The Indian economy is grappling with a concerning trend of increasing joblessness correlating with education levels, according to a comprehensive study conducted by D. Tripati Rao of the Indian Institute of Management (IIM), Lucknow. Collaborating with researchers from Birla Institute of Technology and Science, Pilani, and the Union Ministry of Agriculture and Farmers Welfare, the study reveals alarming issues in the labour market.
The research, published in the Indian Journal of Labour Economics, highlights a period of ‘jobless growth’ from 2004-05 to 2018-19, following a surge in output growth and employment from 1987-88 to 2004-05. Despite a trifling rebound thereafter, the employment growth rate has stagnated, and structural problems in the labour market have emerged, including low female labour force participation and a surge in unemployment correlated with education levels.
Analyzing data from the National Sample Survey Office (NSSO) Employment and Unemployment Survey and Periodic Labour Force Survey Dashboard, the researchers emphasize the need for a conscious effort to identify and promote the labour-intensive manufacturing sector for achieving inclusive growth.
The study underscores the challenges posed by the agricultural sector, which, despite employing a significant portion of the youth, contributes low value-added to the overall economy. “Economic growth, rather than creating more jobs, has resulted in net labour displacement. It is crucial to examine the quality and decency of jobs, as productivity is intricately linked to job decency,” says Prof. Rao. The researchers suggest key policy interventions, including making the manufacturing sector more labour-intensive, to create high linkage effects and uplift various industries.
Significant gender disparity in the labour market is another issue highlighted by the study, with a growing level of unemployment among highly educated youth compared to their less educated counterparts. In 2020-21, out of the total labour force in India (556.1 million), self-employment emerged as the chief driver of the job market, employing 54.9% of the workforce.
The study points to a persistence of gender-based disparity in the Labour Force Participation Rate (LFPR) in rural and urban areas, with a higher decline in LFPR for females compared to males from 1983 to 2020-21. The overall female Work Force Participation Rate (WFPR) for those aged 15-59 in 2020-21 stood at 32.46%, significantly lower than that of men.
Unemployment rates (UR) in the country exhibit an upward trend with education levels, according to the study. The UR for the illiterate and less educated class (below primary) was 0.57% and 1.13%, respectively, while for the highly educated class (graduates and above), it was 14.73% in 2020-21 for the age group ’15-29 years’.
The study suggests that initiatives like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), public works projects, and poverty alleviation measures can positively impact the lives and livelihoods of rural people. However, it also acknowledges potential side effects, such as driving out private sector employment and influencing rural wage levels.
Key Findings of the Study:
- Jobless Growth Period: The study identifies a period of ‘jobless growth’ from 2004-05 to 2018-19, following a surge in output growth and employment from 1987-88 to 2004-05. Subsequently, a trifling rebound was observed thereafter.
- Structural Challenges: Stagnating employment growth rate, weakening employment elasticity, and slow structural transformation contribute to the challenges faced by the Indian economy.
- Quality of Jobs: The researchers emphasize the importance of examining not only the quantity but also the quality and decency of jobs. Economic growth has resulted in net labor displacement, requiring a focus on job decency and productivity.
- Gender Disparity: The study highlights significant gender-based disparities in the labor market, with a decline in the Labor Force Participation Rate (LFPR) for females compared to males from 1983 to 2020-21.
- Education-Linked Unemployment: Unemployment rates (UR) in the country are observed to rise with education levels, with highly educated individuals experiencing higher unemployment rates.
Policy Recommendations:
The study recommends policy interventions focused on making the manufacturing sector more labor-intensive to achieve inclusive growth. The researchers emphasize the need for conscious efforts to address structural problems in the labor market and promote job decency.
