India Employment Report 2024 - Part 01

India Employment Report 2024 - Part 01

(இதன் தமிழ் வடிவத்திற்கு இங்கே சொடுக்கவும்)

Introduction

• The India Employment Report 2024 is the third publication in a series by the Institute for Human Development that focuses on labor and employment issues in India.
• The first report, India Labour and Employment Report 2014: Indian Workers in the Era of Globalization, marked a significant milestone.
• It provided a comprehensive analysis of the employment landscape in India, particularly in light of globalization.
• The second report, India Employment Report 2016: Challenges and the Imperative of Manufacturing-Led Growth, offered a detailed examination of the changing characteristics of India’s labor force.
• This report also identified key employment challenges facing the nation.
• It emphasized the necessity of a manufacturing-focused growth strategy to tackle these issues effectively.

• The India Employment Report 2024 builds on these earlier findings.
• It explores the current state of labor and employment in India while addressing recent developments and future challenges.
• The Institute for Human Development has collaborated with the International Labour Organization (ILO) to produce the 2024 report, which focuses on youth employment, education, and skills.

• Based on an analysis of trends and patterns in the Indian labor market over the past two decades, the report examines the impact of the COVID-19 crisis.
• It highlights the emerging characteristics of the employment challenges currently facing the economy, as well as the relationship between economic growth and employment.
• The report provides an in-depth analysis of the youth labor market, identifying key youth employment challenges and the critical links to education and skills development.
• Additionally, it reviews existing strategies and suggests new policies and approaches to effectively address these emerging challenges, with particular attention to youth employment.

Sustained and High Economic Growth

• India has experienced significant economic growth since the 1980s, particularly accelerating in the 1990s with the liberalization of the economy.
• Growth in the 2000s: The growth rate has reached as high as 8 percent in some years.
• Post-2008 Decline: After 2008, the growth rate has declined substantially due to the global financial crisis and collapsed during the COVID-19 pandemic in 2020 and 2021.

• Despite these disruptions, the economy has maintained an average growth rate of over 6 percent over the past four decades.
• Current Status: Growth has stabilized since the end of the pandemic, positioning India among the fastest-growing major economies in the world.

Future Projections

• Sustained Growth: India is expected to sustain economic growth of 5–6 percent over the next 15 years.
• Projected Economy Size: It is projected to become the third-largest economy in the world by 2027 and to reach a GDP of US $7 trillion by 2030.

Factors Contributing to Growth

• Demographic Advantage: A large and youthful population.
• Investment in Infrastructure: Significant investment in digital and infrastructure.
• Economic Reforms: Reforms in the goods and services tax and improved the service delivery through technology.
• Increased Tax Revenues: The government’s financial resources have expanded due to rising tax revenues.
• According to estimates, the Indian economy grew by 7.3 percent and 7.2 percent in 2022 and 2023, respectively, demonstrating resilience in economic growth, particularly in the post-pandemic period.

Globalization and Trade

• The Indian economy has gradually globalized since the 1990s:
• Exports Growth: The export of goods and services as a percentage of GDP increased from 6.3 percent in 1984 to nearly 22 percent in 2022.
• Composition of GDP: The share of goods and services in GDP rose from 7.7 percent in 1984 to 23.6 percent in 2018.
• Role of Services: Service exports, particularly in software and IT-enabled services, have significantly contributed to growth.

Societal Impact

• The high rate of economic growth has led to important changes in Indian society:
• Poverty Reduction: A significant decline in absolute poverty levels.
• Improved Living Standard: Enhancements in living standards and various social and human development indicators.
• Human Development Index: Despite these improvements, India’s Human Development Index remains low compared to other countries.

Per Capita Income and Inequality

• Per Capita Income Rankings: India has the lowest per capita income among G-20 countries, estimated at US $2,601 in dollars and US $9,073 in purchasing power parity (PPP).

• Comparison with Other Nations: Gross national income per capita in 2022 was US $8,210 for India, US $21,250 for China, and US $77,530 for the United States.

Regional Disparities

• Within India, economic growth has not been evenly distributed:
• State Variations: In 2021, the per capita state domestic product in Delhi was more than eight times that of Bihar and six times that of Uttar Pradesh.

• Slow Growth States: Between 2011 and 2021, states like Bihar, Uttar Pradesh, Rajasthan, Jharkhand, Manipur, Meghalaya, and Assam experienced slow growth compared to other regions.
• Opportunities for Future Growth
• Working-Age Population: An increasing working-age population contrasts with the population decline in developed countries and China.

• Infrastructure Expansion: Continued development in digital, physical, and social infrastructure, especially in education, is expected to drive future growth.
• Global Supply Chains: India's role in global supply chains, through output-incentive plans and a growing domestic consumer market, presents additional growth opportunities.

Indian Labour Market

• Impact of Economic Growth
• While economic growth has positively influenced the country’s labor market conditions, it has not led to a radical structural transformation in employment.
• Agriculture to Services Shift:
• The share of agriculture in total employment declined from 60 percent in 2000 to around 42 percent in 2019.

• This decline has largely been absorbed by the construction and services sectors, with their share in total employment increasing from 23 percent in 2000 to 32 percent in 2019.
• Stagnation in Manufacturing:
• The share of manufacturing in total employment has remained relatively stagnant, hovering around 12–14 percent.
• Productivity and Employment Structure
• An important change in the labor market has been the increase in labor productivity, largely due to rising capital intensity.
• Regular and Formal Sector Workers:
• The proportion of regular workers increased from 14 percent in 2000 to 21 percent in 2019.
• Formal sector workers rose from 12 percent to 18 percent in the same period.
• Informal Employment:
• Despite these increases, about 90 percent of workers remain informal, including informal workers within the formal sector.
• Labour Income:
• The share of labor income in total income has been declining and, as of 2019, was still below its 2000 level, despite some recovery.

Characteristics of the Indian Labour Market

• The Indian labor market exhibits several features typical of a lower-middle-income country:
• Growth Pattern:
• India’s growth has been services-led, differing from the manufacturing-driven growth seen in many developed countries.
• While agriculture’s share in total employment has declined, it largely shifted to services, which accounted for 23 percent of total employment.
• In 2022, agriculture contributed only 14 percent to GDP, compared to services at 55 percent and manufacturing at 18 percent.
• Unemployment Rate:
• The open unemployment rate was historically low, around 2–3 percent, but rose to about 5.8 percent in 2019 (though it declined again in 2022).
• This low unemployment rate indicates a lack of sufficient livelihood opportunities, common in developing economies.

• Informal Employment:
• Approximately 90 percent of workers are informally employed.
• Although the share of regular and formal sector workers has increased, many regular workers in the formal sector remain informal.
• Self-employment constitutes about half of total employment, one of the highest rates globally.
• Market Segmentation:
• The labor market is highly segmented by gender, location, occupation, social groups, and geographical regions.
• Although the earnings gap across gender and other social categories has narrowed, significant socio-economic hierarchies in access to employment, education, and earnings persist.

Women’s Labor Force Participation:

• The labor force participation rate for women is low, at around 25 percent of the total female working-age population in 2022.

• Participation increased during the pandemic due to a rise in subsistence employment.
• India has one of the lowest female labor force participation rates in the world, reflecting considerable gender inequalities.

Employment challenges

• Slow Employment Generation and Lack of Structural Transformation

Overview

• Despite reasonably high economic growth, India has not seen a corresponding expansion in productive employment opportunities.
• This phenomenon is characterized by a declining employment intensity in the growth process.

Services-Led Growth:

• The growth trajectory has primarily been services-led, unlike the manufacturing-led growth experienced by most developed countries during their development.
• This has resulted in a slow and “stunted” process of structural transformation in India.

Labour Market Inequalities and Technological Challenges

• Impact of Technology
• Recent technological developments have significantly altered the labor market landscape:
• Increasing Capital Intensity:
• Over the years, capital intensity has risen, leading to a lower employment intensity within the growth process.
• Changing Skills Composition:
• The demand for high-skill jobs has increased, while low-skill job opportunities have contracted, exacerbating labor market inequalities.
• Inequalities in the Labor Market
• The Indian labor market exhibits high levels of inequality across various dimensions:
• Regional Disparities:
• Significant differences exist in employment outcomes based on region, social groups, gender, and occupation.
• These disparities contribute to broader societal inequalities.

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