India Employment Report 2024: Youth employment, education and skills

The labour force participation rate (LFPR) is the percentage of population working or seeking work. For Indians aged 15 years and above, the LFPR rose to 55.2 per cent in 2022 from 50.2 per cent in 2019. This was remarkable because the rate had been steadily decreasing between 2000 and 2019. The rise in LFPR was accompanied by an increase in the worker population ratio (percentage of labour force that is employed) and a decrease in the open unemployment rate (percentage of the labour force that is unemployed but seeking work).

The LFPR among women was 32.8 per cent while among men it was 77.2 per cent. Compared with the latter, the former showed a greater increase since 2019 by 8.3 and 1.7 percentage points, respectively. Similarly, the LFPR rose more in rural areas compared with urban areas – by six and 2.1 percentage points respectively.

In 2022, the large majority of employed Indians were self-employed (55.8 per cent). Regular employment and casual employment were recorded around 22.7 per cent and 21.5 per cent, respectively.

The paper cautions us that the increase in LFPR may not be a sign of progress. There has been a greater increase in labour force participation amongst women in rural areas. However, these rural women were mostly self-employed and undertook unpaid work for the family, which is “the most vulnerable category of self-employment”, the paper adds. Furthermore, the largest gender gap in monthly earnings was found to be among self-employed workers.

The paper cautious against interpreting the decline in the open unemployment rate as a straight positive. It encourages the use of underemployment figures as supplementary data as it can be a better measure to gauge labour trends. This is because most individuals in the country simply cannot afford to be unemployed for long.

The average real earnings (the income of an individual after taking inflation into account), which has been called a good indicator of the quality of employment generation by Jean Drèze, showed no improvements for regular and self-employed workers and increased only slightly for casual workers.

There was a rise in employment in the agricultural sector between 2019 (42.4 per cent) and 2022 (45.4 per cent). The paper finds this concerning since agriculture is a low-productivity sector. It states that there needs to be employment growth in the services and manufacturing sectors, which can generate better quality employment than sectors like agriculture and construction.

According to the paper’s findings, the youth (15-29 years) were less likely than adults (30-59 years) to be engaged in economic activities. Additionally, a higher proportion of young men (53.5 per cent) were engaged in economic activities compared to young women (19.1 per cent).

In 2022, youths as well as adults were more likely to be self-employed. However, the former were more likely to be engaged in unpaid family work (59.6 per cent) than adults (23.6 per cent).

The worker population ratio (percentage of labour force that is employed) in 2022 among people belonging to Scheduled Tribes (ST) and Scheduled Castes (SC) was found to be 66.8 and 54.2 per cent respectively, while for the general category it was 47.6 per cent. But a lower proportion of workers from SCs and STs (5.1 and 7.3 per cent) were engaged in formal employment compared to people from the general category (16.2 per cent).

Women accounted for nearly 95 per cent of the youth population not in employment, education, or training in 2022. Unemployment was higher among educated women than among educated men, the paper notes.

Urban youths (57.7 per cent) participated more in regular work (17.5 per cent) than those in rural areas. It was also found that 61.1 per cent of young women were involved in self-employed work, especially unpaid family work, compared with 42.9 per cent of young men.

The rise in self-employment was accompanied by an ‘informalisation’ of the formal sector between 2019 and 2022. This meant that while there was a rise in the proportion of workers participating in the formal sector in the period, this additional workforce was engaged on an informal basis.

While a higher percentage of formal sector workers had long-term contracts in 2022 than in 2019, the number of regular workers with short-term contracts decreased in the same period. This implies several people with short-term contracts lost their jobs in this time frame.

The paper recommends affirmative action and inclusive policies to eliminate disadvantages in the labour market based on gender and socio-economic background. It also emphasizes on the need for skills training on the one hand and creating opportunities for youths with higher education on the other.

Focus and Factoids by Nidhi Jha.