Recent data points towards the Indian economy maintaining a healthy growth momentum. In February, the National Statistical Office raised its forecast for GDP growth in 2023-24 to 7.6 per cent, up from its earlier assessment of 7.3 per cent. In its February monetary policy committee meeting, the Reserve Bank of India projected the economy to grow at 7 per cent in 2024-25. However, despite these growth assessments, concerns persist over the state of the labour market, and the capacity of the economy to generate more productive forms of employment. Data from the periodic labour force surveys has shown that there has been a steady increase in the labour force participation rate in the country. For those aged 15 years and above, the participation rate has increased from 49.8 per cent in 2017-18 to 57.9 per cent in 2022-23. Much of this increase has been due to more women entering the labour force — the female labour force participation rate has risen from 23.3 per cent to 37 per cent over this period. However, as the India Employment Report 2024 prepared by the International Labour Organisation and the Institute of Human Development points out, post 2019, roughly two-thirds of the increase in employment comprised of self-employed workers, “among whom unpaid (women) family workers predominate”. The report also notes that in recent years employment in agriculture has gone up, while the share of employment in manufacturing has remained almost stagnant. These are worrying signs that call for a closer examination.
The issue of job creation has been central to India’s development project. The challenge is to generate more productive job opportunities — employment has so far largely been in the form of self-employment and casual wage labour — for the millions entering the labour force each year. The report has pegged the number of new entrants to the labour market at seven to eight million each year. However, currently, even as youth unemployment has fallen from 17.5 per cent in 2019, it remains high at 12.1 per cent in 2022. Unemployment is higher among the young people in urban areas, and among the more educated. Reaping the demographic dividend would require providing more productive forms of employment for these groups. This is going to be a challenge, more so because the production process has become “capital intensive and labour-saving”. As the report points out, “the skill intensity of employment in industry and services increased during this period, which was contrary to the labour market needs of the country”.
Over the decades, governments of varying ideological inclinations have announced measures to boost employment generation. And yet, progress so far has been less than adequate. The policy response has to be at multiple levels, from ensuring quality education and skills to facilitating large-scale labour intensive manufacturing to absorb the millions of low and semi-skilled workers. This should be the priority for the next government.
