ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Missing the Demographic Window of Opportunity?

Labour Market Changes in India, 2005–18

Unemployment among the young increased sharply as the gap between labour absorption and labour supply widened in India during 2012–18. During this period, the non-agricultural sectors—industry, construction and services–were unable to absorb the rising supply of young adults who were potential job seekers. The growth of rural incomes and rural construction jobs slowed down and manufacturing employment declined by one million jobs. Women responded to the labour supply—demand mismatch by withdrawing from the labour market altogether. The jobs crisis among men aged 15 to 29 years was acute, as they comprised 68.3% of all the unemployed in India in 2018.

Unemployment has become a subject of intense political discussions in India. Particularly so since February 2019, when it emerged that the unemployment rate had reached an all-time high of 6.1%, according to the then as-yet-unpublished Periodic Labour Force Survey (PLFS) (Thomas 2019a). Before this, unemployment had not figured so prominently in public debates in India, to the extent that it does in middle-to-high income countries (Basole and Jayadev 2019).

One of the reasons why unemployment remained a less noticeable issue was because the official rates of unemployment in India were quite low. They were low enough to put many developed countries to shame, quipped Amartya Sen in a monograph he wrote in 1975 (Sen 1999 [1975]: 119). Unemployment rate in India was only 2.2%, according to the National Sample Survey Office’s (NSSO) employment and unemployment survey held during 2011–12, which was the latest officially available major employment statistics before the PLFS was released in May 2019. As Sen (1999) notes, the low rates of unemployment in India were partly on account of the way employment and unemployment were measured. A person who does no job but occasionally—as little as one hour of work for 30 days in a year—assists in their family-owned farm could still be categorised as a worker, as per the country’s official employment statistics.

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Updated On : 24th Aug, 2020

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