India’s unique jobs crisis
Context
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India has “too many people” in agriculture and the inability to move surplus labour from farms constitutes a major policy failure of successive governments.
Key Facts
- According to Amit Basole, who heads the Centre for Sustainable Employment at Azim Premji University in Bengaluru, the share of India’s working population engaged in farming has fallen quite significantly during the last three decades.
- In 1993-94, agriculture accounted for close to 62% of the country’s employed labour force.
- That proportion – based on data from the National Statistical Office’s Periodic Labour Force (previously known as ‘employment and unemployment’) Surveys – dropped almost six percentage points by 2004-05 and even more (9 percentage points) over the next seven years.
- Overall, between 1993-94 and 2018-19, agriculture’s share in India’s workforce came down from 61.9% to 41.4%.
- In other words, roughly a third in 25 years.
- That isn’t insignificant. Basole estimates that given its level of per capita GDP in 2018 and comparing with the average for other countries in the same income bracket India’s farm sector should be employing 33-34% of the total workforce. 41.4% may not be a substantial deviation from the average.
Key Challenges
- A reversal of the trend in the last two years, which has seen the share of those employed in farms rise to 44-45%. This has primarily to do with the Covid-induced economic disruptions.
- Even the movement of workforce from agriculture that India has witnessed over the past three decades or more does not qualify as what economists call “structural transformation”.
- The share of manufacturing (and mining) in total employment has actually fallen along with that of agriculture
- The surplus labour pulled out from the farms is being largely absorbed in construction and services.
- Labour transfer is happening within the low-productivity informal economy.
- The jobs that are getting generated outside agriculture are mostly in low-paid services and construction; the latter’s share in employment has even overtaken that of manufacturing.
- Weak structural transformation and persistence of informality also explains the tendency, especially by rural families, for pursuing multiple livelihoods.
What causes unemployment?
- When the pandemic hit, unemployment was already an issue, but the regressive job market in 2020 exacerbated its severity, as new graduates had it really tough.
- A lack of quality higher education.
- Lack of resources to teach new skills and skill shortages due to technological advancements. The rapid emergence and adoption of new technologies as a response to the pandemic caused high unemployment due to business failures and the loss of jobs. As a result, the skill gap between job seekers with traditional credentials kept widening.
- During the work-at-home era, we experienced a massive increase in jobs that moved online. Most of these jobs were available to early career professionals, including sales, data analytics, digital marketing, and web development
- Unfortunately, the skill gap prevented many job-seekers from filling these positions and it was impossible for large IT companies to close even half of their positions leading to a major revenue loss.
Way Forward
- The IT industry is clearly an isolated island of the Indian economy that added jobs during the pandemic and is continuing to do so.
- India’s net exports of software services have surged from $84.64 billion in 2019-20 to $109.54 billion in 2021-22.
- The unemployment situation can be tackled by providing skill development training at a much faster rate than what was happening in the last few years
- The unemployment situation can be tackled by providing skill development training at a much faster rate than is happening in the last few years.
- The National Skill Development Corporation (NSDC) needs to wake up to the reality of the nation and work much better. Presently, only 2 per cent of the total workforce in India have undergone skill training.
- The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is a great flagship skill training scheme of the Ministry of Skill Development and Entrepreneurship.
- There are 748 districts and if each industry provides skill training to the poor youth where their industry is located, India can very quickly have a huge skilled workforce. The prime minister’s dream of Skill India could then be fulfilled. This will help the rural youth to get jobs in the industry and the industry, in turn, will get trained labour for which there is an acute shortage.
- It should be made mandatory for these industries to provide training and stipend to the youth who reside within a 25 km radius of the factory under the Apprenticeship Training Act and then provide them employment. This will also offer a skilled workforce to the industry.
- The Central government can easily give a directive and incentive to the industries to train rural and tribal youth in their establishments so that skill training can take place.
- The greatest provider of unorganised labour in India, after agriculture, is the Micro, Small & Medium Enterprises sector. This sector needs funds to grow that can only be provided by banks as they do not have access to capital markets.
- Social security should be provided to the poor, so that people do not die of starvation.
Reference:
https://indianexpress.com/article/explained/explained-indias-unique-jobs-crisis-8062853/
https://www.newindianexpress.com/opinions/2020/jun/25/upskilling-our-nations-young-workforce-2161057.html
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