Releasing the report, Chief Economic Adviser V Anantha Nageswaran said it is not correct to think that for every social or economic problem, there needs to be a government intervention, adding that industry needs to hire more.
Even as overall labour force participation, workforce participation and employment rates improved in India in recent years after showing long-term deterioration during 2000-2019, the employment conditions remain poor, according to the ‘India Employment Report 2024’ released by the Institute for Human Development (IHD) and International Labour Organisation (ILO) on Tuesday.
The report said the slow transition to non-farm employment has reversed; women largely account for the increase in self-employment and unpaid family work; youth employment is of poorer quality than employment for adults, with a higher proportion of unpaid family work among youth than adults along with stagnant or declining wages and earnings.
Releasing the report, Chief Economic Adviser V Anantha Nageswaran said it is not correct to think that for every social or economic problem, there needs to be a government intervention, adding that industry needs to hire more. “We need to get out of that mindset. In the normal world, it is the commercial sector, those who engage in for-profit activity, who need to do the hiring,” he said.
Nageswaran said the government has taken several facilitative actions for employment including skill development initiatives along with National Education Policy (NEP), which he termed as “futuristic”, adding that it should not become hostage to political consideration. He said other government measures for employment include payment of employers’ contribution for new employees under the Employees’ Provident Fund Organisation (EPFO), Atmanirbhar Bharat Rozgar Yojana; and the new tax regime allowing for deductions of wages to employers and thus, “not favouring capital accumulation over employment generation”.
For the skill initiatives, he said, there is scope for improvement. “…the availability of instructors and also the dropout rate, those are all issues that need to be addressed. Quite clearly, there is considerable scope for improvement and I think the government is mindful of that,” he said.
The IHD-ILO report noted that youth employment and underemployment increased between 2000 and 2019 but declined during the pandemic years. However, unemployment among youths, especially those with a secondary level of education or higher, has intensified over time. “In 2022, the share of unemployed youths in the total unemployed population was 82.9 per cent.
The share of educated youths among all unemployed people also increased, from 54.2 per cent in 2000 to 65.7 per cent in 2022. Among the educated (secondary level or higher) unemployed youths, women accounted for a larger share (76.7 per cent) than men (62.2 per cent). This indicates that the problem of unemployment in India has become increasingly concentrated among the youth, especially educated youths and women in urban areas,” it said.
Economic policies are required to boost productive non-farm employment, especially in the manufacturing sector, with India likely to add 7-8 million youths annually to the labour force during the next decade or so, the report said. India needs to give primacy to labour-intensive manufacturing employment to absorb the abundant unskilled labour and also to combine with select services, it said.
More support needs to be provided to micro, small and medium-sized enterprises, especially by providing a more supportive, decentralised approach including digitalisation and artificial intelligence and a cluster-based approach to manufacturing.
India needs to improve the quality of jobs by investing in and regulating sectors that are likely to be an important source of employment for young people, such as the care sector, digital economy. With a higher rate of urbanisation and migration expected in India, an inclusive urban policy is required to address the needs of migrants, women and impoverished young people, the report said.
Skills development and active labour market policies (ALMPs) need a more effective role in bridging the supply-demand gap in jobs and in making the overall labour market more inclusive, the report said, adding that a larger and more targeted role for state governments and stronger partnerships with the private sector and other stakeholders is also needed, along with greater contribution by the private and non-state sector.
The report highlighted five key policy areas for further action: promoting job creation; improving employment quality; addressing labour market inequalities; strengthening skills and active labour market policies; and bridging the knowledge deficits on labour market patterns and youth employment.
