A dynamic change in wealth and income inequality is possible only in the longer run. Employment scenarios can cause huge changes in employment scenarios either way. The flow of income depends on the availability of assets and various employment chances. Income generated by migrants facilitates the flow of resources across various regions. Equity of income among different classes of people and across regions are closely related to each other.
The most labour absorbing sector of the Indian economy is the agriculture sector. Because of distinguished unemployment and surplus movement of labourers towards tertiary and secondary sectors, there has been a decline in the dependence of people on agriculture.
Present employment scenario
As we notice the current employment scenario in India of December 2021, there are around 53 million unemployed people. Among those, 35 million are actively seeking work. And 17 million people are willing but are not actively seeking. The interesting fact is that a huge proportion of the unemployed are women.
In 1999-2000, around 7.32 % of the workers were unemployed. The unemployment count was 26.58 million, exactly.
The number of unemployed includes the underemployed in the above data in terms of underutilisation of the labour time. At the same time, underemployed who are working under low-income levels are not included.
The proportion of the poor is comparatively high in the case of the unemployment rate.
Among the total employment, only 8% is in the formal sector. 90 % of employees are engaged in the unorganised sector.
The education and talent profile of the current employment scenario in India is comparatively very poor.
Determinants of employment scenario
The factors that influence an economy’s employment outcomes include both the demand and supply sides.
Supply of labour
The supply side which needs to be considered includes:
The age structure of the population: The working-age group(15 to 59) is 24% in the present employment scenario.
Labour force participation: The trends in different segments of the population and the dynamic change in technology lead to the decline in participation rate during 1993 – 94 and 1999- 2000.
Labour for skills: Productivity is the major factor determining the wages level of the labourers. The income of labourers also depends on the productivity and skill level of workers. It is indirectly determined by the technology used.
Demand for labour
The demand side which needs to be considered are:
Structure of economy: The agricultural sector is more labour-consuming than the modern manufacturing industrial sectors. Agriculture had 65 to 70% of the total employed workers between 1991 and 2001, and the employment scenario in the modern manufacturing sector was around 9 %.
Formal and informal sector: The formal sector was very low at 0.066 during 1993 -94 to 1999 -2000, which was a major trouble in the employment elasticity. In contrast, it was 0.2134 in the unorganised sector.
Labour laws: The existing labour law pattern does not support the development of labour-intensive sectors.
Frameworks of labour migration: The effect of interstate changes in the prompt unemployment and migration of labour in search of work highly affect the present employment scenario in all three sectors.
The present employment scenario in 3 sectors:
The employment structure in the three sectors of the Indian economy can be described as below:
More than 60% of the people in India are employed in the primary sector.
Agriculture produces 25% of GDP.
In the preceding 30 years, the secondary sector’s share in GDP has developed to around 16%.
The tertiary sector has grown remarkably in its employment scenario in recent years.
Around 25% of people are employed in the tertiary sector.
In recent days, the secondary and tertiary sector’s productivity has grown to around 75% of the total production.
India’s present unemployment problem
India’s unemployment problem is not a factor affecting the Indian employment rate. The employment scenario is not much affected by the unemployment problem, as the problems are not huge. It is true that employment is available in our country; the problem is with its quality alone.
India needs to avail employment to 7.9% of the unemployed.
An equally important issue is to settle an additional 17 million people who are not fully employed but are willing to work if qualified work is available.
Among 35 million unemployed workers in December 2021, who are active seekers, 8 million were women.
In 2020, during the pandemic situation, the World Bank secured the global employment rate at 55%.
In 2019, a year before, the rate was 58%.
It is quite protruding to see India’s employment scenario stand at the low of 43% in the eyes of the World Bank. And CMIE apprised India’s employment rate at 38%.
India is in the position to employ 7.9% who are unemployed immediately. But are actively looking for employment. At the same time, India has to provide employment to an additional 17 million people who are also not fully employed. Major labourers in the agricultural sector moved to either the secondary or tertiary sector. In the secondary sector, small scale manufacturing is not much developed and is most labour absorbing. In the tertiary sector-wide new opportunities are appearing like biotechnology, information technology and many more.