Unlike many countries in the world, India has fought off the scourge of the global economic crisis that has resulted in large-scale unemployment. The rate of decline in employment is minor. But there lies a vast gray area in a country where countless young people are still struggling to be gainfully employed.
India is saddled with this problem even as its scorching economy has started spewing out thousands of new opportunities, and a growing number of young people are willing to grab anything on the table.
According to experts, unemployment is almost like an unexploded bomb, and despite many eff orts, the country still has some way to go. A recent research by Business Standard, a publication group, reveals that while India’s business sector has added close to $300 billion of fixed assets over the past decade, labor costs have remained flat at about 6.5 percent during the same period. “Since wages and salaries have increased across the board, it implies that recruitment in manufacturing fi rms is either fl at or may even have declined slightly,” the study says.
Similarly, a survey by the country’s labor ministry for the period October- December 2009 said although the overall scenario improved by about 628,000 jobs during December 2009 over September 2009, in the estimated total labor force of over 520 million in 2009-2010, as many as 9.4 percent remained unemployed nationwide, and it was 10.1 percent in villages where 60 percent of the country’s people live.
“Such numbers, however, provide a partial picture, as they cover only selected industries and relate mainly to formal employment,” says a recent International Labour Organisation report.
“About 86 percent of India’s workers are in informal employment and over 90 percent are in what is known as the unorganised sector. These shares have changed little in recent years, indicating that India’s strong and steady growth has not yet yielded a signifi cant improvement in terms of broadening access to quality employment.” A bleak example of the crisis is a recent incident in a small northern Indian town where more than 100,000 people gathered to apply for 416 jobs offering a mere Rs 5,200 ($115) a month.
The oddity is not so much for its massive turnout for so few vacancies in “lowly positions” such as dhobi or washermen, barbers and water carriers, but for the violence that erupted subsequently when applicants grew frustrated.
“While India has seen resumption of rapid economic growth post crisis, employing youth (aged between 19 and 35 years) is still a big problem,” says Rohit Krishnan, an industry expert at London Business School. “Its eff ects are visible at every segment of society – from the economics of labor market to social unrest, to political dissatisfaction and crime.”
“I think when we are looking at the growth scenarios being outlined for India, we are talking about 8 to 9 percent growth over the next 10 years. And then when we look at the demographic projections, we see that we are going to have a very young labor force,” says International Labor Organisation’s Director and Country Offi cer, India, Tine Staermose. According to her, the average age of an Indian by 2020 is estimated to be 29 years compared with 37 years in China and the United States, 45 years in Western Europe, and 48 years in Japan. “Undoubtedly that is a huge challenge, which brings the urgency to ensure that this labor force is properly skilled to be able to fi nd jobs, and to be provided with decent employment,” she says.
“India’s unemployment problems stem primarily from the unprecedented phase of demographic changes,” says India’s Ministry of Labour and Employment Secretary Prabhat C. Chaturvedi. These changes, he adds, contribute to an ever-increasing size of labor force. According to projections, the proportion of population in the working-age group (15-59 years) is likely to increase from approximately 58 percent in 2001 to more than 64 percent by 2021.
Youth unemployment in urban areas arises from the shift of a large number of rural youth, in search of jobs, to urban areas, and (also the fact that they) don’t find it because of lack of skills that the industry seeks, and lack of the industry’s ability to utilize the skills they have,” says Rohit Krishnan.
According to Mukesh Gupta, a specialist at ILO’s South Asia offi ce, “The overcrowded agricultural sector is also a big contributor to employment woes.” With the shift from agriculture to other vocations being very low, a large number of people are either unemployed or underemployed. Chaturvedi says India has initiated a number of programs for skill development over the past few years. “Our target is to have 500 million trained youth by 2022. Most notable schemes for creating wage employment are the National Rural Employment Guarantee Programme (NREGP) in rural areas and Swarna Jayanti Shahari Rozgar Yojana (SJSRY) in urban areas,” he adds. NREGP, which was launched in 2005, aims to provide every household with at least 100 days of guaranteed wage employment in a year. “This is India’s most far-reaching eff ort to guarantee wage employment. It provided gainful employment to 45 million people in rural India last year,” says Gupta. SJSRY on the other hand seeks to provide jobs to the unemployed and underemployed poor in cities. It also helps them set up self-employment ventures. This scheme, says Chaturvedi, was revamped last year with an idea to encourage the private sector to invest in skill development eff orts. ILO adds that the government and private sector’s pursuit to improve skills development and training could result in the number of people covered under skill development programs rising from 3.1 million to more than 10 million a year in the next few years. This may provide light at the end of the tunnel for many, even though the tunnel may appear long. “The good part is that India will continue to grow between 7 and 9 percent for the next two decades. With all the eff orts that both the government and the private sector is taking, India is going to look totally diff erent from what it has been in the last 200 years,” says Nirupama VG, a human resource and recruitment consultant, and the founder and managing director of Ad Astra Consultants. “India has hardly experienced any structural growth in the past. But all that is changing. While the private sector has been very dynamic [in the past decade], the government too is catching up. And together that can make a big difference,” she adds