Relevance: GS-2: Issues Relating to Development and Management of Social Sector/Services relating to Education and Human Resources.

Key Phrases: National Sample Survey Organisation, Centre for Monitoring Indian Economy, GDP growth, National Labour Institute’s, Labour law, Informal employment, Quality of Manpower, Industry-friendly, Education system, Emerging Sectors, Small Medium Enterprises (SMEs), Women Workforce, Fundamental reforms.

Why in News?

• India’s perennial socio-economic problem is the difficulty a vast majority of citizens find in earning good livelihoods. Their problem is not just employment.

Unemployment Situation in India:

• India faces challenges of unemployment, quality of jobs and quality of income.
• Unemployment stood at 8.1% in February 2022, as per Centre for Monitoring Indian Economy (CMIE) data, an improvement from the near 12% unemployment during the peak of the second Covid-19 wave in May 2021.
• Only 40% of Indians were employed or looking for work, compared to about 60% in other countries.
• Around 26% of Indian males between the ages of 20 and 30 years, with at least 10 years of education, were not working, while the figure is 2% for those aged above 30.
• Data also show that there are millions of jobs in India's informal services and contract labour sector, but less than 5% of the workforce is formally skilled, compared to 75% in Germany and 96% in South Korea.
• Further, India now has one of the lowest female workforce participation rates in the world, which has declined from about 35% in 2005 to 21% today, while the world average is 50%.

National Labour Institute’s interim report:

• It provides insights into the impacts of the reforms undertaken by the States so far.
• The report spans the period 2004-05 to 2018-19.
• It focuses on six states that have implemented reforms: Rajasthan, Maharashtra, Andhra Pradesh, Tamil Nadu, Jharkhand, and Uttar Pradesh.
• The report has focused on the reform of the Industrial Disputes Act, which is to raise the limits of applicability of laws relating to terms of service and modes of dispute resolution (roles of unions) to 300 persons.

Findings:

• Labour laws as a factor affecting business investment decisions:
  • The report reminds us that labour laws are important factors affecting business investment decisions.
  • Investors don’t go out to hire people just because it has become easy to fire them.
  • An enterprise must have a growing market for its products, and many things must be put together to produce for the market — capital, machinery, materials, land, etc. not just labour.
• Effects of labour reforms cannot be revealed immediately:
  • Reforms of labour laws have had little effect on increasing employment in large enterprises.
  • The report says that the effects of labour reforms cannot be revealed immediately — they will take time.
  • Therefore, it is telling that Rajasthan, the first state to implement the reforms, seems to have benefitted the least from them.
• Increasing Informal employment:
  • In contrast to creation of jobs, the report says, employment in formal enterprises is becoming more informal.
  • Large investors can afford to use more capital and are also employing increasing numbers of people on short-term contracts, while demanding more flexibility in laws.

Shortcomings:

• The question the report leaves unanswered is whether the reforms have benefited workers.
• The report includes a long chapter on the views of employer associations about the benefits of the reforms and nothing about the views of employees and unions.
• The employers’ associations say the reforms have been beneficial. The question is, beneficial for whom?

Measures to reduce unemployment:

• Improve the Quality of Manpower:
  • The vast majority of the Indian workforce is in the informal sector. If they need to be transitioned to the organized workforce, they need skill training.
  • The government can collaborate with the Indian corporations and set up training centres in different cities, especially in the small towns, and villages. This will enhance their chances of employability in the formal sector.
• Make Degree Courses Industry-friendly:
  • According to the Employment and Unemployment Survey (EUS) 2016, 58 percent of graduate unemployed and 62 percent of post-graduate unemployed cited non-availability of jobs matching their skill and education as a primary reason for their unemployment.
  • Education system should be overhauled to make it more job-friendly by:
    • Introducing industry-aligned curriculum.
    • Setting up more vocational training centres.
    • Offering more Massive Open Online Courses (MOOC).
    • Opening more academic institutions such as IITs, IIMs and AIIMS.
• Give Impetus to Emerging Sectors:
  • The Confederation of Indian Industry (CII) forecasts that India can create 5 million jobs every year provided it focuses on the sectors which can contribute substantially in employment.
  • For instance, construction sector will itself create 30 million jobs in the next 10 years since there is a major thrust of the government on infrastructure and road development.
  • Other emerging industries such as healthcare, tourism, and content creation can drive job opportunities as well.
  • Even the e-commerce sector has the potential to create 12 million jobs in the next 10 years, as highlighted in HSBC Global Report.
• Support Small Medium Enterprises (SMEs) and Startups:
  • The government’s programmes to boost the growth of startups and SMEs are laudable, but the entrepreneurs have not yet found them friendly enough for the ease of registration and operation.
  • Lighter regulation, better financing schemes, adequate incentives and new business models could help them sustain in the long run.
• Empower Women Workforce:
  • A Facebook study reveals that four out of five women in India wish to become entrepreneurs.
  • If they are given the right opportunities and a conducive environment, they can launch 15.5 million new businesses and 64 million additional jobs.
  • This way, the women population can be instrumental in fuelling the employment.

Way forward:

• Fundamental reforms are required in the theory of economic growth - more GDP does not automatically produce more income at the bottom.
• So, the paradigm driving employment and labour policies must also change to enable the generation of better-quality livelihoods for Indian citizens now and in the future.

Source: Indian Express 

Mains Question:

Q. What are the challenges faced by Indian economy in terms of employment? Suggest measures to reduce unemployment in India. (250 words).