The International Labour Organization’s (ILO) India Employment Report 2024, co-authored with the Institute of Human Development, offers an in-depth analysis of India's employment landscape. Despite the country's potential to leverage its demographic dividend, the report highlights a pressing reality: a significant portion of the working-age population is engaged in low-productivity agricultural work and experiences underemployment. This article aims to unpack the findings of the ILO report and discuss the implications for India's employment scenario.
The LFPR, which measures the percentage of the working-age population that is either employed or actively seeking employment, is recorded at 55.2% in 2022. This is slightly below the global average of 59.8%. Alarmingly, the LFPR has decreased from 55.9% in 2012 to 55.2% in 2022, indicating a shrinking active workforce despite significant economic growth. This trend suggests that advancements in the economy have not translated into corresponding employment opportunities.
The concept of underemployment is crucial to understanding the quality of employment in India. Underemployment occurs when individuals are employed but not fully utilizing their skills or capacities. The report notes that underemployment rates have fluctuated from 8.1% in 2012 to 7.5% in 2022, highlighting that many employed individuals are willing and able to engage in more productive work.
Although India has experienced considerable economic growth over the past few decades, it has largely been driven by the services sector. This contrasts with the manufacturing-led growth seen in developed nations. The ILO report criticizes this growth model for its insufficient ability to generate jobs, particularly in a populous nation like India. The findings indicate a "falling employment intensity in the growth process," meaning that economic expansions are not yielding proportional increases in job creation.
India's demographic structure, characterized by a large working-age population, offers a significant potential demographic dividend. However, the report raises concerns about lost opportunities, as evidenced by the declining youth labour force participation rate, which fell from 54% in 2000 to 42% in 2021. This decline emphasizes the urgent need for policy interventions focused on education, skill development, and job creation.
Agriculture continues to dominate employment in India, with 45% of the labour force engaged in this sector. Despite its limited contribution to GDP (16%), a substantial portion of the workforce remains in agriculture, suggesting a mismatch between labor allocation and economic output. The report highlights the necessity for a strategic shift towards manufacturing and services, which can better absorb surplus labour from agriculture and enhance overall productivity.
India's shift toward capital-intensive production methods further complicates employment challenges, particularly for low-skilled workers. The report notes an increase in skill intensity within industry and services, which diverges from the needs of a significant segment of the workforce. This trend necessitates focused efforts in skill development and vocational training to bridge the skill gap and align the workforce with evolving economic demands.
To effectively address the multifaceted employment challenges presented in the ILO report, a comprehensive policy approach is required. Key recommendations include:
The ILO’s India Employment Report 2024 serves as a crucial call to action for policymakers, emphasizing the urgent need for targeted interventions to unlock India’s employment potential and secure a prosperous future for its workforce.
Q1. What is the current Labour Force Participation Rate (LFPR) in India?
Answer: As of 2022, India's LFPR stands at 55.2%, which is slightly lower than the global average and reflects a decrease from 55.9% in 2012.
Q2. How does underemployment affect the workforce in India?
Answer: Underemployment indicates that many individuals are working below their skill levels, with rates fluctuating from 8.1% in 2012 to 7.5% in 2022, showcasing inefficiencies in labor utilization.
Q3. What sectors dominate employment in India?
Answer: Agriculture remains the leading sector, employing 45% of the labor force, despite its low contribution to GDP, indicating a need for diversification into manufacturing and services.
Q4. What are the main recommendations to improve employment in India?
Answer: Key recommendations include promoting sectoral diversification, enhancing skill development, supporting entrepreneurship, improving labor market flexibility, and expanding social security.
Q5. What does the term 'demographic dividend' mean in the context of India?
Answer: The demographic dividend refers to the potential economic benefit from a large working-age population, which requires effective policy interventions in education and employment to be realized.
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