By Sravya Vemuri
In its ‘World Employment Social Outlook-Trends 2018’ report, the International Labour Organisation (ILO) projected that Indias unemployment rate had risen to 3.5 per cent in 2018 from the estimated 3.4 per cent. The unemployment rate will remain at 3.5 per cent for 2018 and 2019, which is equivalent to rate witnessed in 2017 and 2016.
Higher incidence of ‘informality
The report pointed out that globally, unemployment is likely to reduce to 192.3 million jobless people in absolute terms in 2018 compared to the 192.7 million in the year 2017. Though the Asia-Pacific region has prospects of employment generation which could add 23 million jobs from 2017-2019, the number of unemployed will continue to increase. This is attributed to the fact that a large number of people from this region, which also includes India, are engaged in the informal sector of the economy. Such an incidence of informality reduces further chances of decreasing poverty in the region.
According to a survey conducted by National Sample Survey Organisation (NSSO) in its 68th round, employees in the informal component were about 75 per cent of total usual status employment in the rural areas and 69 per cent in urban areas. Workers employed in the informal sectors are more vulnerable to the precariousness of the economic cycles in the country. Such a prevalence of the informal sector also makes it difficult to compute the natural rate of unemployment.
The unemployment conundrum
According to data by the Labour Ministry, around ten lakh new people enter the labour market every month. The Asia-Pacific Human Development Report released by the United Nations Development Program (UNDP) showed that between 1991 and 2013, the size of the ‘working age’ population increased by 30 crores. During the same period, India was able to create fourteen crore jobs. This means that more than half the population entering the workforce was unable to find employment. This would have negative repercussions on the economy. The country would not be able to reap the benefits of demographic dividend as people are unable to get into the labour pool.
Macroeconomic instability
The shortage of jobs will get worse with the increased automation, artificial intelligence, and other cutting-edge technology which reduce the need for labour. To overcome this situation, the government of India has introduced various schemes like MUDRA Yojana, Start-up India, and Make in India. These have immense potential for employment generation. However, much more is needed in order to tackle the unemployment rates.
The introduction of two contracting monetary policiesdemonetisation and GSThave had a toll on the employment in the economy. With the rising unemployment, the production process has distorted and resulted in lower output. This has led to a rise in the market prices resulting in higher inflation in the economy. India needs to address the unemployment problem as soon as possible. If we fail to do so, we will be faced with a massive number of unemployed and dissatisfied youth, which can be detrimental to the nation itself.
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