NEWS
25/09/2018 5:11 PM IST | Updated 25/09/2018 9:37 PM IST

Rate Of Unemployment In India Highest In 20 Years: Report

According to the report, this shortage of jobs is compounded by depressed wages.

Hindustan Times via Getty Images

NEW DELHI—The biggest new challenge facing India's policymakers and administrators is rapidly rising unemployment, says a report released on Tuesday by the Centre for Sustainable Employment of the Azim Premji University.

"Unemployment levels have been steadily rising, and after several years of staying around 2-3%, the headline rate of unemployment reached 5% in 2015, with youth unemployment being a very high 16%," the State of Working India 2018 (SWI) report said. "This rate of unemployment is the highest seen in India in at least the last 20 years," the report added.

This shortage of jobs is compounded by depressed wages, with 82% of men and 92% of women earning less than Rs 10,000 per month.

The report also notes that the growth in Gross Domestic Product (GDP) hasn't resulted in a commensurate increase in employment.

"A 10% increase in GDP now results in less than 1% increase in employment," says the study.

"It used to be said that India's problem is not unemployment but underemployment and low wages. But a new feature of the economy is a high rate of open unemployment, which is now over five percent overall."

The report, co-written by a group of researchers, policymakers, journalists and civil society activists, has primarily relied on data from the National Sample Survey Office and the Employment-Unemployment Survey (EUS) of the Labour Bureau—the last of which was conducted in 2015-16.

The report has looked at the Bombay Stock Exchange-Centre for Monitoring the Indian Economy (BSE-CMIE) surveys for data for the past two years. These surveys, says the SWI study, "report a decline in employment over the past two years, continuing the trend of declining employment observed since 2013 in government data". However, since the two surveys are not comparable, the report doesn't engage as much with the BSE-CMIE data.

EDUCATED UNEMPLOYMENT

The report calls rising unemployment a "new" problem for India.

"It used to be said that India's problem is not unemployment but underemployment and low wages. But a new feature of the economy is a high rate of open unemployment, which is now over five percent overall, and a much higher 16%t for the youth and the higher educated. The increase in unemployment is clearly visible all across India, but is particularly severe in the northern states," it says. States such as Chhattisgarh, Gujarat and Karnataka are exceptions to the trend of rising unemployment nationally.

Amit Basole, associate professor of economics at Azim Premji University and one of the authors of the study, said that the nature of India's job market has changed as more educated people enter it.

"Over the past decade, we've seen a huge educational dividend. As school enrolments and completion rates have risen, the labour market has transformed. The creation of work commensurate with these degrees has not happened. A significant percentage of job seekers would like to hold out for better jobs," he told HuffPost India. Basole cautioned that the quality of the education being provided also "needs to be looked at".

"Confirming and building on a view held by the critics of India's economic reforms process, the study points out that the relationship between growth and employment generation has become weaker over time."

NO LIVING WAGE

Another significant trend that the report highlights is the problem of low earnings. "Nationally, 67% of households reported monthly earnings of up to Rs 10,000 in 2015. In comparison, the minimum salary recommended by the Seventh Central Pay Commission (CPC) is Rs 18,000 per month. This suggests that a large majority of Indians are not being paid what may be termed a living wage, and it explains the intense hunger for government jobs," the report observes. Worryingly, it adds that 90% of industries even in the organised manufacturing sector "pay wages below the CPC minimum. The situation is worse in the unorganised sector".

Confirming and building on a view held by the critics of India's economic reforms process, the study points out that the relationship between growth and employment generation has become weaker over time. "In the 1970s and 1980s, when GDP growth was around 3-4%, employment growth was around 2% per annum. Since the 1990s, and particularly in the 2000s, GDP growth has accelerated to 7% but employment growth has slowed to 1% or even less. The ratio of GDP growth to employment growth is now less than 01," it notes.