Jobless Growth

National Sample Survey Office’s (NSSO’s) report, “State of Working India, 2018” data shows a record spike in unemployment in 2017-18.

State of Unemployment in India:

• The estimated labour participation rate dropped from
  • 45.15 in December 2016
  • 43.57 in December 2017
  • 42.47 in December 2018

Reasons for issue of unemployment:

• Low education and lack of skills lead to loss of many job opportunities.
• Discouraged-worker effect: section of those hitherto willing to work may have simply dropped out of an already challenged labour market.
• Demonetization has caused demoralisation among a section of the already unemployed who may have given up all hope of finding employment.
• About 90% of Indian Workforce is in the unorganized sector which was majorly affected during Demonetization and GST introduction.
• Declining Capital formation which is not backed by Public and Private Investment.
• Low female LFPR to the tunes of 24% also adds to high unemployment rate.
• Automation and IR4.0
• Socially disadvantaged groups do not get enough exposure in the job market like the general castes.
• Tough Labour Laws: Employment protection legislation is restrictive, compared with other emerging economies and OECD countries. Thus, corporates in India tend to rely more on temporary contract labour, stay small or substitute labour for capital to avoid strict labour laws.

Impacts:

• Problem of poverty.
• Increase in Crime rate due to illegal and wrong activities for earning money.
• Getting addicted to drugs and alcohol or attempts suicide, leading losses to the human resources of the country.
• Escalating socioeconomic costs for the State. For instance, 1 percent increase in unemployment reduces the GDP by 2 percent

Way forward:

• Labour intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments should be given special packages, individually designed for each industry are needed to create jobs.
• Public investment in sectors like health, education, police and judiciary can create many government jobs.
• Decentralization of Industrial activities is necessary so that people of every region get employment.
• Development of the rural areas will help mitigate the migration of the rural people to the urban areas thus decreasing the pressure on the urban area jobs.
• Entrepreneurs generate employments to many in a country; therefore government needs to encourage entrepreneurship among the youth.
• Concrete measures aimed at removing the social barriers for women’s entry and their continuous participation in the job market is needed.
• Government needs to keep a strict watch on the education system and should try to implement new ways to generate skilled labour force.
• Effective implementation of present programs like Make in India, Skill India, Start up and Stand-Up India.
• There is a need for National Employment Policy (NEP) that would encompass a set of multidimensional interventions covering a whole range of social and economic issues affecting many policy spheres and not just the areas of labour and employment.