“The Elusive Jobs: New Survey Highlights Government’s Employment Challenge”   

Introduction:

The editorial highlights the growing concern over job creation challenges in India, despite optimistic economic growth forecasts. Drawing from the recent Periodic Labour Force Survey (PLFS), the article underlines the persistent issues in generating productive and remunerative jobs. It emphasizes several key trends, including rising female labor force participation, a significant portion of the workforce in informal employment, and a stagnant manufacturing sector. Despite a decline in the unemployment rate, challenges like high youth unemployment and inadequate quality jobs remain critical, calling for urgent policy focus.

Key Points:

Growth vs Employment: India's Economic Growth and Job Creation

India's projected economic growth, with the RBI estimating a 7.2% growth rate for this year and similar optimistic forecasts from institutions like the IMF, signals robust economic momentum. However, the creation of quality jobs lags behind. The recent Periodic Labour Force Survey (PLFS) highlights concerning trends in the labor market, framing a stark contrast between economic expansion and the nature of employment opportunities being generated.

Key Issues in the Labour Market:

1. Labour Force Participation Rate (LFPR)

• Overall Rise: The LFPR for individuals aged     15 years and above has risen from 49.8% in 2017-18 to 60.1% in 2023-24. This rise is significant but needs closer examination.
• Female Participation: Much of this increase     comes from a sharp rise in female labour force participation, especially in rural areas. Rural female participation surged from 24.6% to 47.6% during the same period.
  • However, this rise could be a sign of economic distress rather than a healthy shift, as more women may be entering the workforce to support household income.
  • Shift to Self-employment: Women’s participation in salaried employment has dropped, while self-employment has increased significantly from 51.9% to 67.4%, with many engaged as unpaid helpers or own-account workers indicative of limited employment alternatives.

2. Informal Employment

• The majority of the workforce remains in informal enterprises. As of 2023-24, 73.2% of workers are employed in informal firms, a slight decrease from 74.3% in 2022-23 but still above the 68.2% level in 2017-18.
• This indicates the persistence of informality in the Indian labour market, with formal job creation lagging behind.

3. Sectoral Employment Trends

• Agriculture’s Growing Share: The share of the workforce engaged in agriculture has risen from 44.1% in 2017-18 to 46.1% in 2023-24, reversing a long-term trend of decline in agricultural employment. This rise could be linked to distress in other sectors or a lack of employment diversification.
• Stagnant Manufacturing Employment: The proportion of workers employed in manufacturing has remained almost static, with only 11.4% of the workforce in this sector in 2023-24, compared to 11.6% in 2021-22. This stagnation in manufacturing, a key sector for formal job creation, points to a broader issue of industrial stagnation.

4. Youth and Educated Unemployment Rate:

• Overall Decline: The overall unemployment rate has dropped from 6% in 2017-18 to 3.2% in 2023-24.
• Youth Unemployment: Youth unemployment, though reduced, remains high, falling from 17.8% in 2017-18 to 10.2% in 2023-24.
• Education-based Unemployment: Unemployment rates are higher for the more educated sections of the population, particularly those with secondary and above education levels, highlighting a potential mismatch between education and job availability.

5.  Policy Implications

• The data suggests that job creation needs to be prioritized in policy discussions, with a focus on generating quality jobs that can absorb the growing labour force, particularly women and the youth.
• Addressing informality, creating more opportunities in the formal sector, and revitalizing manufacturing and other job-creating sectors are critical steps for sustainable development.

Critical Analysis:

Job Creation Challenges & Growth vs Employment in India:

1. Challenges in Job Creation: Impact of Labor-Saving Technology and Capital-Intensive Processes

One of the most significant challenges in job creation is the growing reliance on labor-saving technologies and capital-intensive processes. These trends are impeding employment opportunities by replacing human labor with automation, machinery, and AI-driven systems. Key factors influencing this are:

• Automation & AI: The rise of automation and AI is transforming industries by streamlining production and reducing the need for manual labor. Tasks that once required a significant workforce can now be completed with fewer workers, decreasing job availability, particularly in manufacturing and routine service sectors.
• Capital-Intensive Production: Many industries, including manufacturing and agriculture, are shifting towards capital-intensive methods, requiring higher investments in machinery and technology. While this enhances productivity and efficiency, it limits labor absorption, particularly for low-skilled workers.
• Skilled Labor Demand: With the growing use of advanced technologies, there is a greater demand for skilled labor capable of managing and maintaining these systems. This leaves unskilled and semi-skilled workers in a precarious situation, widening the gap between high-skilled and low-skilled job availability.
• Global Trends in Job Polarization: Globally, there is a growing trend of job polarization where high-skill, high-pay jobs are increasing, and low-skill jobs are declining. The “middle-skill” jobs, often held by workers in sectors like manufacturing, are being squeezed out due to automation and capital-intensive practices. This trend is evident in India as well, where informal and low-paying jobs dominate the market.

2. Growth vs Employment: The Elusive Job Creation Paradox in India

Despite India's projected economic growth, the creation of quality jobs has remained inadequate, as illustrated by recent labor force surveys. The following key points highlight the disconnect between growth and employment:

• Economic Growth vs Job Quality: While India’s economy is growing at a rate of 7.2%, the benefits of this growth are not translating into quality, well-paying jobs. The labor force participation rate has risen, but much of this increase is driven by women in rural areas joining the workforce, often due to economic distress rather than genuine empowerment.
• Female Workforce Participation: A significant rise in female workforce participation in rural areas has been observed, growing from 24.6% to 47.6%. However, many of these women are engaged in self-employment or unpaid work in family businesses, indicating a lack of formal employment opportunities. The increase in self-employment also reflects a growing informal sector that does not offer stable or secure jobs.
• Informality and Agriculture Dependence: A large proportion of India's workforce continues to be employed in informal enterprises, with little to no social security. The share of workers in informal firms remains at over 73%, reflecting the structural weakness in generating formal, secure jobs. Furthermore, the agriculture sector still employs 46.1% of workers, a figure that has increased, reversing a long-term trend of declining agricultural dependence. This points to a stagnation or even regression in structural transformation towards higher productivity sectors like manufacturing and services.
• Stagnant Manufacturing Sector: The share of workers in manufacturing has remained stagnant at around 11.4%. This is particularly concerning as manufacturing has historically been a key driver of job creation in many emerging economies. The lack of expansion in this sector signifies a missed opportunity for generating higher-paying jobs.
• Unemployment and Youth Challenges: While the overall unemployment rate has fallen to 3.2%, youth unemployment remains high at 10.2%, reflecting the challenges young people face in entering the labor market. Moreover, the unemployment rate is disproportionately high among the educated, indicating a mismatch between education and available job opportunities. This signals an inefficient labor market where higher education does not necessarily lead to better job prospects.

Conclusion:

Policy Implications and the Way Forward

The disconnect between economic growth and job creation in India is exacerbated by capital-intensive technologies, insufficient structural transformation, and the persistence of informal employment. While GDP growth figures might appear promising, the lack of remunerative and productive employment highlights a critical development challenge. For India to truly harness its demographic dividend and ensure inclusive growth, the government must prioritize labour-intensive sectors, boost manufacturing, and promote formalization. Furthermore, policies that enhance skill development and create employment opportunities in high-productivity sectors must be at the forefront of India's policy agenda.

Addressing these challenges will require:

• Investment in labour-intensive industries like construction, manufacturing, and services.
• Skill development programs to prepare the workforce for evolving job requirements, especially in technology-driven sectors.
• Promotion of entrepreneurship and innovation to create new businesses and job opportunities.
• Labor market reforms aimed at increasing formalization and improving working conditions in the informal sector.

In conclusion, India's challenge is not just to grow its economy but to ensure that this growth translates into productive and secure jobs, particularly for its youth and disadvantaged sections of the population.