unemployment essay drishti ias

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Tuesday, february 23, 2021, rising unemployment - the biggest challenge before india.

  What is the issue?

• One of the top Twitter trends recently was “#modi_rojgar_do”, that essentially asks PM Modi to provide more employment.
• In this backdrop, here is a look at the extent of the unemployment problem in India.

What is the unemployment scenario?

• There were around 35 million (or 3.5 crore) openly unemployed people in the country.
• To this existing pool, each year India adds roughly 10 million (or 1 crore) new job seekers.
• But over the past year, several million have lost their jobs.
• As a result, as of January 2021, India had only about 400 million employed.
• But many seem to have regained employment as the economy has started recovering.

What is the concern then?

• At another level, the 400 million number also underscores the stagnancy in India’s employment levels.
• Data also show that the total number of employed people in India had been steadily coming down.
• It was 407.3 million in 2016-17 and then fell to 405.9 million in 2017-18, and to 400.9 million at the end of 2018-19.
• In other words, even with India’s economy growing before the Covid crisis, the employment situation was getting worse.
• That is why the total number of openly unemployed people became 35 million.
• Even this 45 million estimate only captures the openly unemployed people i.e. those who are seeking work and not finding it.
• The actual problem of unemployment is even bigger.

Why is unemployment a more serious issue?

• LFPR  - Given India’s population growth, each year there are close to 20 million (or 2 crore) people who enter the working-age population of 15 to 59 years.
• But not everyone seeks a job.
• If more and more of India’s youth decides not to seek job, India’s labour force participation rate (LFPR) falls.
• India has an LFPR of just about 40%.
• Among women, this participation ratio is even lower.
• In most developed countries, it is around 60%.
• If 60% of all joining the working-age group looked for a job then India would have added almost 15 million each year to the pool of openly unemployed people.
• Growth and employment  - Typically, fast economic growth takes care of unemployment worries.
• However, in India, one cannot assume this to be the case.
• This is because, even when India’s GDP has grown rapidly in the past, it produced only a very small number of well-paying jobs.
• In the ten years from 1999-2000 to 2009-10, India’s total workforce increased by 63 million.
• Of these 44 million joined the unorganised sector, 22 million became informal workers in the organised sector.
• Also, the number of formal workers in the organised sector fell by 3 million.

How does the future look?

• In the coming financial year, India’s GDP growth will show a sharp rebound, given a massive base effect.
• This offers some hope.
• The GDP can continue to go up as more and more companies become more productive by replacing labour with capital (machinery).
• But this will only deepen India’s unemployment problem.
• There is another reason that may aggravate the problem at least in the short to medium term.
• The Union Budget for 2021-22 suggests that the government would not be the prime mover in the economy.
• The principle of “minimum government” essentially undercuts the government’s role in directly creating new jobs.
• the Indian economy is quite weak
• the private sector has already shown its preference by choosing to cut jobs and boost its profits
• The private sector is likely to hold back from recruiting in big numbers in the next couple of years, waiting for Indians to regain their purchasing power.
• But, in the meantime, the unemployed will continue to swell up by the millions each passing month.
• All this remind that it is the rising unemployment, and not GDP growth, that is the biggest challenge before India now.

Source: The Indian Express

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• Recently, the Centre for Monitoring the Indian Economy (CMIE) released data stating that India’s unemployment rate in August 2022 rose to 8.3%.

Key Findings

• This is the highest unemployment rate in the past 12 months. In August 2021, the unemployment rate was 8.35%.
• In August, urban unemployment was 9.6% and rural was 7.7%. 
• Only in two months — February and June — has the rural unemployment rate been higher than the urban unemployment rate.
• There is a significant variance in the unemployment rate across states. 
• Haryana, J&K and Rajasthan have the highest levels of unemployment rate — each with over 30% of the unemployment rate.
• In sharp contrast, there are many states with remarkably low unemployment rates as well. 
• Chhattisgarh has an unemployment rate of just 0.4%. 
• Maharashtra, Madhya Pradesh, Odisha and Meghalaya — all have unemployment rates well below 3%.
• Since the unemployment rate is essentially a ratio between the total unemployed and the total labour force, it can go up whenever the number of unemployed increases more than the increase in the total labour force. 
• while the labour force increased by 4 million, the economy instead of creating new jobs, actually shed 2.6 million existing jobs.
• In August while the total number of unemployed went up by 6.6 million, the labour force only went up by 4 million. Hence the spike in the unemployment rate.

Unemployment Rate

• The unemployment rate is essentially the percentage of working-age people (15 years and above) who are demanding work but not able to get a job. Both aspects of the definition are important. 
• It is calculated by looking at all the people of the working age who are demanding work and then finding out what percentage of them are unable to land a job. That percentage is the unemployment rate.
• Unemployment rate = [Total unemployed / Total Labour Force]
• In other words, unemployment rates are expressed as a percentage of the labour force, not the total population.
• The underlying size of the labour force — that is, the percentage of working-age people demanding work — itself varies over time and is measured by the Labour Force Participation Rate (LFPR).

Challenges/Impacts of Jobless growth 

• Between 2010 and 2020, the number of working women in India dropped to 19% from 26%, according to data compiled by the World Bank. 
• CMIE estimated that female labour force participation plummeted to 9% by 2022.
• A growing reserve of frustrated, unemployed youth threatens to turn India’s demographic dividend of having a young population into a curse. 
• The proportion of Indians employed in agriculture had been falling for decades, but this process flattened some years ago and was reversed by the covid crisis.
• Those who move out of farming mostly find themselves in low-paying construction work and informal services.
• India’s economic growth has been largely services led, with a small pool of skills at the upper end, given a glaring failure in mass education.
• India presents a paradox of skill shortages while being labour surplus.
• Trucks are idle because of the shortage of drivers. The steel industry needs more metallurgists. 
• The healthcare sector is short of nurses and technicians. 
• The construction sector needs civil engineers, hi-tech welders, bricklayers, and so on. 
• It is the government’s responsibility to take initiative and create adequate roles for unemployed people within the main economy.
• Government support for enhancing infrastructure is particularly essential for small and medium-sized enterprises.

Source : IE

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Unemployment 

• September 10, 2021
• Posted by: OptimizeIAS Team
• Category: DPN Topics

Subject – Economy

Context – Joblessness at 10.3% in Oct-Dec 2020; more women unemployed than men.

• Unemployment occurs when a person who is actively searching for employment is unable to find work.
• The most frequent measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labor force.

Unemployment rate = (Unemployed Workers / Total labour force) × 100

Definitions:

• Labour Force Participation Rate : It is the percentage of people in the labour force (those who are working or seeking or available for work) in the population.
• Worker Population Ratio is the percentage of employed people.
• Unemployment rate shows the percentage of people unemployed among the labour force.
• Unemployed : A person who is unable to get work for even an hour in the last seven days despite seeking employment is considered unemployed.

Types of Unemployment in India –

• The PLFS is an annual survey conducted by the National Statistical Office.
• It was started in 2017 and it essentially maps the state of employment in the country.
• It collects data on several variables such as the level of unemployment, the types of employment and their respective shares, the wages earned from different types of jobs, the number of hours worked etc.
• Earlier this job was done by Employment-Unemployment Surveys, which were conducted once in five years.

Calculation Methods

There are two ways and they  differ in terms of the reference period .

• The Usual Status (US)
• The survey ascertains whether a person had been employed for enough days in 365 days preceding the survey.
• The Usual Status is the only one that is showing a reversal in the unemployment trend
• The NSO unemployment number most routinely quoted is the one based on Usual Status.
• The Current Weekly Status (CWS)
• The survey tries to figure out whether a person was adequately employed in the seven days preceding the survey.
• But this approach is not comparable with either the global norm (say the one followed by International Labour Organization) or the private sector practice (such as the surveys done by the Centre for Monitoring Indian Economy or CMIE).
• The CWS is closer to the global norm. The CWS method shows that unemployment didn’t really fall
• The CWS is also more relevant because it is this approach that the NSO uses for understanding quarterly changes in unemployment. So if we start looking at the unemployment rate and LFPR trends compiled using the CWS approach, the emerging picture is more in sync with either the data from CMIE or indeed all the other indicators of the broader.

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• Russia Ukraine Conflict UPSC Notes

Russia - Ukraine Conflict [UPSC Notes]

Latest Developments in Russia – Ukraine Conflict

On Feb 24, 2022, Russia launched a full-fledged invasion of Ukraine . Know more about this in the link given. This page gives a background of the issue with an analysis of the developments before the invasion.

The tensions on Ukraine’s border with Russia are at their highest in years. Fearing a potential invasion by Russia, the US and NATO are stepping up support for Ukraine. In this article, we explain the reason for tensions between Russia and Ukraine, the latest developments, the stand of various stakeholders in the region, and the way forward for the UPSC exam IR segment.

Russia – Ukraine Conflict Background

Post the disintegration of the Soviet Union , Ukraine gained independence in 1991.

• Ukraine was a member of the Soviet Union until 1991 when it disintegrated, and Russia has tried to maintain the country in its orbit since then.
• In 2014, a separatist insurgency started in Ukraine’s eastern industrial heartland, Donetsk Basin, also known as,
• Russia further gained a maritime advantage in the region due to its invasion and annexation of Crimea.
• As a result, both the US and the EU have pledged to safeguard the integrity of Ukraine’s borders.

Image Source: Al Jazeera

Importance of Ukraine to Russia

• Ukraine and Russia have shared cultural and linguistic ties for hundreds of years.
• Ukraine was the most powerful country in the Soviet Union after Russia.
• Ukraine has been a hub for commercial industries, factories and defence manufacturing.
• Ukraine also provides Russia with access to the Black Sea and crucial connectivity to the Mediterranean Sea.

Reasons for Russian Aggression

The chief reasons for Russian aggression are discussed below.

• Russia, considering the economic significance of Ukraine, sought Ukraine’s membership in the Eurasian Economic Community (EAEC), which is a free trade agreement that came into being in 2015.
• With its huge market and advanced agriculture and industrial output, Ukraine was supposed to play an important role. But Ukraine refused to join the agreement.
• Russia claims that the eastward expansion by the North Atlantic Treaty Organization (NATO) which they call “ enlargement ”, has threatened Russia’s interests and has asked for written security guarantees from NATO.
• NATO, led by the U.S., has planned to install missile defence systems in eastern Europe in countries like Poland and the Czech Republic to counter Russia’s intercontinental-range missiles.

Russia – Ukraine Latest Developments

Russia has been indulging in military build-up along its border with Ukraine, an aspiring NATO member. Russia has stated that its troop deployment is in response to NATO’s steady eastward expansion. Russia argues that its moves are aimed at protecting its own security considerations.

• Russia has mobilised around 1,00,000 troops on its border with Ukraine.
• Russia seeks assurance from the US that Ukraine shall not be inducted into NATO.
• This has resulted in tensions between Russia and the West which have been supportive of Ukraine. The U.S. has assured Ukraine that it will “respond decisively” in case of an invasion by Russia.

Image Source: The Hindu

Russia’s demands

• Russia has demanded a ban on further expansion of NATO that includes countries like Ukraine and Georgia that share Russia’s borders.
• Russia asked NATO to pull back its military deployments to the 1990s level and prohibit the deployment of intermediate-range missiles in the bordering areas.
• Further, Russia asked NATO to curb its military cooperation with Ukraine and other former Soviet republics.

The response from the West

• The U.S. has ruled out changing NATO’s “open-door policy” which means, NATO would continue to induct more members.
• The U.S. also says it would continue to offer training and weapons to Ukraine.
• The U.S. is said to be open to a discussion regarding missile deployment and a mutual reduction in military exercises in Eastern Europe.
• Germany has also warned Russia that the Nord Stream 2 pipeline would be stopped if Russia were to invade Ukraine.
• The U.S. threatens Russia by imposing new economic sanctions in case of attempts of invasion against Ukraine.

Russia – Ukraine Crisis: Implications on India

What implications does the Russia – Ukraine crisis have on India? This is discussed in this section.

• Maintaining strong relations with Russia serves India’s national interests. India has to retain a strong strategic alliance with Russia as a result, India cannot join any Western strategy aimed at isolating Russia.
• There is a possibility of CAATSA sanctions on India by the U.S. as a result of the S-400
• A pact between the US and Russia might affect Russia’s relations with China. This might allow India to expand on its efforts to re-establish ties with Russia.
• The issue with Ukraine is that the world is becoming increasingly economically and geopolitically interconnected. Any improvement in Russia-China ties has ramifications for India.
• There is also an impact on the strong Indian diaspora present in the region, threatening the lives of thousands of Indian students.

Also read: India – Russia relations

India’s stand

• India called for “a peaceful resolution of the situation through sustained diplomatic efforts for long-term peace and stability in the region and beyond”.
• Immediately after the annexation, India abstained from voting in the UN General Assembly on a resolution that sought to condemn Russia.
• In 2020, India voted against a Ukraine-sponsored resolution in the UN General Assembly that sought to condemn alleged human rights violations in Crimea.
• India’s position is largely rooted in neutrality and has adapted itself to the post-2014 status quo on Ukraine.

Way forward

• The US along with other western countries is expected to revive the peace process through diplomatic channels in mitigating the tensions between Ukraine and Russia which would be a time-consuming process.
• Experts recommend more dialogues between the west and Russia that exert emphasis on the issue surrounding Ukraine.
• Ukraine should approach and focus on working with its Normandy Format allies, France and Germany, to persuade the Russian government to withdraw assistance for its proxies and allow for the region’s gradual safe reintegration into Ukraine.
• The Russian military expansion in Ukraine can be prevented on the geoeconomic grounds that will hamper its trade in the region especially with the Nord Stream pipeline that can carve out a way of resolving the ongoing crisis as pointed out by an expert.
• Ukraine’s internal disturbances need to be addressed to revive the Minsk II agreement for the development of peace in the region and dissolve the ongoing tensions.

UPSC Questions related to Russia – Ukraine Conflict

What is the relation between russia and ukraine.

Ukraine was a member of the Soviet Union until its disintegration in 1991. Post the disintegration of the Soviet Union, Ukraine gained independence in 1991 and Russia has tried to maintain its influence on the country in its orbit since then.

Why did Ukraine not join NATO?

Although Ukraine has no membership offer from NATO, it has been closer to the alliance since its establishment in 1997. Plans for NATO membership were dropped by Ukraine’s President Viktor Yanukovych, who preferred to keep the country non-aligned.

Is Crimea a part of Russia?

The majority of the world considers Crimea to be a part of Ukraine. Geographically, it is a peninsula in the Black Sea that has been battled over for ages due to its strategic importance. In 2014, Russia invaded and annexed Crimea which was a part of Ukraine due to its declining influence over the region and emerging insecurities.

Russia – Ukraine Conflict [UPSC Notes]:- Download PDF Here

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India’s jobs crisis

  Syllabus: Unemployment

  Context : India is facing a jobs crisis, marked by low labour demand for regular wage work .

Status of High unemployment rate in India:

• The unemployment rate in the country has consistently increased over the last two decades – from 2% in 2010 to 5% in 2015 and 6. 1% in 2018.
• According to the Center for Monitoring Indian Economy , it was over 7% for most of 2021 and 2022
• Over 42% of India’s graduates under 25 were unemployed in 2021-22 as per the State of Working India 2023.
• Despite a rise in GDP growth during the 2000s, the employment growth rate remained unresponsive , indicating a phenomenon of jobless growth

Types of Employment in India:

Causes for high unemployment rate:

• In the past 40 years, economic growth in India has aided a structural shift away from agricultural jobs .
• However, this has mainly moved to construction and not to high-value sectors such as manufacturing or services.
• In the non-farm sector , the link between GDP growth and the pace of job creation has weakened over time , leading to rising unemployment.
• While India has made huge progress in improving its physical infrastructure, it has fallen behind on human infrastructure like education and skills .
• Physical infrastructure investments are focused more on urban areas , which benefited in the 1990s.
• However, from 2000 onwards, with the pace of de-urbanisation of manufacturing gathering momentum, the manufacturing sector is migrating away from urban to rural areas to remain cost-competitive.
• However, poor physical and human infrastructure in rural areas has constrained the growth drivers and limited the size of the manufacturing sector in India.
• Jobs catering to the qualifications of graduates who have studied subjects like agriculture, history, English, philosophy and communication are difficult, and increasingly impossible , to come by.
• In the absence of suitable employment in the private sector for this section, many turn to government jobs.
• However, a rapid increase in the supply of educated youth , coupled with a gradual reduction of public-sector vacancies has resulted in stiff competition for even the most junior positions in government offices.

Jobless Growth in India:

• Weak Responsiveness: Automation and tech introduction lead to jobless growth, but increasing GDP can still boost employment.
• High Responsiveness : In India, labour productivity growth is strongly linked to output growth. So even though GDP increases, output will increase only if labour productivity increases.

Social Impact of Unemployment in India:

Various Approaches to growth and employment:

Measures to address unemployment:

• India needs good infrastructure, both physical and human , to create more jobs.
• There has to be a convergence in the paths of urbanisation and industrialisation to streamline job creation.
• Tier II cities should be focused as these new cities have the potential to generate 70% of the country’s new jobs and GDP over the next 20 years.
• National Employment Policy (NEP ): Implement a focused policy considering both the demand and supply sides. Enhance workforce quality, bridge skills gaps, and create public jobs.
• Urban MGNREGA : Introduce an urban version to provide income security for informal jobs and create public assets in urban areas.
• Industrialization and Agricultural Investment: Rapid industrialization and increased investment in agriculture create more jobs and boost productivity.
• Diversify Agriculture and Promote Agro-Processing : Shift to labour-intensive crops, promote agro-processing for export, reduce wastage, and increase value addition.
• Expand Education and Healthcare : Enhance human capital through education and healthcare expansion, providing employment in the social sector.
• Reform Education, Provide Vocational Training : Improve skills and employability through education system reforms and vocational/technical training.

More than 50% of India’s population is below the age of 25 and more than 65% Is below the age of 35. India’s young demographic is an asset in an ageing world. This clearly presents the case for India to address the jobless growth scenario .

Mains Links:

Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC 2023)

Prelims Links:

• Disguised unemployment generally means (UPSC 2013)

(a) a large number of people remain unemployed (b) alternative employment is not available (c) the marginal productivity of labour is zero (d) productivity of workers is low

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