By N Chandra Mohan,
Although India is the world’s fastest-growing large economy, it faces a serious challenge of dealing with joblessness, especially among the youth. Nothing illustrated this better than a cartoon in the Times of India pointing to good news on the jobs front as after UP and Haryana, five more states sought to join Israel’s recruitment drive.
This pertains to 10,000 temporary jobs on offer in Israel’s construction industry—facilitated by the Indian government—that has seen thousands of young men from the Hindi-speaking heartland scrambling for this lucrative opportunity with salaries of `1.4 lakh a month despite working in a war zone. “It is better to die working than perishing due to hunger,” stated an applicant who is a post-graduate.
It is possible to interpret this drive as Indian nationals exploring opportunities in the global workplace due to shortages of semi-skilled and skilled labour. But this desperation to get out reflects a push factor stemming from the limited jobs in the government and private sector in the country. This can also take place illegally.
As many as 96,917 Indians were apprehended seeking to enter the US between October 2022 and September 2023, per United States Customs and Border Protection data. A better description of this reality is jobless growth. An adequate number of jobs for the youth are not being generated, despite economic growth projected to accelerate to 7.3% in FY 24. In other words, growth is not employment-intensive enough.
Unemployment is the biggest concern for educated youth who prefer to wait for better opportunities, unlike the poor who take up whatever is available. But this cannot be an indefinite wait and can erupt into violence, as has happened with the Agnipath scheme for recruitment into the army couple of years ago. That year also witnessed rioting in Bihar due to anger over the non-transparent and problematic hiring process in the railways—more than 10 million aspirants signed up for 35,000 openings. Six years ago, the state government of Uttar Pradesh received as many 2.3 million applications for 368 job openings as peons, including from doctoral and post-graduate candidates. These bleak prospects have also been observed in other states.
In urban India, the latest unemployment rate for those between 15-29 years of age is almost three times higher at 17.3% than the overall rate of 6.6%, according to NSSO’s quarterly Periodic Labour Force Survey for July-September 2023. This is a current weekly status estimate that captures those who sought or were available for work during the reference period of a week preceding the survey. A growing reserve army of unemployed youth portends serious strains on the country’s social fabric. As the electorate that swept the Narendra Modi-led Bhartiya Janata Party into power in 2014 and 2019 was predominantly young, from villages and small towns, the regime must expeditiously address the challenge of youth unemployment.
However, joblessness rarely figures in public discourse as some employment is being generated, even if such jobs are largely in the self-employment sector or pertain to casual wage labour in the urban informal sector. Much has been made of a steady rise in female labour participation—the share of those above 15 years of age who had a job or sought one—in the latest official review of the Indian economy. In urban India, this is true for 2022-23 and July-September 2023, when it nudged up to 24% after remaining stable at 22% since 2019-20. There was a similar uptick in female employment rates that resulted in a lower unemployment rate of 8.6%. But these jobs have been largely of the self-employment kind, including as helpers in household enterprises.
Back to the 15-29 age group, the quarterly PLFS data on males in urban areas hints at a discouraged worker effect of sorts, as some of them are opting out of searching for employment opportunities due to the paucity of suitable jobs. Estimating the real number of discouraged workers, however, is far from easy, as official surveys do not ask probing questions like whether workers are willing to seek work again it if were made available. Labour force participation rates have drifted down in July-September 2023 compared to July-September 2018. While there has been an increase in employment rates, there has been a sharper fall in the joblessness rate, suggesting that fewer young men are seeking work or are available for work to count as unemployed.
Joblessness among the youth cannot be addressed through fiat or mandating the filling of government jobs ahead of important assembly and national elections. There is a need for generating employment-intensive growth, besides labour reform and incentivizing India Inc to invest more to generate employment. More flexible labour markets through reform will help in a big way. There is evidence that states which reformed labour laws saw an increase in average plant sizes and higher employment in the organised manufacturing sector. This is the sustainable way forward to enable millions of people to shift from agriculture to manufacturing and services jobs in urban India and ensure they do not desperately seek temporary opportunities abroad, even in war zones, or enter countries like the US illegally.
(The writer is an economics and business commentator based in New Delhi. Views are personal)