Indian labour market is undergoing a structural change with the fast-changing world of work and the multiple crises therein. On the one hand a very large number of workforce is not able to get jobs, and on the other, employers have been reporting severe labour shortage in both the skilled and unskilled categories, implying a disturbing level of distortion in the labour market that needs an urgent solution before it goes out of control.
At the end of the first week of October, the month of the festival season, unemployment rate according to CMIE data on 30-day moving average basis has registered a record high of 9.5 per cent. It means that even the beginning of the busy season of the Indian economy and the festive season have failed to provide enough employment to our workforce. It should also be kept in mind that a person getting at least one hour of work in a week is counted as employed in our country, and those who have left searching for jobs out of frustration on account of non-availability of jobs in the market are also not counted as unemployed. Therefore, the real situation on the ground is even more frightening that the unemployment data suggests.
It also be noted that the total employment in India has been around 40-41 crore, which included employment in both the salaried and non-salaried categories for quite some time. Salaried jobs have been in the range of 8-9 crore only in the last 12 months. It means around 32 crore people are in some sort of informal jobs, which included own account workers who have reported self-employed, majority of whom are only an unemployment in disguise. The share of self-employed workers is about 75 per cent of all employed population. The working age people (15-59 years of age) in the country are 60.7 per cent (around 85 crore) of the total 142 crore population in the country.
The predicaments of the workforce lie in the fact that around 53 per cent of the salaried workforce does not have any social security benefit as per the government’s latest Periodic Labour Force Survey Annual Report 2021-22. It means that even more than half of the salaried workforce did not have access to provident fund, pension, healthcare, disability insurance, or any other social security coverage. Only 1.9 per cent of the poorest 20 per cent workforce has access to at least on social security coverage. About 1.3 per cent of gig workers have rarely any social security coverage.
It means more than half of the working age people are out of any job whatsoever. There are no jobs for them in the labour market, and has not their won means of livelihood. They are depended on others for their survival, including from their family members or by getting free foodgrains from the government under Food Security Act. They have lost their dignity of a workforce, and eking out beggarly existence. It’s a pathetic situation, and the government must protect their lives and dignity by providing some work. On top of it about 12 million young people leave their education institutions every year to join the workforce. Total working age people in the country is projected to be 104 crore by 2030.
The distortion in the labour market is marked by another fact that at a time when about 45 crore working age people are out of work in the country, the employers are yelling that there is severe shortage of workers, both skilled and unskilled. The shortage is spread across all economic activities, including factories, engineering units, manufacturing, infrastructure, and even assembling plants.
National Skill Development Corporation (NSDC) has said in a report that India’s labour demand reached 10.3 crore in 2022, however, the supply of workers fell short by 2.9 crore. Confederation of Indian Industries (CII) in their report “Decoding Jobs” mentioned a significant likely gap of 68 per cent between demand and supply compared to 2021, chiefly due to reduction in returning of migrant workers to tier-1 cities. Even in other cities, returning of migrant workers likely to decrease by 32 per cent.
One of the chief reasons of migrant workers not returning to the cities is low wage and worse housing and living conditions. Large number migrant workers who have returned from cities to their villages during COVID-19 crisis in 2020 and 2021, are preferring not to return to the cities again. These people are chiefly informal workers. This is impacting the per capital rural income, and overall income has declined. Increase in demand for work in MGNREGA reflects how people are desperately in need of means of survival. For them, living among their own people, though in very destitute conditions, seems to be preferable to the miserable condition in urban poverty without a person of their own. Moreover, there is no urban employment guarantee scheme, wages are too low to survive, and without any social security.
The work of work is fast changing and it needs a different skill. Government have not been able to cope with the development, and in majority of the cases there are skill mismatch. The skills the workforce have are not much in demand, and what skills are in demand, the workforce do not possess. At another level, there is no work where the workforce are, and there are works where there are shortage of workforce.
Even though India has largest number of working age population, it has the largest number of workforce out of job, and without social security coverage. Since a man cannot live without work, one would find something on one’s own, and even will participate in activities that may bring social unrest. Such people are vulnerable to be misused by all sort of political, communal, and anti-social elements. Labour market distortion is thus needs urgent solution. Merely rhetoric by the leaders of the ruling establishment will push the country in great trouble in near future. (IPA Service)