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Picture Courtesy: The Hindu

Context:

India, with its large and youthful population, is set to add around 133 million people to its workforce in the next 25 years, representing a significant share of the global labour force.

Details:

Current employment scenario in India

• Labour Force Participation Trends: The Labour Force Participation Rate (LFPR) for people aged 15 and above has shown a notable increase, rising from 49.8% in 2017-18 to 60.1% in 2023-24, according to the Periodic Labour Force Survey (PLFS) data. Similarly, the Worker Population Ratio (WPR), which indicates the proportion of employed individuals, improved from 46.8% to 58.2% during the same period. A significant rise is also observed in the Female Labour Force Participation Rate (FLFPR), which jumped from 23.3% to 41.7%, highlighting enhanced female engagement in the workforce. 

• Formalization and Structure of the Job Market: The formal job sector is expanding, as evidenced by a sharp rise in subscriptions to the Employees’ Provident Fund Organisation (EPFO), which more than doubled from 61 lakh in FY19 to 131 lakhs in FY24. Meanwhile, self-employment has also grown, with its share rising from 2% to 58.4%, reflecting increasing entrepreneurial activities and a preference for flexible work formats. 

• Sector-Wise Employment Distribution: Employment trends across sectors reveal shifts in workforce distribution. Agriculture’s share in total employment increased from 44.1% in 2017-18 to 46.1% in 2023-24, while both industry and services sectors experienced declines. Manufacturing employment dropped from 12.1% to 11.4%, and the services sector decreased from 31.1% to 29.7%, indicating a gradual concentration of jobs in agriculture relative to other sectors. 

• Unemployment and Persistent Challenges: The overall unemployment rate among individuals aged 15 and above has declined steadily from 6% in 2017-18 to 3.2% in 2023-24, reflecting an improving labour market. 

Importance of Employment for Inclusive Growth

• Poverty Reduction: Large-scale job creation helps lift millions out of poverty by providing stable income sources. 

• Bridging Inequalities: Employment opportunities reduce regional and social disparities, promoting equitable growth.  

• Wider Distribution of Benefits: Ensures that the gains from economic development are more evenly shared across the population. 

• Boost to Consumption-Driven Economy: With India’s economy relying heavily on consumption, quality jobs enhance household spending, fuelling economic growth. 

• Economic Stability: Steady employment strengthens financial resilience, reducing vulnerability to economic shocks.

Key Challenges Affecting Employment Generation in India

• Jobless Growth: India’s economic expansion often does not translate into equivalent job creation, due to growth being skewed towards capital-intensive sectors like IT and finance. 

• Stagnant Manufacturing Sector: Manufacturing, which traditionally drives large-scale job creation, has not kept up with the pace required to employ India’s growing workforce. 

• Skill Mismatch and Low Employability: Many graduates find themselves working in jobs below their qualification levels: the skills they have often do not align with what employers’ demand. 

• Gender-Based Disparities: Female participation in the workforce, while improving, remains significantly lower than men’s participation. 

• Informality and Weak Formalization: A large share of India’s workers are in the informal sector, lacking the protections and stability of formal employment: irregular pay, no social security, low job security. 

• Disruption from Technology and Automation: Rapid adoption of automation, AI, robotics is displacing many low-skilled and repetitive task jobs. 

Way Forward

• Formalizing the Informal Sector: With a majority of India’s workforce in the informal sector, integrating them into the formal economy is essential.
• Measures include: Expanding access to social security, minimum wages, and stable contracts. 

• Modernizing the Service Sector: Sectors like healthcare, tourism, and education offer high employment potential.
• Key initiatives: Establish skill centers that align training with global service standards. 

• Promoting Women’s Workforce Participation: India's low female labour participation requires a comprehensive push.
• Suggested actions: Scale up schemes like MUDRA Yojana and Mahila Shakti Kendra for women-led entrepreneurship and skilling. 

• Fast-Tracking Labour Code Implementation: India must implement its labour codes to match evolving work models.
• Key focus areas: Provide legal and social protections to gig workers and contract-based employees. 

• Strengthening Public-Private Partnerships (PPPs): PPPs can drive employment through collaborative skill development and infrastructure projects.
• Strategy includes: Partnering under schemes like Skill India Mission and PMKVY to align training with industry needs. 

Source: The Hindu