 "Unemployment hurting Indian youth, most jobs informal, says ILO Report")
More than 80 per cent cent of India’s unemployed workforce comprises its youth, said a report by the International Labour Organisation (ILO) on Tuesday. ‘The India Employment Report 2024,’ jointly released by the ILO and the Institute of Human Development (IHD), said that the proportion of young individuals with secondary education or higher, among the total unemployed youth surged from 35.2 per cent in 2000 to 65.7 per cent in 2022.
Youth unemployment and underemployment increased between 2000 and 2019 and declined during the pandemic years, said the report Chief Economic Adviser V. Anantha Nageswaran released. “The youth unemployment rate increased more than twofold between 2000 and 2019, from 5.7 per cent to 17.5 per cent, but then decreased to 12.4 per cent in 2022,” the report said.
The highest youth unemployment rates were observed among those with graduate degrees – a trend that is impacting women particularly. In 2022, women not engaged in employment, education, or training constituted nearly five times higher than the proportion of their male counterparts (at 48.4 per cent versus 9.8 per cent), accounting for around 95 per cent of the total youth population in this category.
“Young women were much more likely to not be in employment, education or training than young men, and this was especially pronounced among the older youths (aged 20–24 and 25–29) than the younger ones (aged 15–19) in 2022,” it said.
Self & casual employment still dominant
Employment in India remained mostly self-employed and casual employment between 2000 and 2022, according to the report. Nearly 90 per cent of the workforce is engaged in informal employment, with the proportion of regular employment, which saw a consistent rise post-2000, declining after 2018. The report highlighted widespread insecurities regarding livelihoods, noting that only a small fraction, particularly in the non-agricultural organised sector, are covered by social protection measures.
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Stagnant wages
Moreover, there has been an increase in contractual employment, leaving only a minority of regular workers under long-term contracts. “Worse, there has been a rise in contractualisation, with only a small percentage of regular workers covered by long-term contracts.”
Wages remained low in 2012-22. While the wages of casual labourers maintained a modest upward trend during 2012–22, real wages of regular workers either remained stagnant or declined. Self-employed real earnings also declined after 2019.
Slight improvement in labour participation
While the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR) showed a prolonged deterioration from 2000 to 2018, there was an improvement post-2019, coinciding with periods of economic distress and except for two peak Covid-19 quarters. However, the authors of the report urged caution in interpreting this improvement, citing concerns about the factors driving these changes.
Despite India's significant youthful population, considered a demographic advantage, the report underscores a deficiency in necessary skills. It said that 75 per cent of young individuals struggle with sending emails with attachments, 60 per cent with basic file operations like copy and paste, and 90 per cent with handling mathematical formulas in spreadsheets.
The report also forecasted a decline in India's youth population from 27 per cent in 2021 to 21 per cent by 2036, with approximately 7-8 million youths being added to the workforce annually. However, it noted that youth employment in India generally offers lower quality compared to adult employment, with a higher prevalence of vulnerable occupations or informal sector engagement among young workers.
Challenges in Indian labour market
Despite some paradoxical improvements in labour market indicators over the past two decades, the report underscored persistent challenges, notably the insufficient growth of non-farm sectors and their capacity to absorb workers from agriculture. Although non-farm employment outpaced farm employment growth before 2018, labour from agriculture primarily transitioned to the construction and services sectors.
Nageswaran said the importance of industry taking the lead in hiring rather than relying solely on government intervention. Additionally, the report calls for economic policies aimed at bolstering productive non-farm employment, particularly in the manufacturing sector, to accommodate the influx of young labourers in the coming years.
How to solve Indian labour market crises
To address these challenges, the report advocated for policies focused on promoting job creation, enhancing employment quality, mitigating labour market inequalities, strengthening skills development and active labour market initiatives, and filling knowledge gaps on labour market dynamics and youth employment patterns.
It stressed the need for supporting micro, small, and medium-sized enterprises (MSMEs) through a decentralised, digitally-enabled approach, as well as investing in sectors expected to be significant sources of employment for young people, such as the care sector and the digital economy.
Lastly, the report underscored the importance of formulating an inclusive urban policy to cater to the needs of migrants, women, and economically disadvantaged youth in light of anticipated urbanisation and migration trends in India.