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India is becoming a young country but with an ageing workforce

GS Paper 3

 Syllabus: Indian Economy, Unemployment

 

Source: IE, IE

 Context: An analysis of employment data from the Centre for Monitoring the Indian Economy (CMIE) reveals that India’s workforce has undergone a significant ageing trend over the past seven years.

 

Meaning of ‘India’s Workforce is Aging’:

An ageing workforce basically means that if one looks at all the employed people in India, the share of young people is going down while the share of those closer to 60 years of age is going up.

 

Key findings:

Major FindingsDetails
Workforce Aging TrendIndia’s workforce has rapidly aged over the past seven years
Youth Proportion DeclineThe share of youth (ages 15 to 29) in the workforce has decreased from 25% (2016) to 17% (2022)
Older Age Group Proportion IncreaseThe share of those aged 45 and above has grown from 37% to 49%.
OverallThe overall count of employed individuals has decreased from about 41 crore to about 40 crore.
Employment Rate DeclineThe Employment Rate (ER) for youth dropped from 29% to 19%, indicating a decline in job opportunities for this age group.
Educational Attainment Impact:Youth unemployment tends to rise with higher educational attainment, contributing to the overall trend.
Contradiction with Demographic AdvantageIndia’s ageing workforce contradicts the perception of having a youthful population.
Reason for this trend:
Reasons This phenomenon is partially attributed to rising youth unemployment and a low labor force participation rate, particularly among women. India’s female labor force participation rate (32.8%) is notably low globally.
Skills DeficitThe ageing workforce suggests a skills deficit, highlighting the need to enhance youth employability for a more productive workforce.

 

Implications of these data: 

Youth Population Growth ≠ Job Increase

India’s expanding youth population does not automatically translate into more job opportunities for them. Despite the demographic advantage, youth struggle to secure employment and face tough competition from older counterparts.

 

Youth Unemployment   Peaks

Unemployment is most pronounced among the youth, even considering the potential influence of higher education pursuits. This trend warrants attention from policymakers. Even non-CMIE surveys indicate that youth unemployment remains a prominent concern in India.

Recommendations for Policymaker Considerations
Demography ≠ DeterminismIndia’s demographic advantage requires aligned policies and programs for tangible benefits; demographics alone aren’t sufficient.
Skill Development & Socio-Economic SupportTo avert the negative impact of unskilled youth, prioritize the provision of education, skills, training, and necessary facilities.
Leverage Employability & Well-beingUnlock demographic dividend by improving the workforce’s employability, health, and education; policies should span land, labour, governance, and vocational training.

 

Conclusion:

Addressing youth employability is vital alongside the broader goal of creating more job opportunities.

Definition of Youth: CMIE’s data defines youth as individuals aged above 15 and below 25. However, for the purpose of comparison, the workforce is divided into three groups: 15 to 30 years, 30 to 45 years, and 45 years and older.

 

Data on Female Labour Force Participation Rate (LFPR):

As per the latest available Annual PLFS Reports, the estimated Labour Force Participation Rate (LFPR) on usual status for women of age 15 years and above in the country was 30%, 32.5% and 32.8% during 2019-20, 2020-21 and 2021-22, respectively, which shows an increasing trend.

 

Insta Links:

Unemployment has decreased, says Labour Survey

 

Mains Links:

How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country? (UPSC 2016)

 

Prelims Links: (UPSC 2020)

With reference to the Indian economy after the 1991 economic liberalization, consider the following statements:

  1. Worker productivity (Rs per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
  2. The percentage share of rural areas in the workforce steadily increased.
  3. In rural areas, the growth in the non-farm economy increased.
  4. The growth rate in rural employment decreased.

 

Which of the statements given above is/are correct?

1 and 2 only

3 and 4 only

3 only

1, 2 and 4 only

 

Ans: 2