Although India has boosted its worker-population ratio (WPR) and dampened the unemployment rate by creating about 114 million jobs between 2017-18 and 2022-23, the majority of such jobs have been in the agricultural segment. According to a report by Icra, nearly 53 per cent of jobs created during the period stemmed from the agriculture sector, reflecting a lack of salaried jobs and growing disguised unemployment in the agri sector, Icra has backed upon the newly introduced employment-linked schemes to address the issues.
According to the periodic labour force survey (PLFS), India’s job creation grew at a compound annual growth rate (CAGR) of 4.4 per cent, which is higher than that of 0.9 per cent in population over the period from 2017-18 and 2022-23. The growth in the workforce was in line with the growth in gross value added during the period.
However, Icra has pointed towards the underlying issues with the headline numbers. As the jobs mainly stemmed from agriculture, the value-added per worker (VAPW) declined during the period, leading to a fall in labour productivity and an increase in disguised unemployment in the sector.
The self-employed segment witnessed a growth of 6.4 per cent during the period, while the salaries jobs registered a CAGR of 2.6 per cent. The reason for such difference is attributed to a rise in helpers in household enterprises along with the lack of salaried job opportunities.
The unemployment rate in the urban areas remains elevated at 5.4 per cent as compared with 2.4 per cent in rural areas, as per PLFS which indicated the overall decline in the unemployment rate from 6.1 per cent in 2017-18 to 3.2 per cent in 2022-23.
Icra has suggested a need to shift from excess farm labour to non-farm jobs to have a higher VAPW. India needs to create around 7 million non-agri jobs every year between 2024-25 and 2033-34 to address the issue.
The rating agency has pointed towards the issues in the labour market such as low levels of formalisation, high unemployment rates among educated youths and low level of growth in the creation of salaried jobs.
The measures introduced by the Centre such as a three-part employment-linked scheme along with a skilling programme to address the issues prevailing in the country’s labour market are good steps going ahead, as per Icra. However, Icra stated that the success would entirely depend upon the way these are executed.
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