First the good news: The unemployment rate has declined post-Covid-19 for all education levels in India. But the bad news is that it remains above 15% for graduates and has reached as high as 42% for graduates under the age of 25, according to the State of Working India 2023 report published by Azim Premji University.
Within the higher educated group, the unemployment rate has fallen to less than 5% for graduates who are 35 or older. While this suggests that eventually graduates do find some work, the question arises on what the nature of these jobs is and whether these opportunities match their skills and aspirations.
The report points out that between 2017 and 2021, there was a slowdown in overall regular wage job creation, but formal jobs (with a written contract and benefits) as a share of all regular wage work rose from 25% to 35%. In 2020-21, during the pandemic, regular wage employment fell by 2.2 million.
However, this net change masks an important trend: there was an increase in formal employment by 3 million and a loss of about 5.2 million of semi and informal regular wage employment. While half the lost employment is accounted for by women, only a third of the increase in formal employment accrued to women. In other words, in net terms, women lost out on formal employment in this period. Effectively, there was a shift towards self-employment due to distress and this was accompanied by a fall in the share of both casual and regular wage work.
Further, the study notes that after falling or being stagnant since 2004, the female employment rates have risen since 2019 due to a distress-led increase in self-employment. While the pre- Covid level was 50%, this went up to 60% post Covid. The heightened competitiveness following the crowding into the self-employment sector by women who were previously out of the workforce, resulted in a decline in real terms in the earnings from self-employment over this period.
In fact, earnings were impacted severely and remained depressed for a prolonged 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 authors cautioned against emphasising merely the rising participation rates for women if they are due to falling household incomes which force women into self-employment. “What we would like to see is an increase in the participation rate alongside constant or increasing earnings in the subsistence sector,” they wrote.
The report notes that since both self-employment and agriculture constitute fallback options for workers who have lost work and cannot afford to remain unemployed, the data can be interpreted to indicate a rise in distress. Taken together, the numbers paint a picture of an economy that was slowing down and was then hit by a massive shock, with the result that there was a distress-led participation of women in paid work as well as a reversal of structural change, the report said.
The report said gender-based earning disparities have declined. In 2004, salaried women workers earned 70% of what men earned. By 2017 the gap had reduced and women earned 76%t of what men did. Since then the gap has remained constant till 2021-22.
However, gender norms continue to remain. According to the report, as the husband’s income rises, women are less likely to work. In urban areas, after the husband’s income crosses `40,000 per month, the chance of the wife working increases again (ie there is a U-shaped relationship).