In recent years, the trajectory of economic growth in India has been a subject of intense scrutiny, with many characterizing it as “jobless growth.” While this label captures a significant aspect of the Indian economy’s performance, it oversimplifies a complex reality. Admittedly, the country has witnessed impressive GDP expansion without a proportionate increase in employment opportunities. However, asserting that growth is entirely devoid of job creation neglects nuanced developments across various sectors. For instance, the emergence of the digital economy and the startup ecosystem has generated employment avenues, albeit in specialized domains. Moreover, sectors like construction and services have absorbed labor, albeit often in informal capacities. Nonetheless, persistent challenges such as skill mismatches, labor market rigidities, and automation exacerbate the job scarcity conundrum. Therefore, while acknowledging the prevalence of jobless growth, it’s crucial to recognize pockets of employment generation and address systemic hurdles to foster inclusive and sustainable economic development in India.
Tag: Indian economy and issues related to planning, mobilization of resources, growth development and employment.
Decoding the Question:
- In the introduction, try to define jobless growth in brief.
- In the body, give arguments in favor or against jobless growth and justify your opinions with an explanation.
- In conclusion, write suggestions to improve the employment scenario.
Answer:
Jobless growth is a situation when the level of output in the economy tends to rise without a proportionate rise in the opportunities of employment. This tends to happen when a relatively large number of people have lost their jobs, and the ensuing recovery is insufficient to absorb the unemployed, under-employed, and those first entering the workforce.In India the trend of jobless growth can be seen during the post 1991 economic reforms period. There is an absolute decline in the number of workers from 467.7 million in 2012 to 461.5 million in 2018.
Jobless Growth in India:
- Rise in the Informal Sector: The rapid rise of employment opportunities in the informal or unorganized sector in recent years is another aspect of employment generation in India, which further marginalizes labor. More than 82 percent of the workforce in India is employed in the unorganized sector, as noted by the International Labour Union in its India Labour Market Update of 2016.
- Mismatch in Demand-Supply: During 2005-10, only 1 million net jobs per annum were generated in the organized sector, whereas 60 million people entered the labor market of India. The World Bank calculates that a 1% increase in growth in India resulted in 540,000 more jobs on average.
- Economic Growth vs. Employment Growth: India has experienced periods of relatively high economic growth in recent years, but employment generation has not matched the growth rate. In 2021-2022, India’s economy contracted by around 7.3% due to the impact of the COVID-19 pandemic. During the same period, the unemployment rate reached historic highs, reaching around 6.9% in March 2021.
- Impact of COVID-19 Pandemic: The COVID-19 pandemic further exacerbated the challenges of jobless growth in India. During the pandemic, many sectors faced disruptions, leading to layoffs, furloughs, and reduced job opportunities. The worst-hit sectors included hospitality, tourism, and retail, which heavily rely on labor-intensive activities.
- Technology Adoption and Automation: The adoption of new technologies, including AI, robotics, and automation, has raised concerns about potential job displacement in certain sectors. Automation in sectors such as manufacturing, logistics, and IT has impacted traditional job roles and created a demand for more skilled and tech-savvy workers.
- Labor Market Informality: A significant portion of India’s workforce operates in the informal sector, which is often characterized by low job security and limited social protection. As of 2022, over 90% of India’s workforce was employed in the informal sector, which poses challenges for stable and formal employment opportunities.
- Skill Mismatch: Jobless growth due to AI and 4IR is also attributed to the challenge of skill mismatch, where the skills demanded by emerging industries may not align with the skills possessed by the existing workforce.As per a report by McKinsey, up to 375 million workers (about 14% of the global workforce) may need to switch occupational categories by 2030 due to automation. According to a survey by the All India Council for Technical Education (AICTE), around 70% of engineering graduates in India were found to be unemployable due to a lack of relevant skills.
Present Status of Jobless Growth in India:
- Rise in unemployment rate – The unemployment rate in India has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy.
- At the same time, the workforce shrank as millions of people dejected over weak job prospects pulled out, a situation that was exacerbated by Covid-19 lockdowns.
- Fall in labor force – The labour force participation rate has dropped to just 40% of the 900 million Indians of legal age, from 46% six years ago, according to the CMIE.
- AI and 4IR Adoption Across Sectors: Various industries in India are adopting AI and 4IR technologies to streamline processes, improve efficiency, and enhance productivity. Sectors like manufacturing, healthcare, finance, IT, and agriculture are witnessing increasing integration of AI-driven solutions and automation.
- Skill Upgradation and Job Transformation: The widespread adoption of AI and 4IR technologies is leading to a transformation in job roles and skill requirements. Certain job profiles are being augmented or replaced by automation, while new roles are emerging, demanding expertise in data analytics, AI development, machine learning, and cybersecurity.
- Positive Impact on Certain Industries: AI and 4IR have positively impacted industries like IT services, data analytics, and e-commerce, creating new job opportunities for skilled professionals. Companies leveraging AI-driven solutions have enhanced their market competitiveness and expanded their operations, leading to job creation.
Government Interventions:
- Pradhan Mantri Rojgar Protsahan Yojana (PMRPY): Launched August 7, 2016. to incentivize employers to promote employment generation by reimbursing the employer’s contribution to the Employee Provident Fund (EPF) and Employee State Insurance (ESI) for new employees. As of December 2022, around 2.21 crore beneficiaries had benefited from the PMRPY scheme, and it resulted in the addition of over 1.49 crore new employees.
- Skill India Mission: Launch Date: July 15, 2015. Skill India Mission aims to enhance the employability of the Indian workforce by providing skill training and certification through various training programs and initiatives. As of 2022, over 2.67 crore individuals had been trained under Skill India Mission across various sectors, enhancing their employability and job prospects.
- Startup India: Launch Date: January 16, 2016. Startup India is an initiative to promote entrepreneurship and support startups by providing various incentives, benefits, and access to funding and mentorship. As of 2023, over 61,000 startups had been recognized under the Startup India program, fostering innovation and job creation in the startup ecosystem.
- Atal Innovation Mission (AIM): Launch Date: June 1, 2016. AIM aims to promote innovation and entrepreneurship among students, faculties, and entrepreneurs through various initiatives like Atal Tinkering Labs and Atal Incubation Centers. As of 2022, over 7,500 Atal Tinkering Labs had been established in schools across India, fostering creativity and innovation among students.
- National Rural Livelihoods Mission (NRLM): NRLM aims to reduce poverty and promote livelihood opportunities in rural areas by organizing rural poor women into self-help groups (SHGs) and providing them access to credit, training, and livelihood opportunities. As of 2022, NRLM had mobilized over 10 crore women into SHGs, enabling them to access financial services and engage in income-generating activities.
- Pradhan Mantri Mudra Yojana (PMMY): Launch Date: April 8, 2015. As of March 2022, PMMY had sanctioned over 30.41 crore loans, providing financial assistance to micro and small enterprises. PMMY provides financial support to micro and small enterprises by offering loans under three categories: Shishu, Kishor, and Tarun.
- Industrial and Labor Reforms: The government has undertaken labor reforms to improve the ease of doing business, simplify labor regulations, and enhance the formalization of the labor market. Various states in India have implemented labor reforms to attract investments and boost employment opportunities. For example, states like Uttar Pradesh, Gujarat, and Madhya Pradesh have undertaken labor law changes to encourage industrial growth.
- National Apprenticeship Promotion Scheme (NAPS): launched Date: August 19, 2016. NAPS encourages industries to engage apprentices for skill development and on-the-job training. As of 2022, over 3 lakh establishments had participated in the NAPS, training and skilling millions of apprentices.
- Code on Wages Act, 2019: Launch Date: August 8, 2019. The Code on Wages aims to simplify and rationalize wage-related laws, ensuring minimum wages and timely payment for all workers. Example: The act strengthens workers’ rights, promoting a fair wage structure and improving job security.
- Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY): Launch Date: September 23, 2018. As of 2021, AB-PMJAY covered over 14.9 crore beneficiary families, providing financial protection for secondary and tertiary healthcare. Example: AB-PMJAY ensures access to quality healthcare, reducing health-related barriers to employment and productivity.
To enhance the quality of life and improve economic growth with the distribution of wealth among every section of society, employment generation is very key. Fruits of economic development can be shared among citizens only by providing them with respectful jobs, especially for youths. If we really want to achieve the target of “NEW INDIA” then employment generation is a must.
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