Sept. 6, 2024
Employment Trends in IndiaSource: IE
Context: Recently, the Reserve Bank of India (RBI) data revealed a significant rise in India's employment rate, growing by 6% in FY24 from 3.2% in FY23, reflecting positive trends in the labour market.
Unemployment:
Unemployment occurs when a person actively seeks employment but is unable to do so, The unemployment rate is calculated by dividing the number of unemployed people by the total number of people in the labor force.
Types of Unemployment
• Open Unemployment: a condition where people have no work to do
• Disguised Unemployment: more individuals are engaged in a job than the number actually required.
• Seasonal Unemployment: employment for only a certain period of time in a year.
• Cyclical Unemployment: This type of unemployment occurs mainly due to deficiency or fall in demand from consumers which in turn leads to a fall in production and low demand for labor.
• Structural Unemployment: This type of unemployment happens when workers do not have the skills required by their employers.
• Underemployment: a situation in which employees contribute to production less than they are capable of.
• Frictional Unemployment: the result of workers searching for new employment or transitioning from their old jobs to new ones.
Concerns Regarding Employment in India
• Growth of Informal Sector: Informal sector lacks security, benefits, or minimum wage.
• Quality of Jobs for Youth: young people might be over-educated for the available jobs or find themselves in precarious situations like the gig economy.
• Gender Gap: Women's participation in the workforce hasn't grown as expected. Many end up in unpaid family work or low-paying self-employment instead of formal jobs.
• Skill Mismatch: The education system might not be aligned with the current job market needs.
• Formalisation Challenges: This leads to lower tax revenue for the government and limited social security benefits for workers in the informal sector.
• Job Automation: This can lead to job displacement in industries like manufacturing.
• Vulnerability to economic shocks as seen during the Covid-19 pandemic and high demand for Government Jobs.
Government’s Initiatives Related to Employment
• Support for Marginalised Individuals for Livelihood and Enterprise (SMILE).
• PM-DAKSH (Pradhan Mantri Dakshta Aur KushaltaSampann Hitgrahi).
• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
• Pradhan Mantri Kaushal Vikas Yojana (PMKVY).
• Direct Benefit Transfer Scheme.
• Pradhan Mantri Mudra Yojana.
Way Forward
• Promote Formalisation: Implement strategies to incentivise informal workers to transition to the formal sector, Streamline the registration process for small businesses to bring them under the umbrella of labour laws and social security benefits.
• AI and Automation Reskilling: providing training programs in areas like AI, robotics, and data science.
• Entrepreneurship and Innovation: Establish industry-specific startup incubators and accelerators. Encourage angel investor networks to provide early-stage funding for promising start-ups.
• Remote Work Opportunities: Encourage companies to leverage technology and offer remote work arrangements. This expands job opportunities for individuals living outside major cities and promotes a better work-life balance.