Insights from the India Employment Report 2024
Context:
The India Employment Report (IER) 2024, released by the Institute for Human Development and International Labour Organization, sheds light on the trickle-down effect of economic growth on the working class amidst a backdrop of 5.4% average real economic growth from 2015-16 to 2022-23.
- It highlights the divergent trends in employment and income between rural and urban areas, raising questions about the implications for the urban poor.
- This editorial delves into the dynamics of employment and wages in urban slums, drawing parallels with the findings of the IER 2024 and advocating for measures to address the challenges faced by the urban poor.
Relevance:
GS-02, GS-03 (Employment, Growth & Development, Government Policies & Interventions)
Mains Question:
Critically analyze the recent trends in India’s labor market, focusing on the implications for economic growth and social welfare. Discuss potential policy measures to address challenges related to job quality, income inequality, and demographic dividend. (250 words)
Dimensions of the Article:
- Key findings of the IER 2024
- What does the India Employment Report (IER) 2024 say
- What is trickle-down effect
- Causes of the Issue
- Suggested Measures
Key findings of the IER 2024:
- Despite overall improvements in labor force participation and employment rates, employment conditions in India remain poor.
- Challenges include stagnant or declining wages, increased self-employment among women, and a higher proportion of unpaid family work among youth.
- India’s youth account for nearly 83% of the unemployed workforce, with 65.7% of them having secondary or higher education.
- Youth employment and underemployment surged between 2000 and 2019, particularly affecting educated youth.
- The Labor Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR) deteriorated between 2000 and 2018 but showed improvement after 2019, coinciding with economic distress periods.
- Despite some improvements in labor indicators, India’s job market faces challenges, especially with the dominance of informal work and lack of necessary skills among the youth.
- Wages have remained low, with a significant portion of workers not receiving minimum wages.
- There’s a rapid rise in digitally mediated gig and platform work, contributing to the informal sector without adequate social security provisions.
- Future migration rates are expected to increase, particularly from eastern to western regions, exacerbating regional disparities.
- India faces a substantial gender gap in the labor market, with low rates of female labor force participation and unemployment challenges among educated women.
- Policy recommendations include integrating employment creation into macroeconomic policies, supporting small enterprises, and improving agricultural productivity.
- Strategies for enhancing job quality include investing in sectors like healthcare and the digital economy and fostering inclusive urbanization policies.
- To address labor market inequalities, policies promoting women’s participation, skills training for disadvantaged groups, and combating discrimination are essential.
What does the India Employment Report (IER) 2024 say?
- The IER 2024 highlights the divergent trends in employment and income between rural and urban areas, with a relatively higher unemployment rate in urban areas despite higher average monthly earnings.
- It underscores the need for further investigation into the implications of this disparity for the urban poor and calls for measures to promote economic mobility and decent work in urban India.
What is trickle-down effect?
- The trickle-down effect refers to the notion that economic benefits, such as increased wealth and income, generated by policies aimed at stimulating economic growth will eventually “trickle down” to the lower socio-economic strata of society.
- However, the effectiveness of this phenomenon in improving the lives of the working class, particularly in urban slums, remains questionable, as evidenced by the findings of the IER 2024 and survey data.
Causes of the Issue:
- Occupational Patterns: The survey data reveals that unskilled labor remains the most stable and significant occupation in urban slums, highlighting the prevalence of low-wage, precarious employment in these areas. Despite fluctuations in employment trends, occupations such as petty businesses, construction work, and domestic service continue to dominate the urban slum economy.
- Income Fluctuations: Income trends in urban slums exhibit significant fluctuations, with real incomes declining for certain occupations, such as government service and medium to large shop ownership, while increasing for others, such as unskilled labor. This disparity underscores the need for gainful employment options and social protection measures for vulnerable workers in urban areas.
- Gender Dynamics: The gender composition within different occupation categories in Kolkata shows a decline in overall female workforce participation in slum areas, despite an increase observed in non-slum areas. This gender disparity highlights the unique challenges faced by women in accessing decent work and economic opportunities in urban slums.
Suggested Measures:
- Promoting Decent Work: Government policies should focus on promoting decent work opportunities in urban areas, including investment in skill development, vocational training, and job creation programs targeted at vulnerable populations, such as slum dwellers. Additionally, social protection measures, including minimum wage guarantees and access to healthcare and education, are essential to ensure the well-being of urban workers.
- Addressing Gender Inequality: Efforts to promote gender equality in the workforce should be prioritized, including measures to eliminate discrimination, provide equal opportunities for women in education and employment, and support women’s entrepreneurship and economic empowerment initiatives in urban slums.
- Enhancing Social Protection: Strengthening social protection systems, including access to affordable housing, food security programs, and unemployment benefits, can provide a safety net for vulnerable urban populations and mitigate the impact of economic shocks and fluctuations in income.
