UNEMPLOYMENT IN INDIA - ECONOMY
News: India's unemployment rate dips to 7.2% in July-Sept 2022: NSO survey
What is in the news?
● Unemployment rate for persons aged 15 years and above in urban areas declined to 7.2 percent during July-September 2022 from 9.8 per cent a year ago.
● Unemployment rate was high in July-September 2021 mainly due to the staggering impact of Covid-related restrictions in the country.
Key takeaways:
● Unemployment rate or joblessness is defined as the percentage of unemployed persons among the labor force.
● The latest data is based on a periodic labor force survey, underlining a decline in the unemployment rate amid an improved labor force participation ratio.
● The unemployment rate for persons aged 15 years and above in April-June 2022 was 7.6 percent in urban areas, the 16th Periodic Labour Force Survey (PLFS) showed.
● Female urban unemployment:
○ It showed that the unemployment rate among females (aged 15 years and above) in urban areas declined to 9.4 percent in July-September, 2022 from 11.6 per cent a year ago.
○ It was 9.5 percent in April-June, 2022.
● Male urban unemployment:
○ Among males, the unemployment rate in urban areas declined to 6.6 percent in July-September 2022 as against 9.3 percent a year ago.
○ It was 7.1 percent in April-June 2022.
● Labor force participation rate:
○ Labor force participation rate in CWS (Current Weekly Status) in urban areas for persons aged 15 years and above increased to 47.9 percent in the July-September quarter of 2022, from 46.9 percent in the same period a year ago. It was 47.5 percent in April-June 2022.
● Women participation rate:
○ WPR (in percent) in CWS in urban areas for persons aged 15 years and above stood at 44.5 percent in July-September, 2022, up from 42.3 percent in the same period a year ago. It was 43.9 percent in April-June, 2022.
UNEMPLOYMENT IN INDIA:
● Unemployment is a situation in which the person is capable of working both physically and mentally at the existing wage rate, but does not get a job to work.
TYPES OF UNEMPLOYMENT:
1. Disguised Unemployment:
● It is a phenomenon wherein more people are employed than actually needed.
● It is primarily traced in the agricultural and unorganized sectors of India.
2. Seasonal Unemployment:
● It is unemployment that occurs during certain seasons of the year.
● Agricultural laborers in India rarely have worked throughout the year.
3. Structural Unemployment:
● This unemployment arises when there is a mismatch between the worker’s skills and availability of jobs in the market.
● Many people in India do not get jobs matching their skills or due to lack of required skills they do not get jobs and because of poor education level.
4. Cyclical Unemployment:
● Unemployment is caused due to the business cycle, where the number of unemployed heads rises during recessions and declines with the growth of the economy.
● Cyclical unemployment figures in India are negligible.
5. Frictional Unemployment:
● Frictional Unemployment also called Search Unemployment, refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs.
● In other words, an employee requires time for searching for a new job or shifting from the existing to a new job, this inevitable time delay causes frictional unemployment.
6. Technological Unemployment:
● It is the loss of jobs due to changes in technology.
● In 2016, World Bank data predicted that the proportion of jobs threatened by automation in India is 69% year-on-year.
CAUSES OF UNEMPLOYMENT:
1. Jobless Economic Growth:
● India’s GDP grew at about 7-8% in the last decade, but growth does not translate into creating more employment opportunities for the labor force of the country.
2. Decline of Small Scale and Cottage Industries:
● Industrial policy of the British Government curtailed the growth of small scale and cottage industries.
● Independent India’s preference to large scale industry and new industrial policy of the 1990's resulted in decline of small-scale industries.
3. Joint Family System:
● It encourages disguised unemployment.
● In big families having large business establishments, many such persons are found who do not do any work and depend on the joint income of the family.
● Joint family system is more prevalent in rural areas; hence a high degree of disguised unemployment there.
4. Agriculture:
● Despite agriculture being the biggest employer in the country contributing to 51% of employment, it contributes only 12-13% to the country’s GDP.
5. Skill requirement:
● The huge workforce of the country is associated with the informal sector because of a lack of required education or skills, and this data is not captured in employment statistics.
6. Mobility of Labour:
● Labour mobility is very low in India.
● Because of their family loyalty, people generally avoid migrating to far-off areas of work.
● Factors like diversity of language, religion and customs also contribute to low mobility. Lower mobility causes greater unemployment.
7. Population Growth:
● Rapid growth of population is the major reason for increasing unemployment in the country. In the last decade (2006-2016), India’s population increased by 136 million and unemployment is at a 5 year high in the financial year of 2015-2016.
8. Rush for Government Jobs:
● Many educated youths run behind government jobs due to job profile and security.
● This led to many remaining unemployed due to students preparing for government jobs.
9. Lack of Investment:
● Inadequacy of capital investment has been a key contributor in not generating enough industry that in turn provides employment to the labor force.
GOVERNMENT INITIATIVES:
1. Atma Nirbhar Bharat Rojgar Yojana (ABRY):
● It was launched with effect from 1st October, 2020 as part of Atma Nirbhar Bharat package 3.0 to incentivize employers for creation of new employment along with social security benefits and restoration of loss of employment during Covid-19 pandemic.
2. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):
● MGNREGA is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.
3. Aajeevika - National Rural Livelihoods Mission (NRLM):
● It was launched by the Ministry of Rural Development (MoRD), Government of India in June 2011.
● Aided in part through investment support by the World Bank, the Mission aims at creating efficient and effective institutional platforms for the rural poor, enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services.
4. PM- SVANidhi Scheme:
● Prime Minister Street Vendor's Atma Nirbhar Nidhi (PM SVANidhi) Scheme since June 01, 2020 to provide collateral free working capital loan to Street Vendors, vending in urban areas, to resume their businesses which were adversely affected due to COVID-19 induced lock-down.
5. Pradhan Mantri Mudra Yojana (PMMY):
● It was undertaken by the government to encourage self-employment.
● Under this scheme collateral-free loans up to Rs. 10 lakh, are provided to small/micro business enterprises and to individuals to enable them to set up or expand their business activities.
6. Pradhan Mantri Rojgar Protsahan Yojana:
● It was initiated in 2016-17 by the Ministry of Labor and Employment.
● Here the government pays the entire employer’s contribution (12% or as admissible) towards the EPS and EPF for all sectors to all eligible new employees for the next 3 years from the date of registration of the new employee.
7. Skill India Mission:
● It is implemented by the Ministry of Skill Development and Entrepreneurship with a focus to provide skilling to one crore people under Short Term Training (STT), Recognition of Prior Learning (RPL), and Special Project (SP) across the country for four years with an outlay of Rs. 12,000 crore.
● Under the scheme, a short-duration skill development training program is being imparted to all prospective candidates including candidates belonging to BPL in the country.
8. National Urban Livelihood Mission (NULM), 2013:
● It is a scheme initiated by the Ministry of Housing and Urban Affairs.
● A Centrally Sponsored Swarna Jayanti Shahari Rozgar Yojana (SJSRY) since 1997 has been restructured as DAY - National Urban Livelihoods Mission since 2013.
● It is for all cities with a population of more than 1 lakh or more.
● It was brought in to decrease poverty, gain self-employment and skilled wage employment, and build strong grassroots level institutions.
● The mission would aim at providing shelter equipped with essential services to the urban homeless.
WAY FORWARD:
1. Rapid Industrialization:
● One of the remedies of the unemployment situation in India is rapid industrialisation.
● Increased number of industries will translate into an increased number of employment opportunities.
2. Self-employment promotion:
● Self-employment should be encouraged more with introduction of liability free loans and government assistance for funding.
3. Agriculture subsidies:
● Better irrigation facilities, better farming equipment, dissemination of knowledge regarding multiple crop rotation and crop management should be focused on.
4. Skill development:
● The curriculum should be changed with increased focus on learning and skill development in the latest technologies.
5. Promote labor intensive industries:
● There are a number of labor-intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments.
● Special packages, individually designed for each industry are needed to create jobs.
Go back to basics:
Periodic Labour Force Survey:
● NSO launched PLFS in April 2017.
● It released data about the unemployment rate for both rural and urban annually.
● On the basis of PLFS, a quarterly bulletin is brought out giving estimates of labor force indicators.
○ Unemployment rate: The unemployment rate is defined as the percentage of unemployed persons in the labor force.
○ Worker Population Ratio: WPR is defined as the percentage of employed persons in the population
○ Labor Force Participation Rate: The percentage of persons in the labor force (that is, working or seeking work or available for work) in the population.
● Distribution of workers by broad status in employment and industry of work in CWS.
● The present Quarterly Bulletin is the sixteenth in the series for the quarter of July–September 2022.
Two PLFS approaches:
1. Usual Status (US):
● In this approach, the survey ascertains whether a person had been employed for enough days in 365 days preceding the survey.
2. Current Weekly Status (CWS):
● In this, the survey tries to figure out whether a person was adequately employed in the seven days preceding the survey.
PLFS annual report 2020-2021:
1. Decline in unemployment:
● The unemployment rate saw a decrease of 0.6% and fell to 4.2% in 2020-21, compared with 4.8% in 2019-20.
● This means that only 4.2% of adults who looked for jobs could not get any work in rural and urban areas of the country in 2020-21.
2. Rural and urban gap:
● Rural areas recorded an unemployment rate of 3.3% and urban areas recorded an unemployment rate of 6.7%.
3. LFPR:
● The percentage of persons in the labor force that is working or seeking work or available for work in the population was 41.6% during 2020-21.
● It was 40.1% in the previous year.
4. WPR:
● It was 39.8%, an increase from 38.2% of the previous year.
5. Migration rate:
● Migrants are defined in the survey as a household member whose last usual place of residence, at any time in the past, was different from the present place of enumeration.
● The migration rate according to the survey is 28.9%.
● The migration rate among women was 48% and 47.8% in rural and urban areas, respectively.
6. Migration due to employment:
● Only 4.4% of migration happened due to employment, which is a drastic reduction from the 10% in 2011.