Why demographic disaster is looming, five warning signs

INDIA will need to generate 28 crore jobs between now and 2050, the year when the working-age population (15 to 64) will peak, according to a new report, amid indicators that the country’s demographic dividend could be at the cusp of disaster.

Over 22 years of unprecedented economic growth (1991 to 2013), less than half the Indians who sought jobs got them, 14 crore of 30 crore, according to a new United Nations Development Programme (UNDP) report.

“In China, the number of jobs grew from 62.8 crore to 77.2 crore between 1991 and 2013, but the working-age population increased by 24.1 crore,” the report said. “A wider gap in India suggests a more limited capacity to generate employment — a serious challenge given the continued expansion of the workforce in India over the next 35 years.”

With fears that India is experiencing jobless growth and scepticism abounding that the country may not be able to cash in on its “demographic bonus” the world’s largest working-age population — 86.9 crore by 2020 — because of limited progress on health, education and job skills, here are five warning signs:

1 Slowdown in country’s organised sector

Employment shrank over two quarters in 2015, the first time since the 2008 global financial crisis, according to the latest data from the Labour Bureau.

The first quarter, January to March, added 64,000 jobs, while the third quarter, July to September, added 134,000 jobs in eight sectors that the Bureau surveys on “changes in employment” (not existing jobs): textiles (apparels), leather, metals, automobile, gems and jewellery, transport, IT/BPO and handloom/power loom.

However, in the second quarter, April to June, 43,000 jobs were lost, and in the last quarter, October to December, 20,000 jobs were lost. These jobs were to be in industries that comprise Prime Minister Narendra Modi’s Make in India programme, a manufacturing expansion meant to offer jobs to the millions moving out of agriculture.

2 93% jobs available in unorganised sector

The informal sector accounted for 90 per cent of jobs through 2004-05 to 2011-12, said the Economic Survey 2015-16. This is going to increase marginally to 92-93 per cent in 2017, according to a report by the National Commission for Enterprises in the Unorganised Sector (NCEUS).

The accelerated growth of the Indian economy over the past two decades is accompanied by increasing informalisation, notes the Report of the Committee on Unorganised Sector Statistics by the National Statistical Commission.

3 Menial rural labouron the rise

From 2001 to 2011, the number of farmers fell 7 per cent, from 12.76 crore to 11.86 crore. Over the same period, agricultural labourers increased 34 per cent, from 10.75 crore to 14.43 crore.

Agricultural growth nosedived over the last two years, with three, and possibly four (the data for January to March 2016 is not yet out), quarters registering a contraction.

Rural wages are growing at a much slower pace compared to the initial years of India’s rural jobs programme, MGNREGA, the wages of which were down at 2005 levels in 2015.

The construction sector is rapidly becoming India’s fastest-growing employment destination. More specialised sectors cannot absorb those leaving farms because they do not possess the skills needed.

Modi’s Skill India initiative aims to train 40 crore Indians over the next six years — that’s 10 lakh every week. In 2014, as reported, no more than 70 lakh were trained; fewer than five of Indians have ever received formal skills training.

4 Difficulty in findingyear-round work

Many Indians who report themselves as ‘employed’ do not get year-round work, or may have jobs lagging their abilities and expectations, said the Fourth Annual Report on Employment and Unemployment 2014.

Only 60.5 per cent of the working population (above 15) was able to find work through the year.

Underemployment affects youth the most. Of 100 persons aged above 30, only two persons report being fully unemployed, while in the 18-29 age group, 13 in 100 are unemployed, noted the survey. Education only appears to increase the prospect of unemployment.

5 Dip in number ofjobs per company

The growth of eight core industries — coal, oil, oil products, gas, electricity, fertiliser, steel and cement — is now the lowest it has been over the last 10 years.

Industrial growth of the last decade shows a slump during the 2008 crisis; it recovers and again goes south till 2015-16.

The number of companies registered every year is down to 2008 levels, an indication of business uncertainty.

In 2014, as many as 70,043 companies were registered in India, marginally less than 70,513 in 2008.

Fewer than 2,000 companies were registered in April 2016, the first month of the new financial year. In comparison, 6,000 companies were registered monthly, on an average, during the last decade.

Large corporations are important to India’s economy, RBI Governor Raghuram Rajan said in February, but many are struggling to repay loans and grow, potentially sparking a circle of low growth, low bank credit, job cuts, low output and low growth.

So, a paradox unfolds, with many young Indians, many with substandard education, unable to find jobs commensurate with their education, while industry endures a shortage of skilled labour.

— IANS, in arrangement with IndiaSpend.org