Unemployment rate dips in first quarter of 2022: survey
GS Paper 2, Employment, Human Resources.
Context:
- According to the Periodic Labour Force Survey (PLFS), the urban unemployment rate fell to 8.2 percent in January-March 2022, down from 8.7 percent in the previous quarter (October-December 2021) and 9.3 percent in the same period in 2021.
- According to the survey report, the unemployment rate is defined as the proportion of jobless people in the labour force.
- The National Statistics Organization (NSO) revealed the survey findings for 2020-21, which showed a 0.6 percentage point fall in the jobless rate to 4.2 percent, down from 4.8 percent in 2019-20.
India’s Labour Structure:
- In its 2008 report, India’s Ministry of Labour categorised unorganised labour in four categories. This categorization classified India’s unorganised labour force according to occupation, kind of work, severely troubled categories, and service categories.
In India, there are several types of unemployment:
Unemployment in Disguise: more individuals are employed than are actually required. It is largely found in India’s agricultural and unorganised sectors.
Seasonal Joblessness: happens during specific times of the year. Agricultural labourers in India rarely have employment all year.
Structural Unemployment: caused by a mismatch between the jobs offered in the market and the abilities of the available employees.
Many individuals in India are unemployed because they lack the necessary skills, and training them is difficult owing to a lack of knowledge.
Cyclical Unemployment: It is a product of the business cycle, in which unemployment rises during recessions and falls during expansions. In India, cyclical unemployment is small. It is a phenomenon encountered mostly in capitalist economies.
Unemployment Due to Technology: It is the loss of jobs as a result of technological advancements.
According to World Bank data from 2016, the share of employment threatened by automation in India has increased by 69 percent year on year.
Frictional Unemployment: Frictional unemployment, also known as Search Unemployment, refers to the time gap between jobs while an individual is looking for a new work or changing occupations.
It is sometimes referred to as voluntary unemployment since it is not caused by a lack of jobs, but rather by employees leaving their positions in pursuit of better chances.
Vulnerable Employment: This refers to those who work informally, without appropriate job contracts, and hence without legal protection. These people are classified as “unemployed” since no records of their job are kept. It is a major source of unemployment.
Unemployment Causes:
- A sizable population.
- Working population with little or no educational levels and occupational skills.
- Inadequate state assistance, regulatory difficulties, and inadequate infrastructural, financial, and market links to tiny/cottage industries or small firms, rendering such operations unviable due to cost and compliance overruns.
- A large workforce is linked with the informal sector as a result of a lack of needed education/skills, which is not reflected in any employment data. Domestic assistants, construction labourers, and so forth.
- The curriculum taught in schools and universities is out of date with regard to industry needs. This is the primary reason for structural unemployment.
- Inadequate infrastructural expansion and little investment in the manufacturing sector, limiting secondary sector job possibilities.
- Low agricultural production combined with a lack of other alternatives for agricultural workers makes the shift from primary to secondary and tertiary industries challenging.
- Regressive societal norms that discourage women from seeking/maintaining work.
Impact:
- The issue of unemployment leads to the issue of poverty.
- Young individuals who have been unemployed for a long period engage in unlawful and illegal activities to make money. This also contributes to an upsurge in crime in the country.
- Unemployed people are readily swayed by antisocial influences. This causes people to lose trust in the country’s democratic principles.
- It is common for jobless persons to become hooked to drugs and alcohol or to attempt suicide, resulting in losses to the country’s human resources.
- It also has an impact on the country’s economy since the workforce that might have been gainfully employed to create resources becomes dependent on the remaining working population, raising socioeconomic expenses for the state. For example, a one percent rise in unemployment decreases GDP by two percent.
Rate of Labour Force Participation (LFPR):
- The LFPR is essentially the proportion of the working-age (15 and above) population that is looking for employment.
- It shows an economy’s desire for work.
- It comprises both employed and jobless individuals.
- The Unemployment Rate (UER) is the fraction of the labour force that is jobless.
The Importance of LFPR:
- More advanced than the Unemployment Rate (UER): The LFPR provides a more accurate representation of the country’s unemployment rate. Simply looking at the UER will understate the impact of unemployment in India.
- Demonstrates a shortage of “excellent” job: LFPR demonstrates how individuals of working age become disillusioned when they cannot find work.
According to data from the Centre for Monitoring Indian Economy (CMIE), India’s labour force participation rate (LFPR) has dropped to 40% from an already low 47 percent in 2016. This indicates that not only is more than half of India’s working-age population (15 years and older) opting out of the labour market, but that this proportion is growing.
Who keeps track of India’s employment data?
- The Decennial Population Census and the National Sample Survey Office’s countrywide 5-yearly surveys on employment and unemployment have been two primary sources of data on workforce and employment.
- The NSSO quinquennial surveys only give data up to 2011-12. As a result, it was superseded by the Periodic Labour Force Survey (PLFS), which began on an annual basis in 2017-18.
- PLFS is India’s first computer-based survey, launched in 2017 by the National Statistical Office (NSO). It was formed on the proposal of a committee chaired by Amitabh Kundu.
It collects information on a variety of factors, including the degree of unemployment, the types of employment and their respective shares, the earnings obtained from various sorts of occupations, the number of hours worked, and so on.
What are the statistics for women?
- Between 2017-18 and 2019-20, the female WPR ratio grew from 17.5 percent to 24 percent. When the ratio is multiplied by the female population, the yearly growth in female employees is 17 percent.
- Another encouraging finding from the PLFS data is that the gender gap in worker engagement is reducing.
- There were 32 female employees in the workforce in 2017-18, compared to 100 male workers. In 2019-20, this figure will rise to 40.
- In 2017-18, women made up 24 percent of the workforce, rising to 28.8 percent in 2019-20.
- Furthermore, the female labour force in rural regions has a far lower unemployment rate than the male labour force, but the converse is true in metropolitan areas.
- This is despite the fact that female labour force participation in rural India is 33% greater than in urban regions.
How does the Actual Unemployment Scenario differ from the Data Presented?
- More Job Searchers than Positions: According to PLFS statistics, the number of jobs rose faster than the number of job seekers between 2017-18 and 2019-20.
Despite this, the number of jobless people grew by 2.3 million between 2017-18 and 2018-19, owing mostly to an increase in the number of job searchers (52.8 million) during the same period.
- Salaried Workers Decline: The percentage of salaried persons has fallen from 21.2 percent in 2019-2020 to 19 percent in 2021, implying that 9.5 million people have left the salariat to become unemployed or work in the informal sector.
- No transition from Agriculture: According to the sectoral structure of the workforce, 45.6 percent of workers in India are involved in agriculture and associated activities, 30.8 percent in services, and 23.7 percent in industry.
There has been no rise in the share of industry and services in total employment from 2017-18 to 2019-20. This suggests that the agricultural labour shift is not taking place.
Government Initiatives:
- The Integrated Rural Development Programme (IRDP) was established in 1980 with the goal of creating full-time job opportunities in rural regions.
- Training of Rural Youth for Self-Employment (TRYSEM): This initiative was established in 1979 with the goal of assisting jobless rural youth between the ages of 18 and 35 in acquiring self-employment skills. SC/ST youth and women were given preference.
- RSETI/RUDSETI: To address the youth unemployment problem, Sri Dharmasthala Manjunatheshwara Educational Trust, Syndicate Bank, and Canara Bank collaborated in 1982 to establish the “RURAL DEVELOPMENT AND SELF EMPLOYMENT TRAINING INSTITUTE” near Dharmasthala in Karnataka. RSETIs (Rural Self Employment Training Institutes) are presently run by banks with active participation from the Government of India and state governments.
- The Jawahar Rozgar Yojana (JRY) was launched on April 1, 1989, by combining the two previous wage employment programmes – National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) – on an 80:20 cost sharing basis between the centre and the states.
- MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act): It is a job-training programme that began in 2005 to offer social security by providing a minimum of 100 days of paid work per year to all families with adult members who choose unskilled labour-intensive work. People have the right to work under this statute.
- The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which was introduced in 2015, aims to enable a significant number of Indian youngsters to pursue industry-relevant skill training that would help them secure a better life.
- The Start Up India Scheme, which was introduced in 2016, intends to create an environment that fosters and develops entrepreneurship throughout the country.
- The Stand Up India Scheme, which was established in 2016, intends to provide bank loans ranging from Rs 10 lakh to Rs 1 crore to at least one SC or ST borrower and at least one woman borrower each bank branch for the establishment of a greenfield firm.
What Further Actions Are Possible?
- Rethinking Our Economic Development Models: The expanding role of industry and services in national GDP without a significant rise in employment calls into question the usefulness of traditional economic growth and development models.
- Perhaps there is a need to reconsider traditional economic development models and their relevance to growing economies such as India.
- An alternative way may be to reconsider our strategy of pursuing an industry-led development model in favour of a more relevant Agri-centric model of economic transformation in order to generate more appealing, remunerative, and rewarding employment in and around agriculture.
- Creating Jobs in Manufacturing and Services: There is also an urgent need to create significantly more jobs in the manufacturing and services sectors than they have in the recent past. This should include the following:
- Changes in labour legislation that prohibit business from adopting labour-intensive production methods.
- Incentives for employment-related output.
- Subsidies for labour-intensive economic activity
- Decentralisation of Industries: Decentralisation of industrial activity is required so that individuals from all regions may find work.
- Development of rural regions will assist to reduce migration of rural people to urban areas, reducing the burden on urban area jobs.
- More Investments: Since 2011, the pace of private sector investment in India has been dropping almost linearly. Only more private investment will help the job situation.
- In addition, the government should coordinate technical and vocational education and make long-term investments in human capital through high-quality education, skills, and on-the-job training, as well as fundamental social safety.
