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Unemployment in India: A Persistent Challenge Amid Socio-Economic Complexities

– Mohd Naushad Khan

Unemployment remains a persistent challenge in India, intricately linked to the country’s complex socio-economic landscape. As the nation grapples with this issue, it becomes essential to delve into the factors influencing the unemployment rate and explore potential solutions.

In recent years, India has witnessed fluctuations in its unemployment rate, driven by various factors such as economic growth, demographic changes, and policy interventions. Notably, according to recent data from the Centre for Monitoring Indian Economy (CMIE), over 45 crore Indians are not actively seeking jobs. This statistic underscores the importance of understanding the actual labor force participation rate. Frustration over the inability to find suitable employment has led many to stop looking for jobs altogether.

Prof. Arun Kumar, a noted economist and Chairperson of the People’s Commission on Employment and Unemployment set up by Desh Bachao Abhiyan, stated, “Our labor force participation rate is less compared to other large economies. According to CMIE data, only 45 percent of the 15-64 age group is in the labor force, whereas in countries like China, Brazil, and the USA, this figure is 65 to 70 percent. In India, the situation is dire, particularly due to the unorganized sector being hit hard by demonetization, GST, and the pandemic. Additionally, growing automation and mechanization, coupled with government funding of capital-intensive rather than labor-intensive projects, exacerbate poverty and demand shortages.”

Prof. Kumar further explained, “Labor force participation among women is low because they cannot find work, and educated youth are unemployed due to a lack of jobs matching their qualifications. Young people are repeatedly taking exams and facing frustration. This leads to them spending excessive time watching videos on their mobile phones, causing depression and leading to substance abuse and domestic theft. Violence has infiltrated homes, and youths are getting involved in petty crimes. Political parties exploit the youth as cheap labor for their activities.

“The government’s labor force data includes women working for free within their families. However, according to the International Labour Organization (ILO), only those earning an income in the market are counted. This discrepancy results in government figures being much higher than those based on the ILO definition. Our report shows that while 32 crore people have proper work, 28 crore either lack proper work or have none at all. Consequently, 32 crore workers are supporting 140 crore people, with each worker supporting 4.4 individuals. If the 28 crore unemployed also had proper jobs, 60 crore people would be working, and each worker would only support 2.3 people, thereby reducing family poverty.”

Structural unemployment in India arises from a mismatch between workforce skills and labor market demands. This misalignment is due to disparities in educational attainment, a lack of vocational training, and rapid technological advancements. The informal sector, which employs a significant portion of the population, often operates without adequate regulation, contributing to underemployment and disguised unemployment.

Cyclical unemployment fluctuates with the business cycle, rising during economic downturns and falling during expansions. India’s economy is susceptible to these fluctuations, influenced by global economic trends, domestic policies, and natural disasters. The COVID-19 pandemic, for instance, exacerbated unemployment levels, leading to widespread job losses across various sectors.

Youth unemployment is a pressing concern, as India boasts a large and youthful population. Despite being a demographic dividend, the inability to absorb this workforce into gainful employment poses a significant challenge. Factors such as inadequate job creation, insufficient entrepreneurial opportunities, and limited access to quality education contribute to this issue.

According to Prof. Kumar, addressing unemployment requires a multifaceted approach, combining macroeconomic policies with targeted interventions. “Agriculture and the micro sectors are the biggest employers, and if they become dynamic, a lot of work can be created. If the poor have greater purchasing power, demand would expand, and so would work. Education and health are big employers. If policy focus shifts to promoting them, a lot of employment can be generated.”

Investing in education and vocational training is crucial to equip the workforce with relevant skills demanded by the evolving job market. Strengthening the social safety net through schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides temporary relief to the unemployed while fostering rural development.

In the digital age, technology presents both challenges and opportunities for employment. Embracing digitalization and promoting innovation can create new employment avenues in sectors such as information technology, e-commerce, and renewable energy. However, it is essential to ensure that technological advancements are inclusive and do not exacerbate existing inequalities.

In conclusion, unemployment in India is a multifaceted issue requiring a comprehensive and coordinated approach from policymakers, businesses, and civil society. By addressing structural barriers, fostering inclusive growth, and harnessing the potential of its demographic dividend, India can navigate the challenges of unemployment and pave the way for a more prosperous future.


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