The Hindu Editorial Analysis- 4th April 2024 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Why in News?

• There have been "paradoxical improvements" in labor market indicators such as the labor force participation rate, workforce participation rate, and unemployment rate in India in recent years after a long-term deterioration from 2000-2019.
• The improvement has coincided with periods of economic distress, both before and during the COVID-19 pandemic, as stated in the India Employment Report 2024 released by the Institute for Human Development and International Labor Organization on Tuesday, March 26.

Status of Unemployment of Youths and Adults in India

• The current report highlights significant concerns regarding poor employment conditions in India.
• There has been a concerning reversal in the slow transition to non-farm employment.
• Women are primarily engaging in self-employment and unpaid family work, contributing significantly to these sectors.
• Youth employment is notably of lower quality compared to employment opportunities for adults.
• Wages and earnings across various sectors are either stagnant or declining, posing economic challenges.

• Overview of Employment Condition Index Changes

  • The 'employment condition index' has shown improvement from 2004-05 to 2021-22.
  • States like Bihar, Odisha, Jharkhand, and UP have consistently ranked at the bottom during this period.
  • Conversely, states such as Delhi, Himachal Pradesh, Telangana, Uttarakhand, and Gujarat have consistently ranked at the top.

• Components of the Index

  • The index is formulated based on seven key labor market outcome indicators:
  • Percentage of workers engaged in regular formal employment
  • Percentage of casual laborers in the workforce
  • Percentage of self-employed individuals below the poverty line
  • Work participation rate
  • Average monthly earnings of casual laborers
  • Unemployment rate among young people with secondary education and above
  • Youth not involved in employment, education, or training

Employment Statistics

• Percentage of workers employed in regular formal work
• Percentage of casual laborers
• Percentage of self-employed workers below the poverty line
• Work participation rate
• Average monthly earnings of casual laborers
• Unemployment rate of secondary and above-educated youth
• Youth not in employment and education or training

Employment Trends Overview

Self-Employment vs. Regular Employment

• The proportion of self-employment remained relatively stable at around 52% between 2000 and 2019. In contrast, regular employment witnessed a significant increase of nearly 10 percentage points, rising from 14.2% to 23.8%. However, this trend reversed by 2022, with self-employment surging to 55.8% while regular employment dropped to 21.5%.
• Casual employment experienced a consistent decline, decreasing to 22.7% in 2022 from 33.3% in 2000.

Quality of Employment

• Regular employment is generally perceived as offering higher-quality jobs due to its stable nature and the associated benefits of social security. On the other hand, casual work is often associated with lower-quality jobs due to its irregularity and lower daily earnings.

Youth Unemployment

• The proportion of unemployed educated youths in the total unemployed population and the youth unemployment rate vary based on social group and level of education. Understanding these dynamics is crucial in addressing youth unemployment challenges.
• Participation of Women in the Labor Force
  • The participation of women in the labor force in India has been consistently low, ranking among the lowest in the world. Between 2000 and 2019, the female labor force participation rate (LFPR) decreased significantly by 14.4 percentage points, compared to a decline of 8.1 percentage points for males.
  • However, there was a positive shift in this trend between 2019 and 2022, with the female LFPR increasing by 8.3 percentage points, in contrast to a mere 1.7 percentage points increase for male LFPR during the same period.
  • Despite this improvement, a substantial gender gap persists. In 2022, women's LFPR stood at 32.8%, which is 2.3 times lower than the LFPR of men (77.2%). India's overall low LFPR can be primarily attributed to the disproportionately low participation of women in the workforce.
  • Comparatively, India's female LFPR remains below the global average of 47.3% in 2022 but exceeds the South Asian average of 24.8%, according to data from the International Labour Organization (ILO).

Understanding Employment Trends

• There has been a significant shift in employment patterns post-2018-19.
• The percentage of agricultural employment decreased from 60% in 2000 to about 42% in 2019.
• This change led to a rise in construction and services employment, which increased from 23% to 32% of total employment in 2019.
• The manufacturing sector's share of employment has remained relatively stable at 12-14%.
• Since 2018-19, there has been a slowdown or reversal in the transition away from agricultural employment.

Impacts of Employment Transformation

• The decrease in agricultural employment signifies a shift towards other sectors.
• Construction and services sectors have absorbed a significant portion of this transition.
• Manufacturing, on the other hand, has not experienced significant growth in terms of employment share.
• The recent trend shows a resurgence in agricultural employment, halting the previous transition.
• Youth Employment
• Overview of Youth Employment Trends:
  • There has been an increase in youth employment, but concerns persist regarding the quality of work, particularly for well-qualified young individuals.
  • Youth employment and underemployment rose between 2000 and 2019, with a subsequent decline during the pandemic years. However, unemployment among youths, especially those with at least a secondary-level education, has shown a continuous increase over time.
• Statistics on Youth Unemployment:
  • In 2022, 82.9% of the total unemployed population comprised youths. The proportion of educated youths among all unemployed individuals rose to 65.7% in 2022 from 54.2% in 2000.
  • The unemployment rate among youths who completed secondary education or higher was 18.4%, and for graduates, it was 29.1%, significantly higher than the 3.4% for those unable to read or write in 2022.
  • Notably, unemployment rates were higher among educated young women (21.4%) compared to men (17.5%), especially among female graduates (34.5%) versus male graduates (26.4%).
  • The unemployment rate among educated youths increased to 30.8% in 2019 from 23.9% in 2000 but declined to 18.4% in 2022.

The Way Forward

• Promoting Job Creation
• Improving Employment Quality
• Addressing Labour Market Inequalities
• Strengthening Skills and Active Labour Market Policies
• Bridging the Knowledge Deficits on Labour Market Patterns and Youth Employment