Opinion Unless job creation picks up, India could get old before it becomes rich

The issue of job creation has been at the core of policy discourse. More so in recent decades, when acceleration in economic growth has not translated to a commensurate increase in high-quality employment generation in the country. Yet, there have also been significant changes in the labour market that reflect, in part, the changing structure of the Indian economy, and the underlying economic momentum. A new report — State of Working India 2023 — throws light on several such trends. These warrant closer examination.

Over the last decades, there has been an increase in the share of non-agricultural employment, more so since the mid 2000s. This increase has been much faster than the rise in the share of regular wage employment or the organised sector. This indicates that jobs created have been more informal in nature. At the same time, the data also points towards an increase in intergenerational mobility over the years. As per the report, in 2004, around 80 per cent of sons of casual wage workers were also engaged in casual employment. By 2018, this had fallen across the board, though to a lesser extent in the case of SCs/STs. Alongside, the percentage of sons, who just like their fathers, were also engaged in regular wage employment, has also increased. This suggests greater opportunities in the labour market. The report also points toward the tenuous link between long run GDP and employment growth. For instance, it estimates that between 2004 and 2011, when non-agricultural value added grew by 7.7 per cent per annum, non-agricultural employment growth was 3.4 per cent. However, between 2011 and 2017, when value added grew by 7.4 per cent, employment growth fell to 1.7 per cent. And from 2017 to 2021, a period which also includes the pandemic years, when value added grew by 3.4 per cent, employment growth was 3.4 per cent. Questions have, however, been raised over the quality of jobs created. For instance, the increase in female employment in recent years, which has been typically of the self-employed type, has been linked to economic distress. While unemployment has fallen from the levels seen during the pandemic, it still remains high, especially among the young and the more educated.

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Successive governments have announced policies to help boost the creation of good quality jobs in the country. However, progress has been slow. The problem will become more acute as millions enter the labour force over the coming decades. Unless job creation picks up, there is a risk of the country turning old before it becomes rich.