CENTRE FOR MONITORING INDIAN ECONOMY REPORT

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Context

A growing number of people, particularly women, are no longer even looking for work in India, according to new data from the Centre for Monitoring Indian Economy Pvt- a Private Research Firm in Mumbai.
They are reportedly frustrated at not being able to find the right kind of job.

Findings of the Report

Labour Participation Rate

Between 2017 and 2022, the overall labour participation rate dropped to 40% from 46%.
About 2.1 crore (21 million) disappeared from the workforce, leaving only 9% of the eligible population employed or looking for positions.
In March 2022, India’s labour participation rate (LPR) fell to 39.5 per cent from 39.9 per cent in February 2022. (This was lower than the rate during the country’s second COVID-19 wave in June 2021, when it was 39.6 per cent.)
An LPR of 39.5 per cent means that over 60 per cent of the employable workforce is not even looking for work.
This situation is ominous for a country like India, which is relying on young workers to drive economic growth.

Don't Want a Job

According to the CMIE, more than half of the 90 crore (900 million) Indians of legal working age don't want a job.
Millions of Indians, especially women, are dropping out of the labour force, tired and disappointed with their failure to find jobs because there are no jobs available.
The phenomenon is called discouraged drop out.

Women workforce

Though women represent 49% of India's population, women contribute only 18% of its economic output, about half the global average.
There are not many employment opportunities and it hurts women and men both but the discrimination is more against women employment in a market with poor employment opportunities.
Reasons like safety, workplace being far from home, transportation, discrimination against women become more apparent in a market where job opportunities are already shrinking.
Women do not join the labour force in as many numbers because jobs are often not kind to them.
For women, the reasons sometimes relate to safety or time-consuming responsibilities at home. Another example - men are willing to change trains to reach their job. Women are less likely to be willing to do that. This is happening on a very large scale.
Half the women in the younger age group are basically neither in the labour force nor trying to find work.

Educated not seeking work

A large part of the dejected population has some degree of education. The CMIE surveys cover the population within the age group of 15-64.
The number of those who are completing education is growing and this demographic of youth over 15-29, who are joining the labour force in larger numbers are not finding work.
There are about 5 million educated youth seeking work each year. These are new people every year looking for work and when they don’t find work, they drop out of the labour force. This also affects the social fabric.

Closure of other sectors

Closure of micro and small enterprises like tailoring, beauty parlours, stationary shops, among others during the COVID-19 pandemic has also resulted in people quitting the labour force.

Disguised unemployment

Employment has not been picking up requisitely and the quality of employment has dropped.
Opportunities have decreased and poor quality employment is replacing better quality employment.
A lot of people have also moved from regular and even casual employment to some form of self-employment, like agriculture.

On one hand, non-agricultural jobs fell by a whopping 16.7 million in March 2022, while this was offset by a 15.3 million increase in employment in agriculture. Such a large increase is usually seen during the harvest season when demand for agricultural labourers rise. But this is unusual for the month of March when harvest was still a month away.

Economists have termed this increase as “disguised unemployment”, in which people, mostly members of a family who were earlier employed elsewhere, now do unpaid family labour in their farms.

Implications

The expectation from India’s demographic dividend is that when younger people get jobs they are going to add to the country's growth. The large share of discouraged workers implies that India will not be able to reap the demographic dividend.
This would mean that India would remain in the middle-income trap, with the K-shaped growth path further fueling inequality.
Failing to put young people to work could push India off the road to developed-country status.

Way Ahead

Overall it’s a reflection of the fact that there is not sufficient demand for work because opportunities are declining.
India needs to create at least 9 crore (90 million) new non-farm jobs by 2030, according to a 2020 report by McKinsey Global Institute. That would require an annual GDP growth of 8% to 8.5%.

https://www.downtoearth.org.in/news/governance/denied-discouraged-why-youths-not-looking-for-jobs-can-be-a-crisis-for-india-82609