India’s job generation problem is becoming more serious: an increasing proportion of individuals are no longer seeking employment. Frustrated by the inability to find suitable work, millions of Indians, mainly women, are leaving the labor field completely, according to new statistics from the Centre for Monitoring Indian Economy Pvt, a private research agency based in Mumbai.
With India relying on youthful people to drive growth in one of the world’s fastest-growing economies, the recent figures are a concerning sign. Between 2017 and 2022, the total workforce participation rate fell from 46% to 40%. The picture is considerably starker among women. Around 21 million people left the labour force, leaving only 9% of the eligible population employed or searching for employment. According to the CMIE, more than half of the 900 million Indians of legal working age – nearly the population of the United States and Russia combined – do not want to work.
The difficulties India has in creating jobs are widely recognised. With almost two-thirds of the population between the ages of 15 and 64, competition for anything other than menial work is severe. Stable government jobs often generate millions of applicants, while admission to elite engineering schools is almost a crapshoot. Though Prime Minister Narendra Modi has stressed jobs, urging India to strive for ‘amrit kaal,’ or a golden period of development, his administration has made only modest headway in addressing intractable demographic math. According to a 2020 McKinsey Global Institute research, India needs to produce at least 90 million additional nonfarm employment by 2030 to keep up with a growing young population. This would necessitate yearly GDP growth of 8% to 8.5 %.
Failure to employ young people might drive India off the path of becoming a developed country. Despite significant progress in liberalising its economy, attracting the likes of Apple Inc. and Amazon.com Inc, India’s reliance ratio will begin to rise shortly. Economists are concerned that the country may miss out on the demographic dividend. In other words, Indians may get older but not wealthier.
The pandemic was preceded by a workforce drop. The economy sputtered in 2016 when the government outlawed most currency notes in an attempt to root out illicit money. Another obstacle was the implementation of a countrywide sales tax about the same period. India has had difficulty adapting to the move from an informal to a formal economy.
The reasons for the decline in employment participation differ. Unemployed Indians are frequently students or stay-at-home moms. Many of them rely on rental income, pensions from older family members, or government handouts. Others are just falling behind in terms of marketable skill sets in a world of fast technological development. For women, the reasons might include safety concerns or time-consuming domestic duties. Despite constituting 49 percent of India’s population, women produce only 18 percent of its economic production, or roughly half the worldwide average.
‘Women do not join the labour field in large numbers since jobs are not always friendly to them,’ CMIE’s Mahesh Vyas explained. ‘ For example, guys are willing to change trains in order to get to work. Women are less likely to agree to this. This is happening on a massive basis.’ The government has made efforts to address the issue, including proposals to raise the minimum marriage age for women to 21 years. According to a recent State Bank of India analysis, this might increase labour participation by allowing women to pursue higher degrees and careers.
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