The Job Crisis in India is Far More Serious Than it Seems

Jitendra Maurya was one of nearly 10,000 unemployed young people who showed up for interviews for 15 low-skilled government positions in Madhya Pradesh, India’s central state. Many of them were overqualified – hopefuls included post-graduates, engineers, MBAs, and persons like Mr Maurya, who is studying for a judge’s test, according to one report.

“The situation is such that there are instances when there is insufficient funds to purchase books. So I figured I’d get some employment [here] “He told a news organization.

Mr. Maurya’s struggle draws attention to India’s severe employment shortage. The epidemic wreaked havoc on Asia’s third-largest economy, which was already suffering from a long-term decline. It’s currently on the mend, thanks to pent-up demand and higher government investment.

However, career opportunities are dwindling. According to the Centre for Monitoring Indian Economy (CMIE), an independent research tank, India’s jobless rate increased to over 8% in December. In 2020 and for the most of 2021, it was over 7%.

“This is far greater than anything witnessed in India in the previous three decades, including the huge [economic] crisis of 1991 [when the nation ran out of currency to pay for imports],” said Kaushik Basu, former World Bank chief economist.

In most nations, unemployment increased in 2020. However, India’s performance outperformed most emerging nations, including Bangladesh (5.3%), Mexico (4.7%), and Vietnam (2.3%), according to Prof Basu.

According to the CMIE, even paid positions have declined. Part of this might be due to companies reducing their employment and cutting costs as a result of the epidemic. According to Azim Premji University research, young employees between the ages of 15 and 23 were the severely harmed during the 2020 shutdown.

“A churn occurred. We discovered that nearly half of people who held paid jobs prior to the lockdown were unable to keep them “According to Amit Basole, a university economist.

Economists claim that the epidemic is only partly to blame for the employment losses.

“What occurred in India underlines the reality that policy is formed with little regard for the well-being of people and small enterprises,” Prof Basu added.

For starters, these depressing headline figures do not reveal the entire picture regarding India’s continuing unemployment.

The number of people in the working age population who are actively looking for jobs has decreased. The percentage of women in the workforce aged 15 and above is among the lowest in the world.

However, in India, unemployment mostly refers to educated young people seeking for work in the formal economy, despite the fact that the informal economy employs 90% of the workforce and creates half of the country’s economic output.

“Unemployment is a luxury afforded to the educated and reasonably well-off. Not the poor, the unskilled, or the semi-skilled, “Radhicka Kapoor, a labor economist, agreed.

The more educated a person is, the less likely they are to be unemployed and hesitant to work in a low-wage informal employment. Poor people, on the other hand, who lack access to education, are forced to take any job that comes their way.

As a result, unemployment figures don’t disclose much about the overall supply of workers in the economy.

Three-quarters of India’s workforce is self-employed and uninsured, with no access to social security.

Only around 2% of the workforce has stable formal positions that include social security benefits such as a retirement savings plan, health care, and maternity benefits, as well as written contracts lasting more than three years. Only 9% have a formal employment with access to at least one kind of social security.

“The bulk of India’s labor is fragile and lives in a risky situation,” stated Dr. Kapoor.

The pay is little. According to surveys, 45 percent of paid employees make less than 9,750 rupees ($130; £96) per month. That’s less than the proposed minimum pay of 375 rupees per day, which was eventually dropped.

The country’s leapfrogging from a predominantly agrarian economy to a growing services economy – no other country of India’s size has seen development headed by services rather than industry – is one reason for the country’s chronic unemployment despite strong growth. High-end services like software and finance, staffed by highly qualified individuals, have fueled India’s rise. Few industrial or factory occupations have been able to accommodate a significant number of unskilled or low-skilled people.

Prof Basu believes that India’s joblessness is concerning since, even as the country’s growth is resuming, the lowest sector is faring worse than in most other countries. He believes that the government must control inflation, create jobs, and assist workers. Furthermore, during Mr Modi’s presidency, a “politics of divisiveness and hatred” is “destroying trust, which is one of the most essential underlying drivers of economic success.”

Mr Modi, who came to office in 2014 promising a slew of new employment, is providing financial incentives to key industries and launching an ambitious “Make in India” push to promote domestic manufacturing. Due to low demand, none of this has yet resulted in a manufacturing – and job – boom.

In the short run, many people, including Dr. Basole, believe that India urgently needs cash transfers or a job guarantee plan for the poorest 20% of urban households to enable them consume and repay debt. The long-term issue is to ensure that all workers are paid a basic minimum wage and have access to social security.

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