The government has its task cut out. It has to focus on fostering the generation of enough jobs for the young and improving the employability of the young, whether through forward-looking skilling efforts or orienting higher education towards job-market demands.
Increasing the retirement age, as a study commissioned by the EAC-PM recommends, would seem a sound proposal given how critical an issue population ageing is for the country. But it needs to be viewed against a more pressing problem—that of unemployment among the young. To be sure, the fact that the above-65-years age group will become the fastest-growing age cohort by 2050 calls for planning ahead. The elderly population is likely to swell to 319 millon by then (a fifth of the total population by then, from the 10% now) and the old-age dependency ratio will be 20.3, up from 9.8 in 2020.
The projected trend of decline in population growth, viewed together with the increased life-expectancy, makes a greying population, sans the requisite income/pension measures in place, seem like an impending crisis for the nation. However, increasing the retirement age is no solution. It will create its own present and future problems by reducing employment opportunities for the young. Youth (15-24 years) unemployment has been trending upwards, reaching 23% in 2020 from 17.8% in 2000; the pandemic is likely to have worsened this.
Unemployment is, conventionally, higher in the younger age cohorts among the working-age population. By extending the working life of those already employed, in a scenario of low job creation given already-sluggish growth getting hit by the pandemic, the employment prospects of the young will be further hurt. A better idea, also suggested for Aspirational Districts by the EAC-commissioned study, would be to have universal pension income for the elderly.
The study pitches for a non-contributory scheme with the pension-contribution fully made by the Centre and the state governments, and the pension credited to beneficiaries’ accounts through DBT. Given how skills acquired a few decades back are becoming increasingly redundant, there is also the need to re-skill the elderly population—this will help them earn gig-income to supplement pensions post retirement. For those who have got left out of the existing pension cover, the government can always orient its welfare schemes, from food security to old-age homes, to serve them better.
But, a mere status quo on retirement age (or a decreasing of this) won’t help solve the problem of youth unemployment, since the problem is also rooted in employability, or the lack of it. This remains a key challenge in India. While youth with lesser years of academic attainment find it easier to get jobs—notwithstanding the fact that these are low-income ones—the more educated ones have had to contend with significantly higher unemployment. As per a January 2020 article by CMIE’s Mahesh Vyas, unemployment among graduates in the 20-24-years cohort stood at more 60%, compared with the unemployment rate among the overall 20-24 years-pool being 37%, in December 2019. Analysis by Aspiring Minds, as this newspaper has highlighted in the past, has found astoundingly high levels of engineering graduates unemployable.
The government, therefore, has its task cut out. It has to focus on fostering the generation of enough jobs for the young and improving the employability of the young, whether through forward-looking skilling efforts or orienting higher education towards job-market demands. While the National Education Policy provides a prescription to achieve the later, a lot depends on implementation matching intent. And, as for the ageing population, pension programmes, especially for the informal sector, and welfare schemes need to be part of the arsenal.