The India Employment Report 2024, a joint undertaking by the Institute for Human Development (IHD) and the International Labour Organization (ILO), sheds light on critical trends in India's labour market, particularly concerning youth employment. 

• Shifting Employment Landscape: The report highlights a slowdown in the transition from farm to non-farm employment. This indicates a growing number of individuals resorting to self-employment and unpaid family work, with women constituting a significant portion of this shift.
• Youth Employment Concerns: The report reveals a worrying trend of rising unemployment among young people, especially those with secondary education or higher. This issue is further compounded by the fact that youth employment often entails poorer quality jobs compared to adult employment. Stagnant or declining wages, alongside a higher prevalence of unpaid family work among youth, paint a concerning picture.
• Educated Yet Unemployed: The report emphasizes the growing concentration of unemployment among educated youth, particularly women in urban areas. The share of educated unemployed youth within the total unemployed population has risen significantly, from 54.2% in 2000 to 65.7% in 2022.
• Policy Recommendations: The report underscores the need for economic policies that prioritize boosting productive non-farm employment, particularly in the manufacturing sector. Given India's projected addition of 7-8 million youths to the workforce annually, labour-intensive manufacturing holds immense potential for absorbing the large pool of unskilled labour. The report also advocates for supporting micro, small, and medium-sized enterprises (MSMEs) through a decentralized approach that leverages digitalization, artificial intelligence, and cluster-based manufacturing strategies.
• Quality Job Creation and Urbanization: The report emphasizes the importance of improving job quality by investing in and regulating sectors like the care economy and the digital economy, which are expected to be significant sources of employment for young people. With India anticipating a rise in urbanization and migration, the report calls for inclusive urban policies that cater to the needs of migrants, women, and young people from underprivileged backgrounds.
• Bridging the Skills Gap: The report highlights the crucial role of skills development and active labour market policies (ALMPs) in effectively bridging the gap between job supply and demand. It emphasizes the need for a more prominent role for state governments, stronger partnerships with the private sector and other stakeholders, and a more targeted approach with a larger contribution from the private and non-state sectors.
• Focus on Knowledge and Action: The report concludes by underlining five key policy areas demanding further action:

1. 1. Promoting job creation
   2. Improving employment quality
   3. Addressing labour market inequalities
   4. Strengthening skills and active labour market policies
   5. Bridging the knowledge gap on labour market patterns and youth employment

3. Employment Rate (ER) and Unemployment Rate (UER)

Both the Employment Rate (ER) and Unemployment Rate (UER) are crucial statistics used to gauge the health of a country's labour market. 

Employment Rate (ER)

• The ER represents the percentage of the working-age population that is currently employed. It essentially reflects the share of people actively contributing to the economy through paid work.
• Calculation:

• • ER = (Number of employed people) / (Total working-age population) x 100

• Example: If a country has 100 million working-age adults and 65 million are employed, the ER would be (65 million / 100 million) x 100 = 65%.
• A high ER indicates a robust economy with a large portion of the population actively participating in the workforce. Conversely, a low ER suggests a sluggish economy with fewer employment opportunities.

Unemployment Rate (UER)

• The UER represents the percentage of the labour force (people actively looking for work) that is currently unemployed. It essentially reflects the portion of the workforce unable to find employment.
• Calculation: UER = (Number of unemployed people) / (Total labour force) x 100
• Labor Force refers to the working-age population that is either employed or actively seeking employment (unemployed).
• Example: If a country has a total labour force of 70 million and 7 million are unemployed, the UER would be (7 million / 70 million) x 100 = 10%.
• A low UER signifies a strong labour market with ample job opportunities for those seeking work. Conversely, a high UER indicates a weak labour market with many individuals unable to find employment.

Key Differences

• Focus: ER focuses on the employed population, while UER focuses on the unemployed population within the labour force.
• Data Used: ER uses the total working-age population, whereas UER uses the labour force (employed + unemployed).
• Interpretation: A high ER is generally positive, while a high UER is negative for the economy.

5. Centre for Monitoring Indian Economy (CMIE)-Role

The Centre for Monitoring the Indian Economy (CMIE) is an independent think tank and research organization that plays a significant role in providing economic and business information, analysis, and research in India. It is not directly affiliated with any specific ministry or government organization but operates as a private entity focused on economic data and analytics. 

Role of CMIE

• Data Collection and Analysis: CMIE collects and analyzes data related to various economic indicators, including employment, unemployment, industrial output, consumer sentiment, business activity, and economic trends.
• Economic Research: It conducts economic research, surveys, and studies to provide insights into India's economic performance, sectoral trends, and policy implications.
• Publication of Reports: CMIE publishes reports, indices, and economic indicators that are widely used by policymakers, businesses, researchers, and the general public to understand and assess economic conditions and trends in India.
• Forecasting and Projections: CMIE also engages in economic forecasting and projections, offering assessments of future economic scenarios based on current data and trends.

Organizational Structure

• CMIE operates as an independent private organization and is not under the purview of any specific ministry or government department.
• It functions as a research and data analytics firm, providing services to various stakeholders including government agencies, businesses, financial institutions, media organizations, and academic institutions.

Data and Surveys

• One of CMIE's notable contributions is its regular surveys and data collection efforts, especially in areas such as employment and unemployment. CMIE's data on the unemployment rate and labour market dynamics are widely referenced and used for economic analysis and policy discussions.
• CMIE's surveys and databases often cover a wide range of economic and social parameters, providing comprehensive insights into India's economic landscape.

Role in Economic Policy and Analysis

• CMIE's research and data play a role in informing economic policy discussions, debates, and decision-making processes in India. Its reports and analyses contribute to the understanding of economic challenges, opportunities, and potential policy interventions.
• Policymakers, economists, researchers, and business leaders rely on CMIE's data and analysis to assess economic performance, monitor trends, and formulate strategies for economic growth and development.

6. Reasons for the rise in Unemployment Rate

The rise in the unemployment rate can be attributed to various economic, social, and structural factors.

• Economic Recession or Slowdown: During economic downturns or recessions, businesses may cut back on hiring or even lay off employees due to reduced demand for goods and services. This leads to an increase in unemployment as job opportunities become scarce.
• Technological Advancements: Automation, artificial intelligence, and technological advancements in various industries can lead to job displacement and reduce the demand for certain types of labour. This structural shift in the economy can contribute to higher unemployment rates, especially among workers whose skills are no longer in demand.
• Structural Unemployment: This type of unemployment occurs due to a mismatch between the skills possessed by job seekers and the skills demanded by employers. For example, if there is a surplus of workers with certain qualifications but a shortage of jobs requiring those skills, structural unemployment can increase.
• Cyclical Factors: Economic cycles, such as booms and busts, can affect the level of unemployment. During economic expansions, unemployment tends to decrease as businesses expand and hire more workers. Conversely, during economic contractions or downturns, unemployment tends to rise.
• Globalization and Outsourcing: Increased global trade and outsourcing of jobs to lower-cost countries can impact employment opportunities domestically. Industries that face intense international competition may reduce their workforce or move operations abroad, contributing to higher unemployment rates in certain sectors.
• Decline in Specific Industries: Shifts in consumer preferences, changes in technology, or regulatory factors can lead to the decline of certain industries. Workers in these declining industries may experience job losses, contributing to overall unemployment.
• Policy Changes: Changes in government policies related to labour, taxation, regulations, or trade can influence employment levels. For example, policy shifts that make it more costly for businesses to hire or retain workers may lead to layoffs or reduced hiring.
• Education and Skills Gap: A mismatch between the skills and qualifications of job seekers and the skills demanded by employers can result in higher unemployment rates, particularly among those with limited education or outdated skills in a rapidly evolving job market.
• Labor Market Frictions: Factors such as geographic mobility barriers, lack of information about job opportunities, inefficiencies in matching workers with suitable jobs, and wage rigidity can create frictions in the labour market and contribute to unemployment.
• Demographic Changes: Population growth, changes in the age distribution of the workforce (such as an ageing population), and shifts in labour force participation rates can impact overall unemployment rates over time.

7. About Labour Force and Labour Force participation rate (LFPR)

The labour force represents the economically active population of a country. It encompasses all individuals who are either employed or actively seeking employment. 

• Employed: Individuals who have a job or are working for pay or profit, including full-time, part-time, and temporary workers.
• Unemployed: Individuals who are currently without a job but are actively looking for work and available to work. This includes people who have recently been laid off and are actively searching for new jobs.

Labour Force Participation Rate (LFPR)

The LFPR is a key economic indicator that measures the percentage of the working-age population that is actively participating in the labour force. It essentially reflects the share of the working-age population that is either employed or unemployed but actively seeking work.

Calculation of LFPR

LFPR = (Labour Force) / (Working-Age Population) x 100

Working-Age Population: This refers to the segment of the population that is considered old enough and able to work. The specific age range may vary slightly between countries, but it typically falls between 15 and 64 years old.

Interpretation of LFPR

• A high LFPR indicates a large portion of the working-age population is engaged in the labour market, either through employment or active job search. This can be seen as a positive sign for a country's economy as it suggests a high level of economic activity.
• A low LFPR indicates a smaller proportion of the working-age population is participating in the labour market. This could be due to various reasons, such as a large number of retirees, students, discouraged workers who have stopped looking for work, or a lack of job opportunities.

Importance of LFPR

The LFPR is a valuable metric for policymakers and economists as it provides insights into the health of a country's labour market. It can be used to:

• Assess the availability of labour for businesses
• Evaluate the effectiveness of employment policies
• Understand workforce trends and demographics
• Identify potential labour shortages or surpluses in specific sectors

8. The latest findings about the Female Labour Force Participation Rate

• A recent report by the Ministry of Statistics and Programme Implementation (October 2023) based on the Periodic Labour Force Survey (PLFS) 2022-23 shows a significant increase in FLFPR.
• The report indicates a jump of 4.2 percentage points, pushing the FLFPR to 37.0% in 2023. This is a positive sign, suggesting more women are entering the workforce.
• Despite the increase, the FLFPR for females remains considerably lower than the rate for males in India.
• There might be a shift towards more women in informal work or unpaid family work, which isn't fully captured in official statistics.
• Quality of jobs for women: Reports suggest an increase in the proportion of women in salaried work but with limited social security benefits. This might indicate a rise in precarious or low-paying jobs for women.

9. The Way Forward

By implementing the strategies, India can work towards creating a more inclusive, equitable, and sustainable labour market that provides meaningful employment opportunities for all segments of society.