India’s growth rate of 6%-8% is not adequate to create enough jobs in the economy, and the government needs to intervene to tide over the crisis in the labor market, according to research firm Centre for Monitoring Indian Economy Pvt.
“I think the government is falling short of what is required to create good quality jobs,” Mahesh Vyas, managing director at CMIE, said in an interview with Bloomberg Television’s Haslinda Amin and Yvonne Man Wednesday. “There is no safety net and people still quit the labor market. We see it as a sign of distress. People have given up looking for jobs actively and also moved out of the labor force,” he added.
More than half of the 900 million Indians of legal working age — roughly the population of the U.S. and Russia combined — don’t want a job, according to the CMIE. Between 2017 and 2022, the overall labor participation rate dropped from 46% to 40%.
Among women, the data is even starker. About 21 million disappeared from the workforce, leaving only 9% of the eligible population employed or looking for jobs.
Prime Minister Narendra Modi has prioritized jobs but his administration has had little success in solving India’s impossible demographic math. With about two-thirds of the population between the ages of 15 and 64, competition for anything beyond menial labor is fierce. Stable positions in the government routinely draw millions of applications and entrance exams to top engineering schools is really tough.
The paucity of jobs in the non-farm sector is pushing labor into the less lucrative farm sector, Vyas says, a trend that depicts a rise in “disguised unemployment.” India’s economy shed 15 million jobs in the past three years but it’s agriculture sector added nearly 11 million jobs on better prospects, according to data by CMIE.
“The household sector has excess labor, the private sector is unwilling to give more jobs. So this requires government intervention,” Vyas said. (Source: Bloomberg)
