IIM Lucknow conducted a recent study headed by Prof. D. Tripati Rao from the same Indian Institute of Management Lucknow, along with researchers from the Birla Institute of Technology and Science, Pilani, and the Ministry of Agriculture & Farmers Welfare, sheds light on a concerning trend in India’s economy.
Despite a period of impressive economic growth from 2004-05 to 2017-18, job creation has not kept pace with the expanding working-age population.
Insider’s from Reports
The study, published in the Indian Journal of Labour Economics, analyzed data from the National Sample Survey Office (NSSO) Employment and Unemployment Survey, and Periodic Labour Force Survey Dashboard.
It found that while the agricultural sector, which employs a significant portion of the youth, contributes to employment, it adds relatively low value to the overall economy.
On the other hand, non-farm sectors, with higher economic potential, show reluctance to hire, despite their capacity to boost the economy.
Prof. Rao’s response to report
IIM’s Prof. D. Tripati Rao, a leading figure in the research, highlighted the importance of examining not just the number of jobs created but also their quality. He emphasized, “Apparently, economic growth, rather than creating more jobs, has resulted in net labour displacement.”
The study points out a decline in employment starting in the 1990s, with near-stagnation in 2011–12.
This period of ‘jobless growth’ saw a mismatch between the increasing working-age population and job opportunities.
Reasons for this include a high percentage of self-employed workers, gender disparity in employment, and rising unemployment among highly educated youth.
Prof. Rao further explained, “The new employment structure relies on non-standard types like casual, contract, and fixed-term employment, intertwined with social hierarchy and discrimination, resulting in new forms of precariousness and extending general disparity in the labour market.”
The rise of short-term gig and platform jobs adds to the challenge, with an expected increase to 23.5 million by 2030, according to NITI Aayog. These workers often lack job security, especially in the informal sector as report said.
Positive outcomes of IIM reports for Indian Employment
It also stated that recent improvements in health and education in India may positively influence the conversion of unemployed youth into a high-quality and skilled workforce as said in IIM reports.
The study – Discerning the Long-Term Pace and Patterns of Employment in India – published in the Indian Journal of Labour Economics.c
Calling attention to identifying labour-intensive manufacturing sector stated that the slowdown in employment rate is primarily due to sectors with good potential registering lower employment growth and that despite an increase in the number of people that can work, economic growth has caused in net labour displacement.
How to tackle this problem in a developing economy?
To tackle this issue, the study suggests policy interventions aimed at making the manufacturing sector more labor-intensive for inclusive growth. The researchers believe this could create a ripple effect, benefiting various industries. Additionally, improvements in health and education could potentially convert unemployed youth into a skilled workforce.
The findings of this study underscore the need for comprehensive strategies to align economic growth with job creation and ensure a more equitable distribution of opportunities.
