For the past few months, several worrying numbers and reports about the rising rate of unemployment in India have been doing the rounds. While such headlines are being politicized regularly, it becomes critical to contextualize these reports and understand conflicting evidence as well. Let us attempt to decipher the extent of joblessness in the nation by taking a closer look at some recent reports and studies.
Rising unemployment: By the numbers
In the past few months, the results of several government-sanctioned and independent studies suggest that the unemployment level in the country is alarmingly high. After the results of general elections were announced, the Periodic Labor Force Survey (PLFS) report by National Statistical Office (NSO) was made public, and it showed that India’s unemployment rate was 6.1 percent in 2017-18; the highest in 45 years. A new methodology was attributed as one of the reasons behind the results, and the Chief Statistician of India, Pravin Srivastava, said that it would be unfair to compare the new numbers with that of the past.
The Periodic Labor Force Survey report by National Statistical Office, released in May 2019, shows that India's unemployment rate was 6.1 percent in 2017-18, the highest in 45 years
More recently, an academic paper written by Santosh Mehrotra and Jajati K Parida and published by the Centre of Sustainable Employment at the Azim Premji University concluded that the total employment in India declined between 2011-12 and 2017-18 by nearly nine million, a first in India’s history. Dr. Himanshu, a professor of economics at Jawaharlal Nehru University, also concluded that the absolute number of jobs declined by 15.5 million over this period. Similarly, the rating agency CARE Ratings also reported that the pace of employment growth in India slowed from 3.9 percent in 2017-18 to 2.8 percent in 2018-19. Another report released by the Centre for Monitoring Indian Economy (CMIE) said that India’s unemployment rate in October 2019 rose to 8.5 percent, the highest since August 2016, although it subsequently fell to 7.48 percent in November 2019.
It is important to note that these results are contradictory to the findings of Laveesh Bhandari and Amaresh Dubey, who undertook a study commissioned by the Economic Advisory Council to the Prime Minister, which claimed that the total employment grew from 433 million in 2011-12 to 457 million in 2017-18. These disparities have been attributed to the different estimates used for the total population of the country and differences in methodologies. However, even this study concluded that the total employment in the country grew by 0.8 percent, which is less than half the rate at which the overall population grew (1.7 percent). Furthermore, the study showed that most of this increase happened in the urban areas, and despite the high growth in the rate of employment in the organized sector, India Inc increasingly prefers to hire non-contractual workers.
The many faces of unemployment in India
Women's participation in the workforce: The OECD Economic Survey of India found that India is one of the worst nations for women workers as the difference between the employment rates of women and men among OECD nations is at 52 percentage points, the highest. The report states that unemployment among young and educated women in urban areas is also high and that underemployment and poor job quality remain fundamental challenges.
Unemployment in youth: The data from PLFS shows that unemployment among people aged 15-29 years was the highest during the January-March 2019 quarter, at 22.5 percent. Another analysis shows that the number of individuals in the 18-30 age bracket employed in the MGNREGA increased from 5.8 million in 2017-18 to 7.1 million in 2018-198. The rise is alarming because this number had steadily been declining from more than 10 million in 2013-14. Experts have opined that the growing unemployment in youth has resulted in them withdrawing from the workforce, and many people in their 20s have stopped looking for work, which means that a part of the most potent section of the workforce is choosing to sit out due to lack of employment opportunities. The recent disruptions in the telecom and auto industries have also resulted in several thousand young individuals losing their jobs.
Rural India and unorganized sector: The Minister of State and Labor Employment Santosh Kumar Gangwar stated in the Rajya Sabha that unemployment in rural areas increased from 2.9 percent in 2013-14 to 5.3 percent in 2017-18; in urban areas, it rose from 4.9 percent to 7.7 percent during the same period. Similarly, a 25 percent jump has been witnessed in the number of people being given work over the past five years under MGNREGA; the Rural Development Minister Narendra Singh Tomar said that the total number of individuals who worked under the scheme across the country went up from 62.2 million to 77.7 million in 2018-19. A rise in the number of people opting for work in the employment scheme is deemed to be a signal of rural distress and lack of employment opportunities.
The OECD Economic Survey of India found that India is one of the worst nations for women workers
The government's reaction and strategy
With the government admitting to a slowdown and the RBI revising the GDP growth forecast to five percent, questions are being raised about the unemployment rate in the country and the quality of jobs available. However, no new policy or program has been launched in recent times to focus specifically on curbing unemployment. When quizzed on the steps taken by the government to arrest unemployment rates, the Minister of State and Labor Employment Santosh Kumar Gangwar replied in the Rajya Sabha that the private sector is being given stimulus to grow and generate more jobs, in addition to fast-tracking investment in existing schemes. He said that expenditure on programs like the Prime Minister’s Employment Generation Program, MGNREGS, Deen Dayal Upadhyaya Grameen Kaushalya Yojana, and the Deen Dayal Antyodaya Yojana-National Urban Livelihoods Mission had been increased.
However, reports have shown that most of the existing programs expected to create jobs have not fared well. For instance, only 20 percent of the beneficiaries who took a loan under the Mudra scheme started new businesses, and nearly three percent of these loans have been classified as NPAs. Similarly, of the 6.4 million individuals trained under the Pradhan Mantri Kaushal Vikas Yojana (to impart skills), only 1.4 million got jobs.
While one can question the reliability and accuracy of all the reports mentioned above, the fact that they all suggest the same overarching trend points towards the compounding challenge of unemployment in the country. However, amid all the gloom, silver linings have started appearing. A recent TeamLease report says that India can expect a seven percent growth in job creation over the next six months and that jobs in healthcare, IT, and e-commerce will witness the maximum growth. Similarly, experts feel that the steps taken to boost growth in the past few months can result in higher capital availability with organizations and encourage them to hire. Nonetheless, the government needs to act fast and implement measures that not only help the economy pick up the pace but also generate employment. To fix the systemic issues that plague the Indian workforce and job market, the government needs to do a lot more than is currently being done.