Why in news: According to the ‘India Employment Report 2024’ released by the Institute of Human Development (IHD) and the International Labor Organization (ILO). Overall labor force participation, workforce participation, and employment rates in India have improved in recent years after a long-term decline during 2000–2019, yet the employment situation remains poor.
Syllabus:
Preliminary Examination: Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.
Mains Examination:
• General Studies I: Social empowerment
• General Studies‐ III: Development and Employment
• General Studies III: Inclusive growth and issues arising from it
India Employment Report 2024
The “India Employment Report 2024,” a collaborative effort between the International Labor Organization (ILO) and the Institute for Human Development (IHD), presents a comprehensive analysis of India’s employment scenario based on national sample surveys and periodic labor force data.
The surveys span from 2000 to 2022. The report is significant because of its detailed exploration of youth employment challenges against India’s economic transformation, labor market changes, educational progress, and skill development scenarios.
Key findings:
Female labor market participation: The report finds a significant increase in the female labor market participation rate since 2019, particularly in rural areas, reversing previous trends of decline. This change is important for gender equality and economic development.
Workforce shift from agriculture: The gradual but persistent workforce shift from agricultural to non-agricultural sectors reflects the evolving structure of the Indian economy and its labor market.
Dominance of informal employment: Most of the employment in India, about 82%, comes in the informal sector. This includes self-employment and contingent labor, emphasizing the need for policy measures to address the protection and rights of informal workers.
Wage Trends: The report sees modest growth in wages for contingent workers between 2012 and 2022. However, real wages for regular workers have seen stagnation or decline, indicating challenges in wage growth and living standards for a significant portion of the workforce.
Urban migration and population: The anticipated migration rate of approximately 40% by 2030, with the urban population reaching approximately 607 million, underlines the critical need for urban planning, infrastructure development, and employment opportunities in urban areas.
Challenges identified:
Prevalence of informal employment: With nearly 90% of workers engaged in informal work, the report points to a widespread absence of job security and social security for the majority of the Indian workforce.
Increase in contractualization: The report indicates an increase in contractual work with a decline in the share of regular workers covered by long-term contracts after 2018, highlighting the uncertainty of labor contracts and employment stability.
Skills Gap: A serious concern is the skills gap among youth, with a significant percentage unable to perform basic digital tasks, which hinders their employability in a digitally evolving economy.
Challenges of Youth Employment:
Demographic Dividend Potential: A report from the Confederation of Indian Industry (CII) suggests that effectively harnessing this demographic dividend could help India’s GDP leapfrog from the current $3 trillion to $9 trillion by 2030 and further to $40 trillion by 2047.
Youth population dynamics: Youth, defined by the International Labor Organization (ILO) as individuals aged 15 to 24, are experiencing demographic change. Despite accounting for 27% of India’s total population in 2021, projections indicate a decline to 23% by 2036. This trend marks a significant change in the demographic scenario of the country.
Labor force participation rate: Youth participation in the labor force has consistently been lower than that of adults. This rate has seen a decline from 2000 to 2019, mainly due to the increase in enrollment in educational institutions.
The emphasis on education reflects a societal shift toward higher education and skill acquisition, although it also highlights the challenges of integrating these educated youth into the labor market.
Youth Unemployment Trends: Youth unemployment poses a significant challenge, with the rate increasing from 5.7% in 2000 to a peak of 17.5% in 2019. This increase in the unemployment rate among youth highlights the difficulties young individuals face in securing employment. However, there is a significant decline to 12.1% by 2022, suggesting some improvement in the employment outlook for young people.
Proposed solutions:
Promoting job creation: To encourage public and private sector initiatives to create employment opportunities.
Increasing the quality of employment: focusing on improving job security, working conditions, and wage standards.
Tackling labor market inequalities: implementing policies to reduce inequalities and promote inclusivity in employment.
Strengthening skills and labor market policies: scaling up education and vocational training to bridge the skills gap and prepare the workforce for future demands.
Bridging the knowledge gap: improving labor market data and insights to inform policy-making and effectively address youth employment challenges.
The “India Employment Report 2024” thus serves as an important resource for policymakers, scholars, and stakeholders, providing in-depth insights into India’s labor market dynamics and solutions to address the multifaceted challenges of employment in India.
Employment Rate (ER) and Unemployment Rate (UER)
- According to recent data and reports, India’s labor market is showing positive trends in both employment and unemployment rates. The Periodic Labor Force Survey (PLFS) for the period between July 2022 and June 2023 highlighted a significant decline in the unemployment rate across various sectors of the population.
- The unemployment rate in rural areas declined from 5.3% in 2017-18 to 2.4% in 2022-23, while urban areas saw a decline from 7.7% to 5.4% over the same period. The overall unemployment rate for persons aged 15 and above was reported at 3.2%.
- The State of Working India Report 2023, produced by Azim Premji University’s Center for Sustainable Employment, also provides a deep insight into the dynamics of India’s employment landscape.
- It said that while the overall unemployment rate declined from 8.7% in 2017-18 to 6.6% in 2021-22, a worrying trend remains among young graduates under the age of 25, where the unemployment rate stands at a worrying 42.3%.
- The report also highlights the slow pace of regular wage employment creation since 2019 due to the economic slowdown and the impact of the COVID-19 pandemic.
- Furthermore, LFPR (Labour Force Participation Rate) and WPR (Worker Population Ratio) have shown improvement. For example, in urban areas, the LFPR for persons aged 15 years and above increased from 47.5% in April-June 2022 to 48.8% in the same months of 2023.
- WPR in urban areas increased from 43.9% to 45.5% during the same period. These improvements reflect positive changes in the country’s labor market, indicating a resilient recovery and progress toward economic stability and job creation.
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