Indian Institute of Management Lucknow, in partnership with Birla Institute of Technology and Science Pilani and the Union Ministry for Agriculture and Farmers Welfare, conducted a study revealing concerning trends in employment dynamics. Their research, featured in The Hindu and published in the Indian Journal of Labour Economics, highlights a stagnation in employment growth, a decline in employment elasticity, and a sluggish pace of structural transformation.
“Jobless growth”
Utilizing data from the National Sample Survey Office (NSSO) Employment and Unemployment Survey and the Periodic Labour Force Survey, the researchers have drawn conclusions regarding employment trends. They observed a significant increase in output growth and employment from 1987–88 to 2004–05, followed by a period of ‘jobless growth’ from 2004–05 to 2018–19, with only a minor “rebound” thereafter.
“Professor S. Tripati Rao from IIM Lucknow emphasizes that while economic growth has surged, it has not translated into a proportional increase in job opportunities. Instead, there has been a net displacement of labor. He stresses the importance of not only assessing the quantity of jobs created but also the quality and decency of these jobs.
In 2020–21, India’s total labor force reached 556.1 million, with the majority (54.9%) being self-employed, while only 22.8% were in regular employment and 22.3% in casual employment.
On May 2, 2023, The Wire reported on the job crisis and the poor quality of jobs in India. Mahesh Vyas from CMIE highlighted that most jobs in India offer low pay and are characterized by informal arrangements in unorganized sectors.
India’s job data has been irregularly reported in recent times, raising concerns about its accuracy in reflecting employment precarity. Unlike OECD, which uses three objective criteria to gauge job quality – earnings quality, labor market security, and the quality of the working environment – Indian data still lacks such comprehensive measures.”
Gender disparity worsens?
“The study conducted by IIM, BITS Pilani, and the Ministry of Agriculture also reveals persistent gender-based disparities in the Labor Force Participation Rate (LFPR) across rural and urban areas. Alarmingly, the LFPR decline is more pronounced for females compared to males from 1983 to 2020–21.
In 2020–21, the overall female Work Force Participation Rate (WFPR) for individuals aged 15–59 was recorded at 32.46%, a significant 44.55 percentage points lower than that of males. Additionally, the total percentage of male WFPR (81.10%) in the same age group is more than twice the rate for female adults (33.79%), highlighting a substantial gender gap in workforce participation.”
Unemployment much higher for highly educated Indians
“The Government of India has been facilitating negotiations with foreign governments, notably Taiwan and controversially Israel, to supply semi-skilled and unskilled labor from India. This move underscores the country’s challenges in creating job opportunities within its basic manufacturing industries. An Memorandum of Understanding (MoU) with Taiwan was signed on February 16, 2024, in this regard.
According to a report by BBC last month, India’s job crisis has led workers to seek employment opportunities in Israel. Even prior to the conflict in Gaza, India and Israel had entered an agreement in May 2023, as stated by former Israeli foreign minister Eli Cohen in the Israeli Knesset. This agreement aimed to send 42,000 Indian construction and nursing workers to Israel.”
However, the study suggests that despite increasing education levels, employment prospects do not improve and, in fact, worsen, indicating a widespread failure to generate jobs in India.
Unemployment rates in India are found to increase with higher education levels. In 2020–21, the unemployment rate for the illiterate and less educated class (below primary) was 0.57% and 1.13% respectively, whereas for the highly educated class (graduates and above), it soared to 14.73% among individuals aged 15–29 years. This trend persists over the years, according to the analysis.
The study advocates for more focus on programs like MNREGA and other poverty alleviation initiatives and public works. It highlights MNREGA’s positive impact in rural areas, including a 5% increase in wages, higher labor force participation among female workers, enhanced bargaining power for low-caste workers, elevated rural wage levels, and reduced dependence on high-caste employers.