Context: The Union Budget announced five major employment-related schemes to facilitate jobs and skilling and other opportunities for 4.1 crore youth. This, along with the Economic Survey and the Prime Minister’s package for employment must be seen along with other initiatives for creating mass employment in the country.
What are Major Causes Behind Unemployment in India?
- Shift Away from Agriculture: Many workers are leaving farming, but there has not been a commensurate increase in non-farm employment opportunities, especially in the manufacturing sector.
- Traditional Factors: Disguised unemployment in agriculture and economic slowdowns due to events like the COVID-19 pandemic. Additionally, regressive social norms that discourage women from joining or continuing to work.
- Infrastructure and Manufacturing: Inadequate growth of infrastructure and low investments and limited focus on labour-intensive sectors like textiles and leather in the manufacturing sector.
- Lack of Skills and Education: Only 16% of India’s labour force have undergone some form of skill training. Hence, insufficient vocational skills and low education levels among the workforce reduces their employability. Only 45% of graduates are considered employable according to the India Skills Report.
- Women's Participation: Low participation of women in the workforce, influenced by mechanisation in agriculture and the nature of India's manufacturing sector. Additionally, as per NITI Aayog’s 2017-20 agenda, women tend to be paid less, work in less productive jobs and are overrepresented in unpaid care work and engaging in vulnerable forms of employment
- Quality of Jobs: While there has been a strong job creation in some ICT- intensive services, a significant portion of them are in traditional low value-added services, where informality & vulnerable forms of employment (gig work) are dominant.
- Shrinking Public Sector: A decline of 89% in direct recruitment in central government ministries and departments.
Challenges in Creating Employment in India
The latest Periodic Labour Force Survey (PLFS), which shows that labour force participation rate since 2019-20 has increased by only 4% points.
- Impact on Employment: The rise of artificial intelligence (AI) could have an impact on employment as the outsourcing industry in India could be disrupted because some back-office tasks would be taken over by AI.
- Lack of Job and Income Security: Investment and regulations are required in the emerging care and digital economies, which could be an important source of productive employment. The lack of job security, irregular wages, and uncertain employment status for workers pose significant challenges for gig or platform work.
- Rising Informality in Employment: Informal employment has risen as around half the jobs in the formal sector are of an informal nature. Almost 82% of the workforce is engaged in the informal sector, and nearly 90% is informally employed. Casual work is linked with relatively poor-quality jobs due to its irregular nature and lower daily earnings.
- Low Female Labour Force Participation: India’s low LFPR is largely attributed to the low female LFPR, which was much lower than the world average of 47.3% in 2022, but higher than the South Asian average of 24.8%.
- Unemployment Among Youth: In 2022, the share of unemployed youths in the total unemployed population was 82.9%. The share of educated youths among all unemployed people also increased to 65.7% in 2022 from 54.2% in 2000.
- Inadequate Skilling Infrastructure: The absence of quality and up-to-date infrastructure in many ITIs, polytechnics, and Rural Self Employment Training Institutes (RSETIs) is a very critical gap in an age of upskilling and re-skilling.
What should the key policy initiatives in creating sustainable mass employment with dignity be?
- Identifying Skilling Needs through decentralised community action. This can help enumerate all those wanting employment in a community register and making it the basis of finding skill providers and employers.
- Converging initiatives for education, health, skills, nutrition, livelihoods, and employment (at the local government level) with women’s collectives to ensure community accountability. Employment does not improve in isolation. All human development indicators achieve better when they devolve and converge.
- Introducing need-based vocational courses/certificate programmes alongside undergraduate programmes in every college. This will greatly improve employability on scale by making graduation programmes employable.
- Standardising nursing and allied health-care professional courses in all States according to international benchmarks. Nurses, geriatric care-givers, and health paramedics are required on scale in and outside India. We need to standardise these skill sets to international standards.
- Creating community cadres of care-givers, to run crèches universally so that women can work without fear. These crèche care-givers can be paid by the local governments/women’s collective after intensive training.
- Investing in Industrial Training Institutes (ITI), polytechnics as these technical institutions can also work as a hub for feeder schools. Schools must develop an equivalence framework for academic and vocational inputs in terms of credits and hours. The focus should be on States/districts with the least institutional structure for vocational education.
- Introducing enterprise and start-up skills through professionals in high schools: Schools need to introduce technology and enterprise as a subject at the upper primary/high school-level onwards. It is important that experimentation and innovation with an understanding of business processes are a part of the regular school curriculum. Visits by professionals to schools can impart finishing skills to students.
- Having a co-sharing model of apprenticeships with industry is critical as far as manufacturing sector opportunities or even the services sector is concerned. Skilling costs must be shared with potential employers as standalone government-funded skilling is not always the best way forward.
- Streamlining working capital loans for women-led enterprises/first-generation enterprises to enable them to go to scale. While efforts to create comprehensive credit histories of every woman borrower are underway (Reserve Bank Innovation Hub), technology can be a great enabler in going to scale.
- Starting a universal skill accreditation programme for skill providing institutions, and let the state and industry jointly sponsor candidates for courses. Skill providers can be accredited after a rigorous assessment process. Candidates can be co-sponsored by the state and employers.
Apprenticeships on scale can facilitate the absorption of youth in a workplace. The scale must go up. The focus must be on skill acquisition and the government’s condition for employer subsidies in any form must always be for wages of dignity on successful completion of apprenticeship.