Why in the news?

  • India’s unemployment rate fell to 5.2% during July–September, down from 5.4% in the preceding quarter.

Unemployment

  • Definition: The International Labour Organisation (ILO) defines an unemployed person as someone who is at least 15 years old and meets the three given criteria – Being without a job is being unemployed, being open to taking a job, actively involved in the job search.
  • Types of Unemployment:
    • Disguised Unemployment: It is a phenomenon wherein more people are employed than actually needed.
    • Seasonal Unemployment: Unemployment that occurs in certain seasons of the year.
    • Structural Unemployment: Arising from the mismatch between jobs available in the market and the skills of the available workers in the market.
    • Cyclical Unemployment: Arising during recessions and declining during economic growth.
    • Technological Unemployment: Loss of jobs due to changes in Technology.
    • Frictional Unemployment: It is the period wherein a person remains unemployed after resigning from one job and searching for another one.
    • Vulnerable Unemployment: People working informally, without proper job contracts.
  • Causes of Unemployment in India
    • Demographic Factors:
      • Large and Growing Population: India’s population creates immense pressure on the job market.
    • Skill Mismatch:
      • Education System Focus: The education system emphasizes rote learning and theoretical knowledge over practical skills and industry-specific training.
      • Skill Gaps: This mismatch can leave graduates unprepared for the jobs available, leading to unemployment despite having educational qualifications.
    • Economic Factors:
      • Slow Economic Growth: This can be due to various factors like global economic slowdowns or insufficient domestic investment.
      • Informal Sector Dominance: Almost 93% of India’s workforce is in the informal sector, which often lacks job security and social benefits.
    • Structural Issues:
      • Labour Market Rigidities: Strict labor laws and regulations can sometimes discourage hiring new employees, hindering job creation.
      • Limited Job Mobility: Social factors or lack of awareness about opportunities in different regions can restrict worker mobility.
    • Other Factors:
      • Automation and Technological Advancements: Technology can automate some existing tasks, potentially displacing workers in certain sectors.
      • Discrimination: Discrimination based on caste, gender, religion, or other factors can limit employment opportunities for certain groups.
  • Government initiatives to tackle unemployment
    • National Employment Policy: Reforms to attract enterprises and help MSME.
    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) Providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
    • Startup India, Make in India and Stand up India
    • Pradhan Mantri Mudra Yojana:To encourage entrepreneurs to set up micro units.
    • Deen Dayal Upadhyay Gramin Kaushal Yojana was launched to cater to rural youth employment opportunities through skill development.
    • SETU (Self Employment and Talent Utilisation) is a techno-financial, incubation and facilitation programme to support start-up businesses.
    • Atal Innovation Mission (AIM): Innovation promotion platform to foster a culture of innovation, R&D and scientific research.
    • National Rural Livelihood Mission (NLRM): Aajeevika is designed as a special programme for rural development.
    • Ease of Doing Business: Rank improved through introduction of Labour codes, Industry codes and Infrastructure development.
  • What can be done?
    • Increased industrialization: Through Make in India, Startup India, Stand Up India, Production linked incentive scheme and attracting FDIs.
    • Improved infrastructure in agriculture: Better irrigation facilities,farming equipment, dissemination of knowledge.
    • Emphasis on skill development: NEP 2020, Vocational schools, PMKVY.
    • Encouraging self-employment: Introduction of liability free loans and government assistance for funding.Examples: AIM, PLI scheme and MUDRA loans
    • Inviting larger capital investments: Through FDIs and FIIs.

 

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