India’s urban unemployment rate reached 20.9% in the second quarter of 2020, with wages declining.
India’s economic growth is failing to generate enough jobs for its burgeoning population, particularly its young demographic, leading to widespread unemployment and underemployment.
While the rate has since decreased, the availability of full-time positions has dwindled. Many job seekers, especially young people, settle for low-paying casual work or unreliable self-employment.
India’s economy is projected to grow by 6.5% in the fiscal year ending in March 2024, surpassing China as the most populous nation.
However, the lack of job prospects is making India’s much-touted demographic dividend a burden, hindering economic progress.
Experts warn that unemployment is only part of the problem, as underemployment and disguised unemployment pose significant challenges.
The declining employment and earnings cycle undermines India’s ability to fuel economic growth and create employment opportunities for its youth.
Economist Jayati Ghosh characterizes India’s demographic dividend as a ticking time bomb.
The country has a large pool of educated individuals who cannot secure suitable jobs despite investing their own or their family’s resources. Ghosh emphasizes that the repercussions extend beyond potential economic losses; an entire generation is being lost.
Unemployment is particularly acute in urban areas, where living costs are high, and there is no government-backed job guarantee program as in rural regions.
Although the urban unemployment rate was 6.8% in the first quarter of 2023, the percentage of urban workers with full-time employment has declined. Out of an estimated urban workforce of 150 million, only 73 million have stable jobs.
The pandemic, combined with other factors such as the demonetization of currency in 2016, has dealt a severe blow to small businesses, which were once a significant source of employment.
The closure of over 10,000 micro, small, and medium enterprises in 2022-23, in addition to thousands in the previous year, has further exacerbated the job crisis. Families in neighborhoods like Khan’s in Mumbai have been deeply affected, with many experiencing job losses and reduced incomes.
For example, Arshad Ali Ansari’s brother and sister lost their jobs during the pandemic, forcing them to take on low-paying work.
To address the issue, India must create 70 million new jobs over the next decade, but estimates suggest that only 24 million will be generated, leaving a shortfall of 46 million jobs.
Achieving a growth rate of 6.5% would only solve a third of India’s employment problem. The government must prioritize job creation and implement policies to support small businesses, providing hope and opportunities for millions of young Indians seeking stable employment and a brighter future.