Unemployment in India & Its Remarkable Impacts

The definition of unemployment given by Investopedia is That unemployment refers to a situation where a person actively searches for employment but cannot find work. Unemployment is considered a vital measure of the economy's health.

The most frequently used measure of unemployment is the unemployment rate. It's calculated by dividing the number of unemployed people by the number of people in the labor force.

Estimation of Employment in India:-

• The government of India launched the (PLFS) Periodic Labor Force Survey, in 2017, to get an estimation of the job situation in the country.

• PLFS is aimed at achieving two primary goals in the assessment of employment and unemployment.

• Firstly, it aims to capture the fluctuation in Labour Force Participation and employment status within a brief three-month period, focusing exclusively on urban regions through the current weekly status (CWS)

• Secondly, it seeks to provide labor force estimates for both rural and urban areas, encompassing crucial parameters in both the usual status and current weekly status.

1. Usual Status Approach- It is considered when individuals are unemployed for 365 days or did not get regular work in one year. The usual status approach is carried out in a longer timeframe.

2. Weekly Status Approach- This considers whether someone had the job a week before the survey was conducted but recently lost the job and searching for a new one. This covers a shorter timeframe.

Employment Scenario in India: PLFS Report 2022.

• India's Unemployment rate dropped to a 5 Year low in June-July 2021-22 to 4.1%.

• The Unemployment Rate for Rural women (2.1%) was lower than it was for Rural men (3.8%).

• In 2021-22, in Urban areas, The rate was high for females (7.9%) as compared to males (5.8%).

Two Main Types of Unemployment:-

1. Disguised Unemployment- Disguised unemployment occurs when more people are employed for the same work than required. When some of them are removed, the output will not reduce. For eg. the family of a small farmer in a rural area works throughout the year in his field, even though all of them are not required all the time. All members of the family in an urban area work in a shop owned by them, even though all may not be required the whole day. In these cases, if 2-3 members do not work on the farm or shop, the production will not decrease.

2. Seasonal Unemployment- Having a seasonal job can offer exciting opportunities to work in special settings and perform job duties that relate to a specific time of the year. Because seasonal jobs typically take place only during a certain part of the year, employees who work primarily in seasonal positions might experience unemployment when a job's season ends.

Reasons Behind Unemployment:-

• Structural Unemployment

1. Population growth: As India being the most populous country has an increased number of youth for employment which leads to more supply of labor than the demand itself.

2. The dominance of the Agriculture sector: Almost 42% of the labor force of India is engaged in the agricultural sector which faces seasonal unemployment. According to National Statistical Office (NSO). Hence, we need to shift more labor force from Agri-sector to the manufacturing sector.

3. Unorganized Sector: Ministry of Labour and Participation has said that around 94% of the Labour Force is engaged in the informal or unorganized sectors, Which leads to unstable and low wages jobs.

4. Urban-Rural Divide: There exists an imbalance in employment opportunities in urban and rural areas- Lack of Industries and Infrastructure respectively.

• Policy Level Factors

1. Industrial Growth- It has been sluggish resulting in poor job opportunities.

2. Labour Market Regulation- As hiring and firing trend. Even the labor codes that the Government of India has not been implemented yet.

3. Education & Training- Skill-based vocational and policy-level training is required to make youth employment eligible.

• Skill Level Factors

1. Job-specific skills: India skills report 2023 according to it only 50% of the youth who graduated are eligible for employment.

2. Skill Industry Mismatch: Digital skills and & Data analytics are the need of the hour.

3. Technology & Automation- Artificial Intelligence.

Roadmap to generate Jobs in India:-

1. Promote Industry Relevent Skills- Through vocational training programs.

2. Revamp Education System- New Education Policy (NEP).

3. Focus Public Private Partnerships (PPP) Modelon to implement large scale development projects, Infrastructural enhancement, and large-scale workshops.

4. Rural Development & Agriculture sector- Government Investment in Infrastructure as well Modern Technologies.

5. Support to Small-medium Enterprises (SMEs).

6. Labor market reforms- labor codes

7. Improve Infrastructure- by fostering PM Gati,

8. Promote digitization & E-commerce

9. Focus on Labor Intensive sectors such as Leather/ Auto components.

10. Continuous monitoring and evaluation- establish mechanisms.

In this way,skill-based we can create more jobs for the youth Shakti, to fulfill the requirements of the country & the economy.