IMPRI Team

The issue of unemployment remains a prominent topic for political and social discussion, exacerbated by the COVID-19 lockdown. With this in mind, Centre for Work and Welfare (CWW) at the IMPRI Impact and Policy Research Institute and Centre for Development, Communication and Studies (CDECS), Jaipur organized a panel discussion under The State of Development Discourses – #CohesiveDevelopment on “How to Resolve Unemployment Problem in India

How to Resolve Unemployment Problem in India

Dr Arjun KumarDirector at IMPRI gave a brief presentation to provide an overview of the unemployment crisis in India. The sources of employment statistics in India include Census, National Sample Surveys (NSS), Periodic Labour Force Surveys (PLFS), Labour Bureau, Chandigarh, Government Registries such as Employment Exchange and Migration Data, Private Databases such as Centre for Monitoring Indian Economy (CMIE) and IMPRI, Government Databases such as Employees’ Provident Fund Organisation (EPFO) and MNREGS, Corporate Databases such as Naukri.com and LinkedIn, and Independent HR.

Looking at the trends in unemployment, certain features stand out:

  1.  Since 2010, the unemployment rate has been declining across all age groups.
  2. Starting from 2017, the rate hovered around 4%, rising to 6-7% within two years and jumping to 25% due to the lockdown measures. The rate then moved in tandem with the COVID-19 waves. The rise in the unemployment rate during the second wave was not as devastating as the first one.
  3. Among daily wage workers and salaries workers, the former have been the most hard- hit.
  4. Women’s labour force participation has been declining, especially the youth in the marginalised classes.
  5. India has not been able to reap the benefits of demographic dividend as only 5.5 million additional jobs have been created against 8 million youth joining the labour force during 2017-18.

Lack of policy and statistical architecture including industrial policy and employment policy, youth and female unemployment, and livelihoods in lockdown are pertinent issues facing policy makers and the country.

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Prof Dev NathanEminent Professor; Research Director, Gendev Centre for Research and Innovation, Gurugram, focused on manufacturing exports, which has high employment elasticity of output. Thus, in order to increase employment, the country must increase its share of manufacturing output. This can be achieved by integrating itself into Global Value Chains (GVC).

So far, India has been participating in assembling products through the GVCs. Prof Nathan noted that these chains have maintained, despite the international border restrictions. China had taken advantage of these GVCs to emerge as a manufacturing hub in the world and as a result, reduced poverty and increased employment. However, with the rising wages, manufacturers have moved out of China but have not looked at India as an attractive alternative, limiting labour-intensive exports. An inverted tariff structure, with higher tariffs for components and lower tariffs for finished products, contributes to this problem.

This problem can be ameliorated if low quality production, logistical bottlenecks, low share of synthetics in garment exports, inefficient labor systems dependent on contractual labour, physical and administrative infrastructure, and low research and development (R&D) and innovation are eliminated.

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