, the employment rate for this age group has experienced a sharp drop from 29% to 19% over a span of seven years.
Varied Impact on Different Age Categories
- Across Age Groups: The reduction in employment rates is most pronounced among the youth, yet the trend is also noticeable in other age groups, albeit to a lesser degree.
- Oldest Age Group: Intriguingly, the oldest age segment (45 years and above) has faced a comparatively minor decline in employment rates and has even seen an upturn in the absolute number of employed individuals.
Factors Influencing an Ageing Workforce
Limited Job Opportunities
- Insufficient Job Openings: A major driver of diminishing youth employment is the scarcity of available job opportunities.
- Population Growth vs Job Growth: The rapid expansion of the youth population hasn’t been met with a proportional increase in job openings, resulting in intense competition for limited positions.
Skill Mismatch
- Skills Gap: Disparity between the skills possessed by youth and those demanded by the job market can lead to elevated unemployment rates.
- Education’s Role: The education system might not adequately prepare young individuals for the evolving job landscape, causing underemployment or joblessness.
Informal Sector Predominance
- Informal Employment: A significant portion of India’s workforce engages in the informal sector, where stable employment and social security benefits are often lacking.
- Lack of Formal Opportunities: Entering the job market, youth might struggle to secure steady formal employment, resulting in instability and underutilization of skills.
Educational Mismatch
- Educational Attainment Increase: Although youth are achieving higher education levels, a discrepancy could exist between acquired education-based skills and those demanded by employers.
- Aspirations and Waiting: A desire for higher-level positions might lead youth to wait for suitable jobs, contributing to a decline in their employment rates.
Concerns and Implications of an Ageing Indian Workforce
Reduced Productivity and Economic Impact
- Health-related Issues: Older employees might experience decreased productivity due to health concerns and declining physical capabilities, affecting overall economic output.
Healthcare Demand and Strain
- Healthcare Demand Increase: An ageing workforce could lead to heightened demand for healthcare services, potentially straining both public and private healthcare systems.
Lack of Innovation and Dynamism
- Fresh Perspectives and Innovation: Younger workers often bring novel viewpoints and technological expertise, fostering innovation in various industries.
- Aging Workforce Limitation: An ageing workforce may lack the dynamic qualities and innovation potential that younger employees offer.
Impact on Economic Growth
- Declining Workforce Contribution: A shrinking working-age population contributes less to both production and consumption, affecting economic growth potential.
Labor Shortages in Certain Sectors
- Labor Shortages: Industries relying on manual labor, like construction and manufacturing, might face shortages if younger workers are unavailable to replace older ones.
Skill Shortages and Impeded Progress
- Skill Deficits: An ageing workforce can result in skill scarcities, particularly in sectors requiring specialized knowledge, potentially hindering technological advancement.
Altered Consumer Patterns and Demand
- Different Consumption Patterns: Older individuals often prioritize savings and essential goods, influencing consumer demand and affecting industries catering to luxury goods.
-Source: Indian Express
