THE CONTEXT: The growing number of young job seekers and the evolving economy, driven by technological advancements, complicate the situation. Recent studies, including the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the International Labour Organisation (ILO) reports, underscore the gravity of the employment crisis, highlighting stagnant manufacturing employment and insufficient job creation rates.
THE ISSUES:
- Technological Displacement: Rapid technological advancements are reducing the need for workers, making it challenging to create enough jobs for the growing number of young job seekers.
- Unincorporated Sector Employment: The Annual Survey of Unincorporated Sector Enterprises (ASUSE) reported that only 21% of establishments used the Internet for entrepreneurial activities. The unincorporated non-agricultural economy employed about 11 crore workers in 2022-23, up from 9.8 crore in 2021-22, but the share of manufacturing employment remains stagnant at around 12%—14%.
- Agricultural Workforce: Despite efforts to transition jobs from agriculture to non-agriculture sectors, 45.76% of the workforce was still engaged in agriculture and allied sectors during 2022-23, exacerbated by the COVID-19 pandemic.
- Job Creation Rate: Reports, including one from Citigroup, indicate that the current rate of job creation is insufficient to meet future demand, highlighting a significant gap between job availability and the number of job seekers.
- Sectoral Employment Distribution: The ASUSE noted that ‘Other Services’ contributed the most to total employment (36.45%), followed by ‘trading’ (35.61%) and ‘manufacturing’ (27.94%).
- Policy and Union Demands: Various stakeholders, including the Swadeshi Jagran Manch and trade unions, have proposed measures such as imposing a ‘robot tax’ to mitigate AI-induced job losses and incentivize job creation. They have also called for convening the long-pending Indian Labour Conference to address these issues comprehensively.
THE WAY FORWARD:
- Employment-Linked Incentive (ELI) Scheme: The government could introduce an Employment-Linked Incentive (ELI) scheme, like the Production-Linked Incentive (PLI) program, targeting labor-intensive sectors like textiles, apparel, toys, furniture, tourism, and logistics. The Indian economy grew by over 8% in the last fiscal year, driven by government capital expenditure, but private investment has lagged, limiting job creation.
- Vocational Training and Upskilling: There is a pressing need to improve the quality of education and vocational training, particularly in partnership with the private sector. This includes focusing on new and advancing technologies to align the workforce with evolving market needs. Only 2.3% of the Indian workforce has undergone formal skill training, compared to 68% in the UK and 96% in South Korea.
- Formalization and Social Protection: Since a significant portion of employment is informal, policies are crucial to formalize these jobs. This can be achieved through robust wage growth, strengthening social protection, and active formalization policies. For instance, the Pradhan Mantri Mudra Yojana (PMMY) has already provided significant funding to self-employed workers, which can be expanded. E-Shram, a government portal for informal sector workers, aims to encourage registration and provide social security benefits.
- Foster Public-Private Partnerships: The government should foster public-private partnerships to identify and develop productive activities that create new jobs. This includes sectors like food processing, which has significant potential for expansion but is currently constrained by factors such as weak infrastructure and lack of modern storage facilities. The private sector’s gross fixed capital formation has risen at a compound annual rate of about 8% since 2014, lower than the 14% during the previous decade.
- Streamlining Regulatory Processes: Simplifying compliance procedures and reducing red tape can encourage private-sector investment and job creation. This includes reforming tax structures and improving cooperation between central and state governments to create a more conducive environment for business growth.
- Investment in Digital Infrastructure: Increasing internet use for entrepreneurial activities can create new job opportunities. The ASUSE report highlighted that only 21% of establishments used the Internet for business purposes, indicating significant room for growth in digital entrepreneurship.
THE CONCLUSION:
Technological innovations should aim to reduce workloads rather than displace workers. An honest acknowledgment of the problem is essential for developing effective mitigative strategies, as economic growth without corresponding employment growth can lead to social and political instability.
UPSC PAST YEAR QUESTIONS:
Q.1 “‘Earn while you learn’ scheme needs to be strengthened to make vocational education and skill training meaningful.” Comment. 2021
Q.2 Economic growth in the recent past has been led by increased labor productivity. Explain this statement. Suggest a growth pattern that will create more jobs without compromising labor productivity. 2022
Q.3 Account for the failure of the manufacturing sector to achieve the goal of labor-intensive exports rather than capital-intensive exports. Suggest measures for more labor-intensive rather than capital-intensive exports. 2017
Q.4 “Success of ‘Make in India’ program depends on the success of ‘Skill India’ program and radical labor reforms.” Discuss with logical arguments. 2015
Q.5 While we found India’s demographic dividend, we ignore the dropping employability rates. What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain. 2014
MAINS PRACTICE QUESTION:
Despite various efforts, the current rate of job creation is insufficient to meet the growing demand, exacerbated by rapid technological advancements. Critically analyze.
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