Syllabus: Economy
Source: IE
Context: India faces a jobs deficit with only 6 crore formal jobs created for 9 crore new working-age citizens since 2017-18. Rapid automation and capital-heavy growth threaten employment, needing urgent reforms for Viksit Bharat.
Importance of Labour Force for Viksit Bharat:
- Demographic Dividend: With 65% of India’s population under 35, providing productive employment is key to long-term growth.
Ex.: China leveraged youth power via labour-intensive manufacturing from 1990–2010.
- Structural Transformation: Transition from agriculture to high-value sectors like IT and pharma requires a skilled workforce.
Ex.: These sectors contribute 8% to GDP but employ only 5% of the workforce.
- Inclusive Growth: Formal employment helps reduce poverty and income gaps by raising consumption.
Ex.: MGNREGA boosted rural wages but lacks skilling for sustainable upliftment.
- Global Competitiveness: Low-cost labour enhances India’s attractiveness for FDI in export-oriented sectors.
Ex.: Vietnam’s textile boom was driven by wage competitiveness.
- Social Stability: Joblessness can lead to social unrest and migration crises.
Ex.: 2020 lockdown saw mass distress among unemployed migrant workers.
Challenges Faced by India’s Labour Force – Explained
- Skill Deficit: Only 10% of the workforce has formal vocational training, limiting employability.
Ex.: PLI in electronics faces hiring issues due to unskilled labour shortages.
- Capital-Intensive Growth: Automation and AI are reducing demand for low-skilled, repetitive jobs.
Ex.: 30% manual textile jobs lost to robotics (ICRA, 2024).
- Informalization: 90% workforce remains informal, without social protection or legal safeguards.
Ex.: Gig workers lack EPFO, health or insurance coverage.
- Regulatory Hurdles: Rigid labour laws deter mass-scale hiring by small and medium enterprises.
Ex.: Post-reform Rajasthan saw a 25% rise in MSME registration.
- Wage Stagnation: Real wage growth remains sluggish at just 2% annually (ILO 2012–2022).
Ex.: This reduces income-led demand and impacts consumption-driven growth.
Balancing Labour & Capital for Viksit Bharat:
- PLI-ELI Synergy: Link production incentives with employer incentives for hiring trained workers.
Ex.: Drone firms rewarded for hiring ELI-certified youth.
- Graded Skill Subsidies: Offer higher EPFO subsidies for firms employing skilled youth in niche sectors.
Ex.: Germany’s dual system blends industry training with formal education.
- Labour Reforms: Enable flexible hiring and fixed-term contracts to boost employment elasticity.
Ex.: Gujarat’s fixed-term policy encouraged formal job creation.
- ITI Revamp: Align ITI curriculum with market demands and tech advancements.
Ex.: Toyota’s JIM model integrates auto-sector skill training.
- R&D in Labour-Intensive Sectors: Promote AI-complementary employment in sustainable and traditional sectors.
Ex.: India’s solar energy sector added 3 lakh jobs over 5 years.
Conclusion:
To realize Viksit Bharat, India must balance skill development with capital investment to create a tech-ready workforce. Flexible labour reforms should formalize jobs while maintaining worker protections. Data-driven policies like NSDC-NSO partnerships can align training with industry needs for sustainable employment growth.
PYQ:
- Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC-2023)
