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Economy 13-Mar, 2024

Election Focus: Unpacking India's Employment Status

By: Rishav Khetan

Election Focus: Unpacking India's Employment Status

The looming threat of automation poses a significant risk to India's vast unskilled labour force, primarily engaged in the informal sector. A mere 5% of the workforce in India has undergone formal skill training, compared to 68% in the UK, 75% in Germany, 52% in the US, 80% in Japan, and 96% in South Korea.

As the political atmosphere in India intensifies with the approaching General Election to elect the members of the 18th Lok Sabha, concerns about unemployment have taken precedence on the national stage, particularly among the youth. Even more concerning is the surge in unskilled labour across the country, raising questions about their future employability in the face of advancing automation and artificial intelligence.

A recent "Mood of the Nation" survey conducted by CVoter reveals that a whopping 64% of respondents feel that their economic situations have either worsened or remained stagnant during the Modi government's decade-long tenure. Furthermore, 35% report a decline in their economic conditions since 2014. Unemployment emerges as a pressing concern, with 71% of respondents deeming it either "very serious" or "serious" and a substantial 54% categorizing the job situation as "very serious." The survey also highlights that 66% of respondents anticipate no increase in their household incomes, while 30% fear deterioration. Price inflation is identified as the Modi government's most significant failure by 26% of the surveyed individuals.

Employment Trends As per EPFO

Analyzing the enrollment data under the Employees’ Provident Fund Organisation (EPFO) and Employee State Insurance Corporation (ESIC) can give us an idea regarding the growth of Employment in India. The EPFO data, considered a reliable indicator of formal sector employment, reveals a positive trend. According to payroll data from the Ministry of Labour and Employment, the net payroll under the Employees’ Provident Fund (EPF) witnessed a noteworthy 11.9% increase in December 2023, reaching 15.61 lakh net members compared to 11.05 lakh net members in November. According to the data, the establishment remitting the first ECR in the month stood at 2,643 in December compared to 2,967 in November. Further, on a year-on-year basis, the data indicates a 4.62% increase in net new subscribers added to EPFO in December 2023 compared to the same period in 2022, with significant growth observed in states such as Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Haryana. These states constitute around 58.33% of net member addition, adding a total of 9.11 lakh net members during the month. Of all the states, Maharashtra, in particular, led the way by contributing 21.63% to the net member addition during the month. As per the data, EPFO added 17.8 lakh subscribers in April, 20.2 lakh subscribers each in May and June, 19.8 lakhs in July, 19.4 lakhs in August, 18.8 lakhs in September and 17.8 lakh in October. 

Steady Growth: ESIC Reports 18.2% Monthly Increase in Formal Job Creation

According to another Payroll data released by the Ministry of Labour and Employment, the formal job creation under the Employees’ State Insurance Corporation (ESIC) went up by 18.2% month-on-month to 18.8 lakh in December 2023 compared to 15.9 lakh new employees added in November. Employees’ State Insurance Corporation is one of the two main statutory social security organisations under the Ministry of Labour and Employment, the other being the Employees’ Provident Fund Organisation. All employees earning up to ₹ 21,000 per month as wages contribute 0.75% of their wages while the employer contributes 3.25%, taking the total contribution to 4%, which is used to provide medical and cash benefits to the employees and their families. These statistics suggest an encouraging trajectory in formal job creation under the Modi government's leadership.

India has one of the youngest populations in the world; more than 62% of the population is in the 15-59 years age group, and about 54% are below 25 years of age. According to Statista, the median age in India is around 32.4, with only 5% of formally skilled labour, which puts India in a precarious position. According to a report published by the World Economic Forum (WEF), nearly 6.9 crore new jobs will be created in India by 2027, while 8.3 crore will be eliminated mainly because of Artificial Intelligence (AI). Significant demand will be witnessed for Artificial Intelligence (AI) and Machine Learning (ML) professionals, sustainability specialists, business intelligence analysts, and information security specialists in the next few years. In the future, a large number of unskilled labourers will be replaced by artificial intelligence and sophisticated machines, making them unemployed and unemployable. At best, they will be underemployed or deployed in the least productive way.

However, the looming threat of automation poses a significant risk to India's vast unskilled labour force, primarily engaged in the informal sector. A mere 5% of the workforce in India has undergone formal skill training, compared to 68% in the UK, 75% in Germany, 52% in the US, 80% in Japan, and 96% in South Korea. As India gears up for the 18th Lok Sabha elections, the dual challenges of unemployment and skill development come to the forefront. While the EPFO and ESIC data show positive signs in formal job creation, the youth's concerns regarding economic conditions underscore the need for comprehensive strategies to address unemployment and equip the workforce with the skills required for the future job market. The success of initiatives like Skill India will play a pivotal role in shaping India's employment landscape and ensuring the prosperity of its burgeoning youth population.

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