The Alarming Rise of Unsecured Jobs in India: Why Skilling Alone Won't Save Us
The recent Rajendra Nagar calamity highlights the desperate pursuit of government jobs among India's youth, indicating a broader socio-economic context where a government job is perceived as a rare ticket to security, status, and upward social mobility.
UnemploymentInformal JobsSkillingEconomic SurveyBudgetEmploymentJobsLabourIndiaReal EstateSep 06, 2024
This desperation for government jobs comes from the rising concern of lack of secured employment opportunities in the country as indicated by the rise in informal jobs devoid of any tenured contracts, benefits such as dearness allowances, gratuity, pension schemes, health insurance, and paid leave among others.
According to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate of the country grew from 7% to 9% in June 2024. Far more alarming is the youth unemployment rate which is as high as 10% as of the end of 2023, and especially among the graduates, at 17.31%.
The Budget and Economic Survey 2024-25 despite its attention to the issue of unemployment has overlooked the question on secured employment. The authors’ research findings suggest that the percentage of employed persons having access to neither any form of social security, tenured contract of at least a year and provision for paid leave is as high as 87% in 2022-23, an increase from 85% in 2018-19.
The government posits the employment crisis as an issue of lack of skilled employees. However, according to the national classification of occupation, the share of employees already engaged in skilled jobs such as in legislative, administrative, medical, technical, professional and managerial posts, have witnessed a reduction from 18% in 2018-19 to 14% in 2022-23.
A perfunctory study of the latest National Accounts Statistics data reveals that India’s labour force continues to rely on agrarian economy with its share in employment increasing from 40% in 2018-19 to 46% in 2022-23 while its share in output (Gross Value Added – GVA) dwindles around 15%.
With agrarian output increasing at a lesser rate than that of employment, it is probably indicating underemployment. Further, given that the entire agrarian sector is beyond the ambit of any labour legislation, the sector is bereft of any labour rights such as minimum wage, social security benefits and secured jobs.
Construction, the other pivotal contributor to employment generation, is also highly informalized with its extent of informalisation marginally rising between 2018-19 and 2022-23.
The rationale behind this technology induced transformation in the production process is rooted in the market logic of cost minimisation and labour rationalisation. Under this situation, relative employment generating capacity of the output contributing sectors can get low by the very production mechanism itself.
Hence, ensuring skill-based employability might not guarantee employment. Further, providing secured jobs adds cost to the private business entities which they might be able to afford but the market logic does not give them the reason to do so.
In this regard, digitisation and technologies used to reduce labour cost, be it by reducing the labour dependency and substituting with technologies and algorithms or be it by reducing the labour cost by cheapening the labour itself through informalisation, is more rational from the business point of view.
Probably the solution remains in not only skilling people to increase their employability. It also requires a parallel push to increase the volume of jobs so that the decrease in recruiting capacity per enterprise can be compensated for with a greater number of enterprises.
In short, the current scenario is as follows — growth-driving sectors are not creating enough decent jobs, other sectors absorbing large chunk of workforce are dominated by informal labour, sectors with relatively larger share of formal employment contribute minuscule portion to overall employment, and on the top of it, introduction of AI and IoT threatens the job prospects of even skilled workers.
Under such circumstances, unfortunately it seems like informality is here to stay, if not expand. Let us not forget that the demand for labour is closely tied with the demand of goods and services in general and India, due to its burgeoning inequality, has a very low domestic demand base. In the face of a global slowdown the perils only could be heightening.
Frequently Asked Questions
What is the current unemployment rate in India?
The unemployment rate in India grew from 7% to 9% in June 2024, with a youth unemployment rate of 10% as of the end of 2023.
What is the percentage of employed persons having access to social security and tenured contracts?
According to the authors’ research findings, the percentage of employed persons having access to neither any form of social security, tenured contract of at least a year and provision for paid leave is as high as 87% in 2022-23.
What is the share of skilled jobs in the Indian economy?
The share of employees already engaged in skilled jobs such as in legislative, administrative, medical, technical, professional and managerial posts, have witnessed a reduction from 18% in 2018-19 to 14% in 2022-23.
What is the impact of technology on employment?
The rationale behind this technology induced transformation in the production process is rooted in the market logic of cost minimisation and labour rationalisation, which may lead to a decrease in employment generating capacity.
What is the solution to the employment crisis in India?
The solution remains in not only skilling people to increase their employability but also requires a parallel push to increase the volume of jobs so that the decrease in recruiting capacity per enterprise can be compensated for with a greater number of enterprises.
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