Why they opt out of job market?
Gender imbalance in employment and opportunities of earning livelihood needs immediate correction by drawing the attention of the Government & policy makers
India is a society of “young people’’. With a demographic profile of 65 per cent of the population below 35 years of age, obviously, the country has a lot of advantages. Youths are generally upbeat, vibrant, motivated, more enthusiastic, having more energy, ready to work for long hours, take lesser days of leave and are willing to work for a lower pay. Unfortunately, the situation is just the opposite in India. The data from the Centre for Monitoring Indian Economy (CMIE) indicates that India’s Labour Force Participation Rate (LFPR) has fallen to 40 per cent from 47 per cent in 2016. It is a clear indication that more than half of India’s population in the working age group is deciding to opt out of the job market. To be more specific, fewer youth in the 20-24 age group are working or looking for employment. In 2017, about 49 per cent of them were part of the labour force which dropped to 38 per cent in 2021-22. This should have caused a sharp decline in their employment rate. Yet, despite that sharp 11 percentage point decline in their LFPR, the unemployment rate in the 20-24 age group rose from 32 per cent in 2016-17 to 48 per cent in 2021-22, which shows that nearly half of those in their early 20s,who wanted to work, are unemployed.
Before going further, let us have a basic understanding about certain important terminologies. We need to define the Labour Force (LF) which, according to CMIE, consists of persons who are of 15 years of age and older and belong to the two categories: first employed, and second unemployed who are willing to work and are actively looking for a job. LFPR is the percentage of the working age group, i.e. 15 years or older population that is seeking jobs; it represents the “demand” for jobs in an economy and includes both those who are employed and those who are unemployed. The Unemployment Rate (UER) is the number of unemployed (category 2) as a proportion of the labour force. We, generally, expect that the LFPR will, by and large, remain stable. So, any analysis of unemployment in an economy can be done just by looking at the UER. However, the case of India is different from the rest of the world as the LFPR here is not only lower, but, falling. This affects the UER because the LFPR is the base, i.e. the denominator on which the UER is calculated. The LFPR is around 60 per cent the world over, but, in India, it has been sliding over the last decade and shrunk from 47 per cent in 2016 to 40 per cent in 2021.
The interpretation of data on employment shows that the jobs are available, but, the salaries are so low that they don’t attract young people. So, they either prefer to remain unemployed or to altogether get out of the workforce. This is truer in the case of graduates and postgraduates because there is a total mismatch between education and job industry. This leads to a frustrating situation because, initially, they are offered jobs which are below their qualification and dignity which they decline, but, later on having no choice they are forced to accept the same jobs. Looking at the global employment workforce data, we find that in rich countries, the LFPR is about 60 per cent; in poor countries, it is about 65 per cent; and in lower middle income countries like India, about 53 per cent of those in the working age population are in the labour force.
According to CMIE data, five years ago, India’s LFPR was 48 per cent which consisted of not just those who were working or were looking for work, but, also of those who wanted to work, but were not actively seeking it. An additional 60 million people should have joined the labour force by 2021-22 if our LFPR had stayed at that level. Instead, our labour force has dropped by 22 million and the LFPR has come down to 42 per cent. Some 575 million people should have been either working or looking for jobs if the LFPR had been similar to that of other lower-middle income countries.
Instead, our labour force consists of just 452 million which means about 120 million people who should participate have withdrawn from it. For clarity, let us assume that there are 100 people in the working age group, but only 60 ask for jobs, i.e. the LFPR is 60 per cent. Out of them, 6 don’t get the job. This would imply a UER of 10 per cent. Now, let us consider a different situation, when the LFPR has fallen to 40 per cent and, as such, only 40 people are demanding work. Out of them, only 2 people fail to get a job. The UER would have fallen to 5 per cent and it would have appeared that the economy is doing better on the jobs front. But, in reality, beyond the 2 who are unemployed, a total of 20 people have stopped demanding work. Typically, this happens when people in the working age get disheartened by not finding quality work of their choice. Something similar has happened in the case of India. Every time when the LFPR falls, the UER also falls because fewer people are now demanding jobs — giving an incorrect impression to policymakers that the situation has improved.
Several reasons are attributed to such a dismal situation. The official government version is that a large number of young people of 15-19 age group are enrolled in schools and colleges and are not inclined towards taking jobs. Another reason given is that the emergence of affluent middle class families has made the demands of jobs irrelevant which seems unlikely. Yet another reason is that many young people have shifted to their villages during the pandemic and have started their own businesses or taken jobs under MNERGA. Distribution of free ration has made the workforce idle is quoted as one of the reasons. However, the most convincing answer is women leaving the workforce in large numbers and pushing down the overall labour force participation. According to CMIE data, in December 2021, while the male LFPR was 67.4 per cent, the female LFPR was as low as 9.4 per cent. In 2021, the overall unemployment rate for men was about 9 per cent, whereas for women it was 27 per cent, the situation being worse in urban areas where women unemployment rate is 36 per cent, three times that of men. Main reasons being adverse and insecure working conditions, discrimination at work and societal norms, low wages, violence against women, etc. This gender imbalance in employment and opportunities of earning livelihood needs immediate correction. Undoubtedly, the unemployment situation is serious and demands immediate attention of the government and policy makers.
(The writer is a senior journalist and Chairman, Panwar Group of Institutions, Solan, Himachal Pradesh. The views expressed are personal.)
Source: PTI
