Amidst all the problems that exist in India, the unemployment crisis is at the topmost position. A report by the Centre for Monitoring Indian Economy (CMIE) reveals India’s unexpectedly increased unemployment rate to 24% in April 2020, then decreasing to 9.1% in December 2020 and 6% in January 2021. This impacted as many as around 90 lakh people losing jobs during the worldwide COVID-19 lockdown. The number of unemployed people might have decreased over the period, but unemployment still remains an unsolved problem in India.
Before jumping onto the solutions to the above problem, let’s understand its types, causes, and equal impact on the country’s economy.
Types of Unemployment Crisis in India:
When organizations hire employees more than they need.
When employees’ skillset mismatch with their job roles due to the unavailability of jobs in the market.
When people do not have work during certain seasons of the year, like laborers in India rarely earn through daily wage jobs throughout the year
A person’s employment is not on record if they have no proper documentation or job contract. They don’t contribute to India’s GDP.
It is when people lose their jobs due to technological advancements. Eg:- digital automation replacing various manual processes.
Removal of a massive number of employees from the organization.
People get a job for a short period and search for a new job or switch between jobs. The reason for this type of unemployment is not a shortage of jobs. Instead, the employees themselves quit their jobs in search of better job opportunities.
Major Causes and Impact of the Unemployment Crisis in India:
- Large population: India has crossed 1,389,456,823 population already with only $1,877 (nominal; 2020 est.) and $6,284 (PPP; 2020 est.) per capita income.
- Low or no educational levels: As per NSO’s report, India’s average literacy rate is 77.7%. Almost 2 million graduates and half a million postgraduates are still unemployed in India.
- Low employment skills: Around 47% of graduates in India are not suitable for any kind of job role.
- Job opportunity & skills mismatch: According to a report, 48% of urban youth face the problem of landing a suitable job. Moreover, 38% of employees are not satisfied with their current job.
- Societal responsibilities for women: Only 19.9% of educated women in India are working. Although many graduates have to get married right after their graduation. Moreover, others quit jobs due to family responsibilities or pregnancy and maternity gaps.
Solutions to the unemployment crisis in India:
For every problem in the world, Education stands as the strongest solution. Education is the basic right of any citizen, and it should be provided with minimum fees. Right from equal educational facilities to skill-based and computer knowledge, the Education system can and should be improved.
2. Career Guidance
Job seekers who could not figure out the right career path should consult a career guidance expert. Every industry has numerous career opportunities, but Indian workers lack complete awareness about the same. A career guidance expert can help job seekers understand the industry know-how, zero down on the best career option, and choose the right career path for them.
3. Skill-based training
Every job role requires a specific skill set. Hence, every job seeker should get training in those skills. Many EdTech startups provide career guidance with industry, job, or company-specific training to hone organizational skills. These skills training sessions also include resume-building training, interview preparations through mock interviews, and everything that can help job seekers become employable.
4. Job Referrals
Many job seekers fail to find the right place to work. Job referrals in top companies can help job seekers prepare and crack interviews accordingly. It is important for job seekers to find the right company and get placed with a deserved salary. This will minimize the frictional unemployment crisis in India.
If every fresher graduate has an opportunity to work in the companies, then we are already halfway through eradicating unemployment. Additionally, if job seekers receive the right career guidance, and get trained, then every top company would want to hire them. Education, career guidance, and skill-based training can together solve the unemployment crisis in India.
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Frequently Asked Questions
Several factors contribute to the unemployment rate in India. Some key factors include:
Economic Growth: The overall pace of economic growth affects employment opportunities. When the economy is growing rapidly, it generally leads to increased job creation and lower unemployment rates.
Skill Mismatch: A mismatch between the skills possessed by job seekers and the skills demanded by employers can result in higher unemployment rates. This issue often arises due to a gap in the education system and industry requirements.
Labor Force Expansion: The growth of the working-age population without a corresponding increase in job opportunities can lead to higher unemployment rates.
Industrial and Sectoral Shifts: Structural changes in the economy, such as the decline of certain industries or the emergence of new sectors, can impact employment opportunities and contribute to unemployment.
Government Policies: Government policies related to labor market regulations, investment, and economic reforms can influence the employment scenario.
Technological Advancements: Automation and technological advancements may lead to job displacement, particularly in certain industries, impacting the unemployment rate.
The unemployment rate in India is typically calculated using survey-based methods. The government conducts periodic surveys, such as the Annual Employment-Unemployment Survey (EUS) or the Periodic Labour Force Survey (PLFS), to collect data on employment and unemployment. These surveys gather information about individuals’ employment status during a specific reference period and calculate the unemployment rate as the ratio of unemployed individuals to the total labor force.
Yes, there are different types of unemployment observed in India, including:
Structural Unemployment: This occurs when there is a mismatch between the skills possessed by job seekers and the skills demanded by employers.
Frictional Unemployment: It refers to the temporary unemployment that individuals experience while transitioning between jobs or entering the labor force for the first time.
Cyclical Unemployment: This type of unemployment is associated with economic downturns or recessions. It occurs when there is a decrease in overall economic activity leading to a decrease in job opportunities.
Seasonal Unemployment: Seasonal industries or agricultural activities may experience fluctuations in demand, leading to temporary unemployment during off-season periods.
Disguised Unemployment: This refers to a situation where individuals are employed but their contribution to productivity is minimal or redundant. It is often observed in the informal sector and agriculture.