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News: Recently, the 62nd annual conference of the Indian Society of Labour Economics was concluded at the Indian Institute of Technology, Roorkee.
In this conference, various useful papers were presented related to the Indian Economy.
Why a major structural transformation is necessary for high long-term growth?
India is facing severe unemployment. There were 28 million unemployed persons in 2019-20, out of which 24 million were in the 15-29 age group. It can lead to closure of the ‘demographic dividend’ window of India.
India’s growth elasticity of employment is low as compared to some other Asian comparators. In fact, has also been declining.
India’s GDP has not been registering robust growth. The repeated covid shocks, has eroded the growth potential of the economy. The small businesses, especially MSMEs, have been impacted. There have been supply-chain disruptions. The Russia-Ukraine conflict has further exacerbated these disruptions.
Around 90% of the employed workforce is involved in unskilled or low-skill jobs. Further, around 35-40% of graduates and technical graduates are unemployed and not employable.,
What is the work profile of India’s workforce?
Among those who are employed, 90% are employed in unskilled or low-skill jobs.
Unemployment rate is as high as 35-40% among graduates and technical graduates. Evidently, despite a relatively high level of education, many unemployed graduates are not employable
The workforce share of industry in India is 6% higher than the norm. Workers have mostly moved to the low-skill or unskilled jobs in the industry like construction industry as well as trade, hotels and transportation industry.
The workforce share of services is very low. It is because high-value-added services like financial and professional services, infotech and communication services, etc, are not employment-intensive.
The challenge of high unemployment cannot be tackled without adequate GDP growth
– Annual GDP of India must grow at 13% to spur an annual employment growth rate of 1.5% so that 90 million jobs can be created between 2023 and 2030 to clear the backlog of youth unemployment.
There has to be a radical structural transformation. The structural transformation requires different policy approaches at different levels.
– The strategic sectors should be promoted where labour absorption can be very high in India.
– The focus should be on construction and low-skill services where the bulk of the Indian labour force is equipped to handle at present. For example, Major infrastructure programmes can be undertaken.
– The high value jobs should be scaled up. For this, good quality education and skilling should be undertaken as a long-term strategy.
Source: The post is based on an article “India needs an economic reboot for rapid employment-heavy growth” published in the Livemint on 15th Apr 22.