India Together carried this piece. Reproduced below with references
In a widely reported speech, the Prime Minister recently claimed that the 21st century can belong to India as it has three assets that no country has: ‘democracy’, ‘demand’ and ‘demographic dividend’. ‘Demographic dividend’ has become a much bandied phrase in recent years.
The allusion is to India’s current demographic state where the ratio of the working age population to the dependent population (the children and the elderly) is near its peak, a situation that will last another 20 to 30 years. Having a greater proportion of working age people in the population can mean faster per capita economic growth, but only if their full potential is realised. A look at the state of employment in the country shows that India is at a far cry from deriving any advantage from its demographic dividend.
A significant trend of recent years is the increased proportion of boys and girls opting for higher schooling as seen in the accompanying chart showing NSSO 2012 data. The trend in favour of education also extends to young adults between 20-24 years who would typically be enrolled in a college diploma or degree course. Over 25% of young men in this age group were studying in 2012! The increased percentage of youth attending educational institutions in 2012 (compared to 2005) was possible because of a lower fraction going for work.
If enrolment in education is increasing, what is happening to the composition of the new entrants to the labour force? The accompanying chart shows the educational composition of the youth (15-29) labour force and the youth unemployed in 2005 and 2012 using NSSO survey data. (While NSSO surveys underestimate unemployment compared to the census, this is unlikely to affect the trends seen in the data.)
Against this backdrop, there is absolutely no reason for optimism that India will benefit from its demographic dividend any time in the near future. Instead of empty talk, the government needs to present a concrete roadmap of the steps it is taking to promote employment intensive economic growth.
Data Sources:
“Employment and Unemployment situation in India”, NSS report 554, NSSO, Jan 2014
“Report on third annual employment and unemployment survey (2012-13)”, Labour Bureau, Sept 2013
“Employment and Unemployment situation in India”, NSS report 551, NSSO, Sept 2006
Data on workers (tables B1 and B13) from Census 2011 and Census 2001 available at http://www.censusindia.gov.in
Other articles on this subject:
“Unemployment in an era of jobless growth”, N Chandra Mohan, ISID working paper 159, Jan 2014
“Youth employment and unemployment: An Indian Perspective”, A Mitra & S Verick, ILO Asia Pacific Working Paper Series, Mar 2013
In a widely reported speech, the Prime Minister recently claimed that the 21st century can belong to India as it has three assets that no country has: ‘democracy’, ‘demand’ and ‘demographic dividend’. ‘Demographic dividend’ has become a much bandied phrase in recent years.
The allusion is to India’s current demographic state where the ratio of the working age population to the dependent population (the children and the elderly) is near its peak, a situation that will last another 20 to 30 years. Having a greater proportion of working age people in the population can mean faster per capita economic growth, but only if their full potential is realised. A look at the state of employment in the country shows that India is at a far cry from deriving any advantage from its demographic dividend.
Data on employment in India is
provided by three different agencies - the National Sample Survey Organization
(NSSO), the Labour Bureau and the decadal Census. The three agree broadly on
the worker and student populations. It is in identifying the unemployed from
among the non-working population that they come out with widely varying estimates.
There are several reasons for this. Among
them is the difficulty in determining if women engaged in housework, particularly
in rural India, are doing so under duress, being unable to find a job. Another
is in deciding if youth, nominally enrolled in educational institutions but
still looking for a job, are part of the labour force. Problems also arise in deciding
if workers who work in casual jobs for short durations are to be considered as
working or unemployed.
The census with its count of those not
working (even part time) but “seeking or available for work” shows up a far
higher level of unemployment than both the NSSO and Labour Bureau sample
surveys of contiguous years. In the following discussion, the unemployment
numbers are from Census 2011 made available in Sept 2014.
In 2011, over 56 million people aged 15 and above who were not working were seeking or available for work, putting the unemployment rate at 10.7%. This was however not the full extent of job seekers. Just short of a quarter of the work force consisted of “marginal workers” – workers who were able to find work for less than 6 months. Nearly half of the marginal workers were also “seeking or available for work” taking the count of job seekers to nearly 21% of the labour force.
The accompanying chart shows unemployment rates derived from the 2001
and 2011 census for different age groups with a focus on new entrants to the
workforce. Unemployment rates
across all age groups have increased between 2001 and 2011, a period of high
growth of the Indian economy! Jobs have clearly not kept pace with the increase
in job seekers.
In 2011, over 56 million people aged 15 and above who were not working were seeking or available for work, putting the unemployment rate at 10.7%. This was however not the full extent of job seekers. Just short of a quarter of the work force consisted of “marginal workers” – workers who were able to find work for less than 6 months. Nearly half of the marginal workers were also “seeking or available for work” taking the count of job seekers to nearly 21% of the labour force.
Youth and unemployment
Further insights into unemployment may be gained by looking at the new entrants to the workforce. The transition from education to work happens between the ages of 15 and 29. As NSSO data shows, around 90% of children below 15 are enrolled in school while above the age of 30, the numbers attending educational institutions are miniscule.
The age – unemployment
relationship is also striking. Unemployment is highest in the 15-19 age group
and decreases progressively for higher age groups. For youth aged 15-29 as a
whole, the unemployment rate is 21% (counting only those seeking or available
for jobs among the non-working) compared to 5% for people aged 30 and above. Young
men (15-29) account for nearly 85 % of total unemployment among men in 2011!
(Young women account for over 61% of total unemployment among women) The new
entrants to the workforce bear the brunt of unemployment.
Education and
unemployment
The other dimension of
youth unemployment that needs to be explored is its connection to education.
A significant trend of
recent years is the increased proportion of boys and girls opting for higher
schooling as seen in the accompanying chart showing NSSO 2012 data. The trend
in favour of education also extends to young adults between 20-24 years who
would typically be enrolled in a college diploma or degree course. Over 25% of
young men in this age group were studying in 2012! The increased percentage of
youth attending educational institutions in 2012 (compared to 2005) was possible
because of a lower fraction going for work.
If enrolment in education is increasing, what is happening to the composition of the new entrants to the labour force? The accompanying chart shows the educational composition of the youth (15-29) labour force and the youth unemployed in 2005 and 2012 using NSSO survey data. (While NSSO surveys underestimate unemployment compared to the census, this is unlikely to affect the trends seen in the data.)
The comparison of the
situation in 2005 with that in 2012 outlines several trends.
One is that the young entrant to the labour force is increasingly more educated. The second is that it is not the illiterate who are most likely to be unemployed. The relatively better educated youth – those with secondary and higher qualification – have a far greater share in total unemployment than in the labour force. In other words, unemployment is higher in more educated sections of youth. Finally, the share in unemployment of the most educated section, the youth with diplomas and degrees, is actually increasing over time.
What makes it harder for youth with greater education to find jobs? Educated youth naturally have higher expectations from the job and clearly there are not enough jobs that can meet these expectations. The less educated youth, most likely from poorer families, are more likely to settle for just any job be it casual labour or poor quality self employment. The high unemployment among the educated youth in particular reflects the lack of growth of jobs in organized manufacturing and services sectors.
In summary what is abundantly clear is that India faces a severe youth unemployment problem with the relatively better educated sections worse off than the rest. The problem has actually worsened in the decade between 2001 and 2011, with the economy unable to expand jobs for educated youth fast enough despite high GDP growth. With trends showing youth opting for longer years of education, the future entrants to the labour force are going to be relatively more educated and face greater employment challenges.
Data Sources:
“Employment and Unemployment situation in India”, NSS report 554, NSSO, Jan 2014
“Report on third annual employment and unemployment survey (2012-13)”, Labour Bureau, Sept 2013
“Employment and Unemployment situation in India”, NSS report 551, NSSO, Sept 2006
Data on workers (tables B1 and B13) from Census 2011 and Census 2001 available at http://www.censusindia.gov.in
Other articles on this subject:
“Unemployment in an era of jobless growth”, N Chandra Mohan, ISID working paper 159, Jan 2014
“Youth employment and unemployment: An Indian Perspective”, A Mitra & S Verick, ILO Asia Pacific Working Paper Series, Mar 2013
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