Unemployment in India

Understanding Unemployment in India

Unemployment is a critical economic indicator that measures the percentage of people actively seeking work but unable to find employment.In India, the labour force includes both employed and unemployed individuals, with people who are not working or seeking work (e.g., students) excluded.

Current State of Unemployment in India

1. Overall Unemployment:

   • As per the Periodic Labour Force Survey (PLFS), India’s unemployment rate dropped to 5.1% in 2023.

   • However, the unemployment rate among youth (ages 15–29) remains alarmingly high at 14.6%.

   • According to the India Employment Report 2024 by the International Labour Organization (ILO), one in every three unemployed individuals in India is a youth.

2. Youth Unemployment:

   • Asia’s youth unemployment is at 16%, much higher than the US at 10.5%, with countries like India, China, and Indonesia facing the toughest youth job challenges.

Reasons for Unemployment in India

1. Demographic Pressure:

   • India has a young population, but the economy is not creating enough jobs. The World Bank points out that employment grew by only 1.7% annually (2000–2023) compared to a 1.9% rise in the working-age population. This has widened the employment gap.

2. Skill Mismatch:

   • Only 4.7% of India’s labour force has received formal skills training, leading to an underutilized workforce.

   • There's a paradox: high unemployment exists alongside talent shortages because of a disconnect between educational outcomes and industry needs.

3. Jobless Growth:

   • India’s economic growth of 6.5-7.8% is not creating enough jobs. The manufacturing sector contributes only a small share to employment, partly because India's global export share is just 1.8%.

4. Gender Disparity:

   • Urban female unemployment (ages 15–29) is 25.7%, significantly higher than male unemployment at 15.6%. This reflects societal and structural barriers to female workforce participation.

5. Technological Disruption:

   • The rise of automation and AI threatens up to 69% of jobs in India, especially in sectors like manufacturing, data entry, and customer service, necessitating large-scale reskilling.

6. Seasonal Employment & Agriculture:

   • About 45.76% of India’s workforce is engaged in agriculture and allied sectors, which typically offer seasonal and low-paid jobs. Rural areas suffer from underemployment and migration pressures due to limited non-farm job opportunities.

Impacts of Unemployment

1. Economic Stagnation:

   • Unemployment leads to lost GDP, as there’s less consumer spending, which affects businesses and deepens the economic slowdown.

2. Poverty & Inequality:

   • Joblessness contributes directly to poverty and exacerbates income inequality as families without stable incomes face hardship.

3. Social Instability:

   • High youth unemployment can fuel social unrest, crime, and political instability due to frustration and disillusionment among young people.

4. Mental Health and Skill Crisis:

   • Prolonged unemployment causes psychological distress and results in deskilling, reducing future employability and self-esteem.

5. Fiscal Burden:

   • Unemployment increases the government's fiscal burden through higher welfare spending while reducing tax revenues, which worsens the fiscal deficit.

Initiatives to Generate Employment

1. PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi):

   • A skill development program focusing on the training and empowerment of marginalized communities.

2. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

   • Provides guaranteed employment in rural areas, focusing on infrastructure and rural development.

3. Start-Up India Scheme:

   • Promotes start-ups and entrepreneurship, creating jobs through new businesses.

4. PM SVANidhi Scheme:

   • Provides collateral-free loans to street vendors, helping revive businesses affected by COVID-19.

5. PM Vishwakarma Scheme:

   • Supports traditional artisans, promoting traditional crafts and entrepreneurship.

6. National Education Policy 2020:

   • Introduces vocational education in schools to enhance youth employability.

7. Deen Dayal Antyodaya Yojana (DAY-NRLM):

   • Focuses on empowering rural women through Self-Help Groups, promoting sustainable livelihoods.

8. Pradhan Mantri Kaushal Vikas Yojana (PMKVY):

   • Focuses on industry-relevant skills, aiming to improve youth employability.

Reforms Needed to Tackle Unemployment

1. Boost Labor-Intensive Manufacturing:

   • Focus on high-employment sectors like textiles, leather, food processing, and electronics assembly. Enhancing export competitiveness via trade agreements can also help create jobs.

2. Bridge the Skill Gap:

   • Education reforms should emphasize vocational training and practical skills aligned with market demands, such as AI, data analytics, and IoT.

3. Support MSMEs:

   • Easier access to credit and reduced compliance burdens can help micro, small, and medium enterprises (MSMEs) thrive, generating more employment.

4. Address Underemployment in Agriculture:

   • Diversifying the rural economy with agro-based industries and promoting alternative livelihoods like animal husbandry and fisheries will help reduce migration pressures.

5. Strategic Government Investment:

   • Continued public investment in infrastructure (roads, railways, housing) and Production Linked Incentive (PLI) schemes can boost manufacturing and create jobs.

Conclusion

India's unemployment crisis, especially among youth and urban females, is primarily due to jobless growth, skill mismatches, underemployment, and technological disruptions