Date : 25/08/2023

Relevance –

• GS Paper 2 – Government Policies and Interventions
• GS Paper 3 – Indian Economy – Demographic Dividend

Keywords – Independence Day, Workforce, Employment rate, Demography

Context –

During the Independence Day speech, the Prime Minister emphasized India's status as a nation with a significant youth population and underscored the array of opportunities available to the country's young generation. Nonetheless, an examination of India's workforce using data from CMIE's Economic Outlook reveals a contrasting trend – despite having a sizable youthful population, the workforce of the nation is undergoing a swift process of aging.

Analysis of Workforce Composition Based on Age Groups

Percentage Data

Within CMIE's dataset, the category of youth pertains to individuals aged above 15 years and below 25 years.

However, considering the Prime Minister's reference to individuals under 30 years as youth, the composition can be segmented into three categories:

1. Individuals aged 15 years or more but less than 30 years.
2. Individuals aged 30 years or more but less than 45 years.
3. Individuals aged 45 years and older.

The percentage of India's youth has experienced a decline, dwindling from 25% during 2016-17 to a mere 17% by the conclusion of the recent fiscal year in March. Similarly, the portion of individuals falling within the middle age group has also contracted from 38% to 33% over the same time frame. In contrast, the senior-most age category has expanded its share from 37% to 49%. This essentially signifies that within a span of just seven years, the workforce has undergone a considerable aging process, as the fraction of those aged 45 years and above has surged from one-third to almost half.

Absolute Number Data

The data indicates a decrease in the overall count of employed individuals, declining from 41.27 crore to 40.58 crore. The most substantial decrease, however, has occurred in the representation of India's youth. In 2016-17, the workforce encompassed 10.34 crore individuals under the age of 30 years. By the conclusion of 2022-23, this figure had plummeted by more than 3 crores, resting at a mere 7.1 crore.

Simultaneously, the number of individuals aged 45 and above has witnessed an increase, despite the overarching decline in employment levels.

Cause of Workforce Aging in India: Decline in Youth Participation in Employment

• Notwithstanding the growing population figures, the younger segment is experiencing a reduction in its presence within the job market.
• One effective approach to monitor this phenomenon is by assessing the parameter known as the "Employment Rate."
• The Employment Rate (ER) for a specific population or age bracket provides insight into the proportion of that particular age group or population that is engaged in employment.
• For instance, if there exist 100 individuals within the age range of 15 to 29, and only 10 among them are employed, the resulting ER would stand at 10%.

Analysis of Employment Rate Across Age Segments

Age Group: 15 to 30

• The demographic encompassing the youth, as outlined by the Prime Minister, expanded in size from 35.49 crore in 2016-17 to 38.13 crore in 2022-23.
• However, the total count of individuals in this age group who were employed exhibited a decline.
• Interestingly, despite the growth of this youthful population by 2.64 crore, there was a reduction of 3.24 crore in the number of employed individuals.
• In essence, rather than maintaining parity, India's youth encountered a substantial 31% reduction in employment opportunities over the last seven years.
• This decline is mirrored in a significant drop in the Employment Rate within this age group.
• This rate diminished from 29% to a mere 19%. To put it differently, seven years ago, 29 out of every 100 individuals within the youth bracket (ages 15 to 30) were employed; today, this figure has dwindled to 19 out of every 100.

Age Group: 30 to 45

• The employment rate has also experienced a decrease within this age segment, albeit to a lesser extent.
• Furthermore, the initial employment rates within this age group were notably higher.

Age Group: 45 and Older

• Among the various age groups, the decline in employment rates has been the least pronounced for those aged 45 and above. Intriguingly, this is the only age category where the absolute count of employed individuals has indeed risen.
• However, it's worth noting that the overall population of this group has increased even more, contributing to a certain extent of ER reduction.
• Within the 45 years and above category, the subgroup spanning 55-59 years emerges as noteworthy.
• This specific age bracket (55-59) not only demonstrated an upswing in the employment rate but also marked the most substantial ER growth over the preceding seven years.

Projection Based on Examination of Employment Rate

Evident Shift towards an Aging Workforce in India

• Upon evaluating five years of data, the age bracket spanning 25 to 29 years showcases a noticeable increase in the employment rate across the past seven years.
• However, a closer examination of the absolute figures clarifies that this upsurge in the ER isn't due to a higher number of individuals in this age group securing employment, but rather stems from a steep decline in the overall population within this range.

Challenges Faced by a Swiftly Expanding Youth Population in Attaining Employment

• The provided data unequivocally illustrates that the rapid expansion of India's youthful population alone doesn't automatically translate into a proportional increase in youth employment opportunities.
• This phenomenon arises because young individuals are encountering difficulties in establishing a presence in the job market, with indications that they are progressively facing competition from older segments of the Indian populace.

Predominance of Unemployment among the Youth

• Even after considering the possibility that a substantial portion of young people might be pursuing higher education, the trend remains striking enough to warrant attention from policymakers.
• For instance, official surveys, apart from those conducted by CMIE, indicate that unemployment rates in India are most pronounced among the youth.

Important Considerations for Policy Planners

Demographics as a Dynamic Force: India's potential gains from its demographic advantage will materialize only through the alignment of policies and initiatives with this shifting demographic landscape. It's vital to understand that demography is not an unalterable fate.

Fostering Essential Competencies and Socioeconomic Infrastructure

The anticipated demographic boon can swiftly turn into a detrimental demographic setback if an inadequately skilled, underutilized, and discontented young populace undermines social cohesion and economic progress.

Realizing the potential of the demographic dividend hinges upon factors like the readiness of the working-age population for employment, their access to quality healthcare and education, vocational training, and proficiency in relevant skills. Additionally, it necessitates appropriate land and labor policies, complemented by effective governance practices.

Conclusion -

• India possesses a substantial youth demographic in comparison to other developing countries. Nevertheless, the failure to provide employment opportunities to this demographic could exacerbate the situation.
• In the absence of a reversal in these patterns, India might persist in encountering the paradoxical scenario of maintaining a youthful national profile alongside an aging workforce.

Source – The Hindu