Job seekers at attend Aspire 2024 jointly organised by District Employment office and Vocational Higher Secondary Department at SRV Government Vocational Higher Secondary School in the city on Saturday.
| Photo Credit: THULASI KAKKAT

United States-headquartered multinational banking group Citi has said India’s unemployment challenge is multi-faceted one and even 7% GDP growth might not be able to fulfil the jobs required in the country over the next decade. In a report, titled “India Economics – Nuances of Addressing the Employment Challenge,” Citi has suggested efforts could be made to fill one million Central government job vacancies to address the situation. The banking group has also recommended operationalisation of the four labour codes and said labour reform could be a significant step towards ease of doing business. The Opposition Congress, commenting on the report, said demonetisation, a hastily rushed through Goods and Services Tax (GST), and rising imports from China are the main reasons for the decimation of Micro Small and Medium Enterprises (MSMEs) that provided employment for a huge number of people.

Depending on employment data from the Centre’ Periodic Labour Forced Surveys and the Centre for Monitoring Indian Economy, a private company, the Citi’s report said a “holistic employment generation strategy” will be a combination of deploying scarce fiscal resources to support labour-intensive manufacturing for export purposes, bridging the skill gaps through more formal vocational training, improving availability of credit through credit guarantees to promote self-employment, a large-scale social housing project to boost construction jobs and operationalising the labour reforms to infuse formalisation and flexibility in labour markets.

Quality of jobs

The report said while official unemployment rate is just 3.2%, details reflect serious issues around quality of jobs and possible underemployment. It said agriculture accounts for 46% of all employment but its contribution to the Gross Domestic Product (GDP) is less than 20%. “Both manufacturing and services sectors absorb lesser share of labour than their share in GDP. Share of formal sector in non-agriculture jobs is still only 25%,” the report said. It added that only 21% of the labour force has a “salaried” job, lower than 24% in the pre-pandemic scenario. “Share of employment in rural areas has remained at 67% between 2018 and 2023, indicating that the rural to urban migration process has practically stalled,” it said.

It said India has created 7.4 million jobs per year in this century. “Job addition has been marginally better after 2012 [8.8 million per year] but with a pronounced shift towards self-employment. Under the assumption of Labour Force Participation Rate increasing to 47% [from 42.4% now], 11.8 million jobs must be created every year for the next 10 years, assuming no significant change in the unemployment rate. Even if employment elasticity remains at current levels and real GDP grows by 7%, India can generate eight to nine million jobs per year, over the next decade,” the report said. “Wherever possible, efforts could be made to fill one million Central government job vacancies,” it said.

Social security benefits

It added that the implementation of four labour codes will extend some social security benefits to the gig economy workers. “There has been no nationwide rollout of the four labour codes that were passed by the Parliament in the previous term,” it said and added that once rolled out, labour reforms could be a significant step towards ease of doing business as the companies would be spared of submitting multiple returns under different labour laws prevailing earlier.

Reacting to the report, Congress general secretary and MP Jairam Ramesh said he had been sounding the alarm on the country’s unemployment crisis for the past five years at least. “The crisis has been accentuated with the decimation of job-creating MSMEs through the ‘Tughlakian demonetisation’, a hastily rushed through GST, and rising imports from China,” Mr. Ramesh said. “With his economic policies that favour only large conglomerates, the non-biological Prime Minister has created India’s highest unemployment rate in 45 years, with the unemployment rate for graduate youth at 42%,” he added.

Former NITI Aayog Vice Chairman Rajiv Kumar. File
| Photo Credit: BIJOY GHOSH

Prime Minister Narendra Modi led-NDA government in its third term must tackle the problem of unemployment in India, especially in the unorganised sector and in small and medium enterprises, former NITI Aayog Vice Chairman Rajiv Kumar said on June 10.

Mr. Kumar also emphasised that the government now must finalise the four labour codes as it has been delayed beyond expectations.

“We must recognise that post-Covid economic recovery has been a K-shaped recovery. I think the most important reform that the Modi government must take is to tackle the unemployment problem, especially in the unorganised and the small and medium enterprises,” he told PTI in an interview.

According to a recent International Labour Organisation (ILO) report, the share of unemployed youths in India’s total unemployed population was nearly 83% in 2022. “The large corporations have done very well and those who are highly skilled have done well. But at the lower end, people are without jobs and firms are struggling to expand their capacity,” the eminent economist said.

According to Mr. Kumar, an important way to generate employment is to reduce the regulatory and compliance burden that SMEs face. “So they have to be tackled along with the State governments,” he said.

He said that the four labour codes need to be finalised and made into statutes.

‘Expand apprenticeship programmes’

Mr. Kumar stressed the need to give more attention to the skilling of youth, especially to apprenticeship development, saying schooling and the education system in India are lagging behind in this regard.

“Our apprenticeship programme needs a far bigger push than we have now and access to quality education should be ensured because ultimately, these are the factors which will determine the employability and employment generation potential for our economy,” he noted.

Coalition dharma and economic reforms

Responding to a question regarding the future of the government’s disinvestment programme, Mr. Kumar noted disinvestment has taken a backseat over the past five years. He pointed out that targets of non-tax revenue and non-tax capital revenue have not been huge in the successive budgets in the last five years, except one year when Air India was privatised. I am not sure at all that the coalition dharma will be the cause for pushing this (disinvestment) in the background,” he said.

The former NITI Aayog Vice Chairman emphasised that privatisation and generating revenues from it to reduce India’s public debt-to-GDP burden is a necessary and important reform measure that should be taken. “Also, to improve the efficiency of the public sector enterprises, especially the public sector banks, where I had advocated very strongly the privatisation of most public sector banks, except the State Bank of India,” he said.

On a question concerning the correlation between coalition governments and economic reforms, Mr. Kumar said the coalition governments have been far better in generating reforms.

He said being a coalition government, one should not believe that there will not be any reforms and they will be only populism. “I think all the three parties (BJP, TDP and JDU) who are coming together are pro-reform parties. And therefore, the pace reforms can and perhaps will continue, as in the last 10 years,” he said.

The share of workers with regular wage increased since 2004, with the country creating three million regular jobs annually till 2017 and five million jobs between 2017 and 2019, according to “State of Working India 2023: Social Identities and Labour Market Outcomes”, a report prepared by a group of economists and researchers with the Azim Premji University.

The report, released here on Wednesday, however, added that since 2019, the pace of regular wage jobs creation decreased due to economic slowdown and the pandemic. The researchers said only 6% of these jobs provided any kind of social security — including a health insurance or an accidental care insurance. The report was based on the data sourced from National Statistical Organisation’s surveys, census reports and periodic labour force surveys and such government sources.

The number of men working in such regular jobs, where salaries are provided on a fixed date in a month or in one or two weeks, has increased from 18% to 25% over the years and from 10% to 25% in the case of women.

Caste-based segregation

The report said in 2004, over 80% of sons of casual wage workers were themselves in casual employment. “This was the case for both SC/ST workers and other castes. For non-SC/ST castes, this fell from 83% to 53% by 2018 and incidence of better-quality work such as regular salaried jobs increased. It fell for SC/ST castes as well, but to a lesser extent [86% to 76%],” the study said, pointing out towards a decrease in caste-based segregation. “In waste management and sewerage, over-representation of SCs decreased to 1.6 times in 2011 before increasing slightly again,” it pointed out.

The report said gender-based earnings disparities have also reduced in the last 20 years. “In 2004, salaried women workers earned 70% of what men earned. By 2017, the gap had reduced, and women earned 76% of what men did. Since then, the gap has remained constant till 2021-22,” the researchers said.

Post-COVID, the report said the unemployment rate was lower than it was pre-COVID, for all education levels. “But it remains above 15% for graduates and more worryingly it touches a huge 42% for graduates under 25 years,” it said, adding that the rate of women unemployment was rising due to a “distress-led increase in self-employment”. “Before COVID, 50% of women were self-employed. After COVID this rose to 60%. As a result, earnings from self-employment declined in real terms over this period. Even two years after the 2020 lockdown, self-employment earnings were only 85% of what they were in the April-June 2019 quarter,” the report added.