Economic Growth vs Rising Unemployment
Economic Growth vs Rising Unemployment
Analysis of International Labor Organization (ILO) report
GS-3: Indian Economy
(IAS/UPPCS)
Relevant for Prelims:
International Labor Organization (ILO), United Nations, Economic Development, Unemployment, Unorganized Sector.
Relevant for Mains:
Economic growth and unemployment-data, Causes of unemployment in India, Way forward, Conclusion.
24/04/2024
Source: Jansatta
Context:
Presently, India's GDP rate is at a high level of economic progress. But despite continued good growth rate, many old problems remain the same in India. The common man of India is very frustrated and surprised by this jobless growth of the Indian economy. For example, the problem of unemployment or the issue of increase in employment opportunities has always affected the Indian society and Indian economic policies.
- This article is based on an International Labor Organization (ILO) report which presents a very worrying picture of India's per capita economic growth.
Economic Growth and Unemployment:
According to the report of the International Labor Organization (ILO), a United Nations organization-
- Currently, the rate of underemployment in India is higher than the unemployment rate.
- In terms of employment in India, the total labor force in India has increased by 17 crores since 2000, while the number of unemployed has increased from 92 lakhs to about 2.5 crores.
- The unemployment rate in India has more than doubled in the last twenty-three years.
Unemployment during Corona epidemic-
- During the Corona epidemic in the year 2019, the number of unemployed in India was approximately three crore or 5.9 percent.
- Then in the year 2022, the total number of unemployed came down to 2.29 crores and the unemployment rate came down to four percent.
- This clearly shows that unemployment remains an unending problem in India, despite good economic growth rates.
Availability of employment:
- At present, daily work in India is fixed at an average of eight hours.
- A large section of the Indian population is getting very short term employment on a daily basis.
- Some people are employed for five hours, some for three hours or some for less.
Impact:
- Due to this, the daily income of such people is very low, but employment is available to them.
- The underemployment rate was equal to 8.1 percent among men and women in 2012, which increased to 9 and 9.6 percent respectively in 2019.
- However, this rate decreased in 2022 and now it has been recorded at 7.7 percent in men and 7.1 percent in women.
Self-Employment (Unorganized Sector):
- The unorganized sector in Indian society includes people like roadside vendors, milk and vegetable sellers, and people who work as 'electricians' and 'plumbers' in a society.
- Due to very low daily income, these people are not financially capable.
- From the year 2000 till now, fifty to fifty-five percent of the total labor force in India is dependent on one's own efforts for employment, which has been kept in the category of self-employment in this report.
- In the year 2000, there were 52.5 percent people in this category, then in 2022 their number increased to 55.8 percent.
Regular Employment:
- The percentage of people under regular employment in India has increased continuously till the year 2019, but after that it has seen a decline.
- According to the data, in the year 2000, 14.2 percent of the total labor force in India was in regular employment, whereas in 2012, their percentage increased to 17.9 and in 2019, it was the maximum of 23.8 percent, but in 2022, there was a significant decline in it. And it became 21.5 percent.
- In the category of regularly employed workers, about 60 percent of the people do not have any written contract or terms of employment.
Irregular Employment:
- The percentage of temporary employees in India is continuously decreasing. For example, in the year 2000 it was 33 percent, which decreased to 22 percent in the year 2022.
Salary:
- All types of employment in India, be it regular or irregular or self-employed, have seen a decline in average per capita wages in the last decade.
Regular Workers:
- According to the data, the average monthly salary of regular workers in the year 2012 was Rs 12,100, which was found to be Rs 11,155 in 2019 and Rs 10,925 in 2022.
Irregular Workers:
- In the category of irregular employment, the salary is much less than that of regular workers, but there has been a comparative increase in this salary in the last decade.
- In the year 2012, the average salary per month for casual employees was Rs 3700, which will increase to Rs 4712 in 2022.
Unorganized Sector:
- The salary of self-employed or self-reliant workers in the unorganized sector was Rs 7017 per month in 2019, which was found to reduce to Rs 6840 in 2022.
Causes of Unemployment in India:
According to the report of International Labor Organization-
- Lack of skilled training: The main reason for more than eighty percent of youth in India being unemployed is their not being very skilled in professional work.
- Retrenchment of employees: The main reason for unemployment in India is the retrenchment of employees by every organization during Corona.
- Dependence on Agriculture: Even today a large part of India's population depends on agriculture for employment.
- Lack of employment in service sector: India's economy is being driven by the service sector since the nineties. But its contribution to employment is comparatively very less.
- The service sector contributes about 55 percent to the GDP in India.
- Poor economic policies: Due to poor economic policies, the possibility of increase in unemployment increases.
- Dominance of the unorganized sector: A significant share of employment in India is in the unorganized sector, which lacks employment security, social-security benefits and stable income. Workers in the unorganized sector face uncertain employment prospects, which contributes to overall unemployment.
About International Labor Organization:
- International Labor Organization was established in the year 1919. In the year 1946, ILO became a specialized agency of the newly formed United Nations.
- At present ILO has 187 members. The current Director-General of the ILO is Guy Ryder.
- Its headquarters is in Geneva – Switzerland.
- This organization was awarded the Nobel Peace Prize in the year 1969 on its 50th anniversary.
- This organization brings together governments, employers and workers of member countries. It sets labor standards, develops policies, and develops programs that promote a decent work culture for all women and men.
- In the year 2019, ILO released ‘ILO Centenary Declaration on the Future of Work, 2019’.
Way forward:
- India may be able to reduce the unemployment rate to a great extent by adopting a comprehensive approach including skilling people, better education, focusing more on labour-intensive sectors, etc.
- New reforms are needed in economic policies to increase employment in agriculture, manufacturing and service sectors. If GDP in the economy grows continuously then accountability of economic policies should be 100 percent fixed for increasing employment and per capita income. Otherwise, GDP growth will fail to set a very positive tone for economic growth.
Conclusion:
This report of ILO makes clear the dire conditions of unemployment in India. According to this report, more than fifty percent of the people are in the category of self-employed in the unorganized sector and about 25 percent of the people are earning their living through regular employment. This means that 75 percent of the people in the country have employment in their lives, but there is a lack of stability in employment.
There is discussion that if India's economy becomes five trillion dollars then unemployment will be reduced to half. This seems far away from the ground reality.
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Mains Question
Despite economic development in India, unemployment is at its peak. Discuss the solutions to the causes of unemployment.