“Recently, 46000 postgraduates and graduates rush for Haryana sweeper jobs. Rising unemployment is a key problem for India’s policymakers.“
How severe is the unemployment problem in India? Often, it would be useful to look at the evidence on the ground along with the data from the government or private agencies. That should give you a sense on what is the reality on the ground.
Recently, for a sweeper post (job description involves cleaning offices in Government departments), which offered a salary of Rs15000 per month, around 46000 postgraduates and graduates applied, showing the severe unemployment problem on the ground.
According to reports, there were around 6000 postgraduates and 40000 graduates. Over one lakh people applied.
This isn’t an isolated incident.
Recently, there was a stampede-like situation when more than 25,000 applicants turned up for 2,600 vacancies walked in for an interview at Air India Airport Services Ltd recruitment drive for airport loaders.
An India Employment Report 2024 published by the International Labour Organisation (ILO) and the Institute of Human Development (IHD), said nearly 83% of the jobless population under the age of 34.
An unemployment in the country is on the rise. A report from Centre for Monitoring Indian Economy (CMIE) said unemployment rate rose to 9.2 per cent in June, 2024. That is a sharp jump compared with the previous month. The Economic Survey 2023-24 said India needs to generate 78.5 lakh jobs in the non-farm sector by 2030 to cater to the rising workforce.
According to CMIE’s Consumer Pyramids Household Survey, the unemployment rate increased in urban India as well as in rural India. Rural unemployment rate rose to 9.3 per cent in June from 6.3 per cent in May. Urban unemployment rate climbed from 8.6 per cent to 8.9 per cent.
Unemployment rate increased in June alongside a rise in labour participation rate (LPR) and a fall in employment rate. LPR in India stepped up to 41.4 per cent in June, from 40.8 per cent in the previous month. Employment rate, which is the proportion of employed persons in the working age population, fell from 38 per cent to 37.6 per cent in June 2024.
In June, an RBI survey too pointed out that Indians expecting more unemployment and inflation in the months ahead.
In July this year, Citigroup, in a report said India will struggle to create enough jobs for its growing workforce over the next decade even if the economy grows at a pace of 7 percent.
As per the report, Citi estimates India will need to create about 12 million jobs per year over the next decade to absorb the number of new entrants to the labor market. Based on a growth rate of 7 percent, India can only generate 8-9 million jobs a year, Citigroup’s economists Samiran Chakraborty and Baqar Zaidi wrote in a report.
In its counter, the government said the report ‘fails to account for the comprehensive and positive employment data available from official sources such as the Periodic Labour Force Survey (PLFS) and the Reserve Bank of India’s KLEMS data’, Ministry of Labour and Employment said.
Ministry clarified that India has generated over 8 crore job opportunities between 2017-18 to 2021-22, which translates to an average of over 2 crore (20 million) jobs per year. This, despite the COVID-19 disruption, contradicts Citigroup’s assertion a potential lack of employment in India.
But the reality on the ground and findings of independent agencies such as CMIE suggests unemployment is a key issue in India.
Can Government offer a solution?
The solution to give more employment to the workforce should come from the private sector investment, rather than from the government. More private capex will generate to more projects and give employment opportunities to downstream SMEs, MSMEs and thereby to individuals.
The private capital expenditure cycle is expected to revive, according to an article published by the central bank staff in the August edition of the Reserve Bank of India (RBI) bulletin. Capex spending is set to jump to Rs 2.5 lakh crore in 2024-2025 compared with Rs 1.6 lakh crore in fiscal year 2023-2024. Hopefully, this should translate into creation of more jobs.
The rising unemployment is the singlebiggest challenge for the Narendra Modi government in its third term. The economy isnt generating enough jobs contrary to what the government claims going by the evidence on the ground. A government-spending led growth cannot generate enough jobs to cater to this demand. The centre will have to ger more private investments which should lead the growth narrative.