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India’s age-related issue

India like a lot of South Asian countries, has an aging population. This can be a great chance for growth in the future and also puts policymakers in the position of creating jobs. As per the World Bank, the projected growth in South Asia’s working age population from 2020 to 2050 will be around 254.m which is 30.6 percent of the growth across the globe. India alone will contribute 16.5 percent of the increase. In China, the working age population is expected to fall over the same period by around 226m, and falls across all of the world’s developed countries.

Agriculture and other activities like forestry or fishing are the main source of income for almost 43.5 percent of India’s population, the low levels of productivity in agriculture, and stagnant investment by the government in the past decade, have led to a decline from the industry. People who are young, moderately educated living in rural areas are becoming eager to leave what is considered to be “disguised unemployment” in agriculture.

The rising number of students enrolled in school and the escalating departure of young people from agriculture are increasing the number of jobless numbers.

Are the lure of new opportunities outside of agriculture be enough to fill the growing labor force in India? It seems unlikely.

The research based on the official statistics for employment in India which include the Periodic Labour Force Surveys, which are published by the government – show that between 2012 and 2018 the number of non-agricultural employees – those who, with the right training can work in industries or in construction or other services was up by 17.5m each year.

This has led to an unprecedented rise in the rate of unemployment in India and in particular among men. In the same way in the face of a deficient amount of jobs being created in the market women have withdrawn from the labor market, having only 23.0 percent employed in the year 2018compared to 42.8 percent in 2005. In parallel, there was an increase in the percentage of women who cited their role as a caregiver for household duties within their homes.

Prior to being hit by the Covid-induced crises, its economy had been growing fairly high rates. In 2020, the year that was the first following the Covid-19 outbreak India’s GDP growth slowed to negative levels (-7.3 percent) and left millions of the country’s informal sector workers with no means of earning. The main cause of India’s job problem is the slowing of job creation within the industry of manufacturing. The amount of the workforce employed in manufacturing in India decreased by 61.3m from 2012 until 58.6m in 2018. It grew only marginally to 59.8 million by 2020. Most job losses that occurred after 2012 were in the micro and small industries.

A popular view within the policy world is the Indian labour laws that prohibit firing workers as well as reducing wage levels are excessively restricting.

What measures do we need to take to ensure that the Indian economy is fully recovered from the devastation caused by the Covid-19 epidemic, and to ensure adequate employment? 

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Jane S. King

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