Unemployment and the Strategy to Overcome it

(General Studies III – Economy Section – Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment. Inclusive Growth and issues arising from it.)

• India, one of the fastest-growing economies, faces a paradox of high unemployment and a significant skill gap. Despite rapid economic expansion, the country struggles with job creation, especially in the formal sector.
• According to the Centre for Monitoring Indian Economy (CMIE), India’s unemployment rate was around 7.8% as of 2023, reflecting the chronic issue of joblessness. Additionally, the Periodic Labour Force Survey (PLFS) 2021-22 highlighted that youth unemployment (15-29 years) stood at 12.9%.
• The India Skills Report 2023 revealed that only 47% of the Indian graduates were considered employable, indicating a glaring gap between education and employability.
• Despite various government initiatives like Skill India and Pradhan Mantri Kaushal Vikas Yojana (PMKVY), the challenge remains. Short-duration skill programs often fail to yield long-term employment, and a lack of emphasis on vocational education exacerbates the issue.

The question then arises: How can India bridge this skill gap and create sustainable employment?

Issues Leading to Unemployment and Lack of Skills –

1. Mismatch Between Education and Industry Needs: A significant disconnect exists between the education system and industry requirements. Many graduates lack practical skills, leading to high unemployability despite possessing academic qualifications.
2. Low Wages and Dignity of Work: Wages in many sectors are insufficient to ensure a life of dignity, particularly in urban areas. The PLFS 2019-20 found that wage earners in the top 10% earn just ₹25,000 per month, indicating that low wages deter many from taking up available jobs.
3. Shortcomings in Skilling Programs: Short-duration skill programs have low success rates in terms of long-term placements. Many individuals return to their villages due to the lack of viable urban opportunities that offer sustainable livelihoods.
4. Regional Disparities in Human Development: States with better human development indicators, such as Tamil Nadu, Kerala, and Himachal Pradesh, also have higher per capita consumption. In contrast, states like Odisha, which focus more on short-term skilling, lag due to inadequate higher secondary, vocational, and higher education opportunities.
5. Inadequate Public Employment: Public employment per capita in India is significantly lower than in most developed countries. This limits the government’s role in providing stable jobs and ensuring a decent standard of living.

Measures to Address Unemployment and Skill Gaps –

1. Decentralised Community Action for Skilling Needs: Grassroots identification of skilling needs through community involvement is essential. Local institutions like gram sabhas can help align government programs with the needs of the community, ensuring that skills are relevant and beneficial.
2. Converging Initiatives at the Local Level: Integrating education, health, skills, and employment initiatives at the local level, particularly through women’s collectives, can ensure community-driven accountability. This convergence can improve human development indicators and create more holistic employment opportunities.
3. Need-Based Vocational Courses in Colleges: Incorporating vocational courses alongside traditional undergraduate programs will make education more practical and employment-oriented. By making such courses compulsory in every college, graduates will be better equipped for the job market.
4. Standardising Nursing and Allied Healthcare Courses: By aligning nursing and allied healthcare professional courses with international benchmarks, India can create a skilled workforce that meets both domestic and international demands, addressing both unemployment and skill gaps.
5. Community Cadres of Crèche Care-Givers: Creating community cadres of crèche care-givers will allow women to work without fear, increasing female labor force participation. These cadres, trained and employed at the local level, can support working women while providing dignified employment.
6. Investing in ITIs and Polytechnics: Strengthening Industrial Training Institutes (ITIs) and polytechnics as skill hubs can ensure that vocational education is up-to-date and accessible. These institutions should act as feeder schools, particularly in regions lacking vocational infrastructure.
7. Introducing Enterprise and Start-up Skills in High Schools: Incorporating enterprise and start-up skills into the school curriculum will foster innovation and entrepreneurship from a young age. This will prepare students for both traditional employment and self-employment opportunities.
8. Co-sharing Model of Apprenticeships: A co-sharing model for apprenticeships, where the government and industry share costs, will ensure that skilling programs are aligned with industry needs. This will enhance employability and ensure that skills acquired are practical and marketable.
9. Streamlining Working Capital Loans for Women-led Enterprises: Ensuring access to working capital loans for women-led and first-generation enterprises will enable them to scale up operations. This will encourage entrepreneurship and contribute to job creation.
10. Universal Skill Accreditation Programme: A universal skill accreditation program, jointly sponsored by the state and industry, will ensure that skill providers maintain high standards and that candidates receive quality training.
11. Utilising MGNREGA Funds in Water-Scarce Blocks: Focusing MGNREGA funds on water-scarce and deprived blocks can improve livelihoods through income-generating activities. This will enhance the productivity of wage earners and provide more sustainable employment options.
12. Scaling Up Apprenticeships: Expanding apprenticeship programs will help absorb more youth into the workforce. Government subsidies should be linked to dignified wages upon successful completion of apprenticeships, ensuring that employment leads to a higher standard of living.

To achieve “Viksit Bharat” by 2047, India must prioritize inclusive growth by bridging the unemployment and skill gaps. Aligning education, skill development, and industry needs, with strong government and community support, is essential. By creating dignified jobs, India can harness its demographic dividend, ensuring shared prosperity and a resilient workforce, driving the nation towards a $30 trillion economy and a brighter future.