India's growth should be led by labour-intensive manufacturing: ILO

There is “no alternative” for India to have growth led by labour-intensive manufacturing at least for the next 10 years to absorb seven-eight million youths who will join the labour force annually, a report jointly prepared by the International Labour Organization (ILO) and Institute for Human Development (IHD) has said.

Using official data, it highlighted the increasing uncertainties in the labour market due to fast-changing technologies, including artificial intelligence (AI).

Titled “India Employment Report 2024” and released on Tuesday, it said: “Fast-changing technological advancements, particularly artificial intelligence, are going to be important disruptive factors in the labour market, with positive and negative consequences. Although on a good footing, India still needs to do more to prepare itself for the challenges posed by new technologies.”

 

The report calls for primacy to be given to labour-intensive manufacturing employment to absorb the abundant unskilled labour, along with the emerging employment-generating modern manufacturing and services sectors, with a direct and greater focus on micro, small and medium-sized enterprises by providing a more supportive and decentralised approach.

It also highlights investment in the green (environment-friendly) and blue (based on ocean resources) economies, developing rural infrastructure, and establishing an integrated market to revive employment in the farm and non-farm sectors in rural areas.

The report mentions outsourcing in India could be disrupted because some back-office tasks would be taken over by AI, but given that India has a lot of vibrant startups, tech developers, and a reasonably good digital infrastructure, it is possible to create jobs. AI offers immense opportunity to enhance labour productivity and incomes of even unskilled and semi-skilled workers, while cautioning that the disadvantaged states are less prepared for this, and active policies and programmes need to be formulated and implemented for training youths in those states.

India remains poised to reap a demographic dividend for at least another decade due to the youth population remaining at 23 per cent of the total in 2036 from 27 per cent in 2021. However, youth employment has by and large remained of poorer quality than employment for adults.

“Employed youths have been much more likely to be in more vulnerable occupations (informal) or in the informal sector. Youth wages and earnings have increased with age but are lower than what they are for adults for all categories of employment. Educated youths have experienced much higher levels of unemployment as the youth unemployment rate has increased with the level of education, with the highest rates among those with a graduate degree or higher and higher among women than men,” it notes.

In 2022, the unemployment rate among youths was six times that among persons with a secondary or higher level of education (at 18.4 per cent) and nine times greater among graduates (at 29.1 per cent) than for persons who cannot read and write (at 3.4 per cent).

Besides, the report calls for regulating and investing in emerging care and digital economies to provide productive employment for the youth.

“Digital platforms and the gig economy are creating many new jobs, but these jobs are largely temporary, informal, and non-standard work. Additionally, the ongoing demographic transition is poised to increase the demand for childcare and elderly care services,” the report reads.

On the gig and platform economy front, the report mentions that autonomy and flexibility are non-existent due to algorithmic management and control as the subjective and unfair nature of ratings used through the algorithmic management in these platforms also creates difficulties.

“Workers face penalties and a decline in incentives based on ratings given by customers, which limits their freedom and flexibility. The lack of transparency in the nature of artificial intelligence-powered algorithmic decision-making poses a serious challenge in protecting working conditions and the rights of the workers,” the report read.