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Introduction:

India, the world’s second-most populous country, faces significant employment challenges. As of December 2022, India’s unemployment rate stood at 7.9%, according to the Centre for Monitoring the Indian Economy (CMIE). Despite a growing economy, the creation of quality jobs has not kept pace, leading to widespread joblessness and underemployment. This situation is exacerbated by structural, economic, educational, and demographic factors.

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Reasons Behind India’s Job Creation Challenges:

• Structural Issues:
  • Jobless Growth: Despite robust GDP growth, the employment rate has not seen a corresponding increase due to the phenomenon of jobless growth. This is largely driven by automation and labour-saving technologies, which have reduced the need for human labour in many sectors.
    For example: India’s employment elasticity hovers around 0.18 to 0.20 (RBI).
  • Informal Sector Dominance: A significant portion of India’s workforce is employed in the informal sector, which lacks job security and benefits. Approximately 80% of Indian workers are engaged in informal employment, which contributes to economic instability and poor working conditions.
• Economic Factors:
  • Decline in Manufacturing Jobs: The manufacturing sector has struggled to create sufficient jobs.
    For example: Despite initiatives like “Make in India,” the sector employs only around 30 million people, down from 50 million in 2017, due to low investment in labour-intensive industries.
  • Agricultural Dependence: Around 40% of the workforce is still engaged in agriculture, a sector characterised by low productivity and disguised unemployment. This dependence on agriculture limits the potential for job creation in more productive sectors.
• Educational and Skill Gaps:
  • Mismatch Between Education and Industry Needs: The Indian education system often fails to equip students with skills that are in demand in the job market. This skills gap results in a significant portion of graduates being underemployed or unemployed.
    For example: India Skills Report (ISR) pointed out that only 45.9% of graduates are employable in India. 
  • Underemployment: Many graduates are forced to take jobs that do not match their qualifications due to a lack of suitable employment opportunities, leading to widespread underemployment and job dissatisfaction.
• Demographic Pressures:
  • Rising Workforce: Every year, approximately 12 million people enter the workforce. However, the economy has not grown rapidly enough to absorb these new entrants, leading to increased unemployment and underemployment.
  • Gender Disparities: Women’s participation in the labour force remains significantly lower than men’s, which constrains the overall employment potential of the economy.

Measures to Improve Employment Generation:

• Enhancing the Manufacturing Sector:
  • Incentivize Labor-Intensive Industries: Providing subsidies and tax breaks to industries like textiles and leather, which can generate a large number of jobs, is crucial. This can help create more employment opportunities in manufacturing.
  • Boost MSMEs: Strengthening support for Micro, Small, and Medium Enterprises (MSMEs) through easier access to credit, technology, and markets can significantly enhance job creation.
• Educational Reforms:
  • Align Education with Industry Needs: Updating curricula to include skill-based training and vocational education that align with market demands is essential. This can bridge the skills gap and make graduates more employable.
  • Strengthen Public Education and Training: Investing in public education and vocational training centres to enhance the quality of the workforce is critical for long-term employment growth.
• Promoting Formal Employment:
  • Encourage Formalisation: Implementing policies that make it easier for informal businesses to transition to the formal sector can provide benefits like social security and healthcare, improving job quality and stability.
  • Regulatory Reforms: Simplifying labour laws to make it easier for companies to hire and retain employees in the formal sector can boost formal employment.
• Inclusive Growth
  • Increase Female Labour Participation: Creating supportive policies for women, such as maternity benefits and safe workplaces, can encourage higher participation in the workforce, thereby increasing overall employment.
  • Focus on Rural Employment: Effective implementation of programmes like MGNREGA can provide employment in rural areas, reducing migration to cities and balancing employment opportunities across regions.

Conclusion:

India’s job creation challenges are multifaceted, involving structural, economic, educational, and demographic factors. Addressing these requires a comprehensive strategy that includes boosting labour-intensive industries, aligning education with market needs, promoting formal employment, and ensuring inclusive growth. By implementing these measures, India can better harness its demographic dividend and ensure sustainable economic development.

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