About 450 Million Job-ready Indians Not Interested In Working? Let's Delve Deeper

A recent report by Center for Monitoring Indian Economy (CMIE) has stated that a growing number of people are no longer looking for a job. The number is roughly the size of the population of US and Russia combined! Let’s have a closer look. 

Data highlights stark reality

CMIE data reveals a drop of 6% in the overall labor participation rate between 2017 and 2022. The labor participation rate dropped from 46% to 40%. As per the report, more than half of the 900 million workforce in India is not even looking for a job, possibly due to disappointment over not being able to get a suitable job or the job seekers are under the impression that there are no jobs available. 

Speaking of women, about 21 million female workers have permanently left the workforce, leaving behind only 9% of the eligible population employed or searching for jobs. 

Why aren’t Indians looking for jobs? 

While many unemployed people are either students or homemakers, there are some who survive on rental income or pension of elderly household members

Major reasons for women opting out of the workforce are safety concerns, household responsibilities, lack of good quality jobs and dearth of convenient transport facilities. As a result, though women constitute 49% of India’s population, they contribute only 17% to the country's economic output, which is about half the global average that stands at 37%.

Indians may become older, but not richer

To steer past the ‘middle-income trap’, India has been working actively towards liberalizing the economy and getting multinational companies to create job opportunities in India. However, many economists believe that we may still miss the window to reap a demographic dividend. The staggering figures showing a large share of discouraged workers suggest that India might not be able to reap the full potential of its young population. Simply put, Indians may end up becoming older and not richer!

On the other side of the coin

Some experts have challenged the said CMIE report terming it as flawed. According to them, the report has grossly underestimated the number of working women and banked on unreliable data.

If we go by facts, as per the World Bank report that contains data compiled from officially recognized sources, the total labor force in India was reported at 457779812 in the year 2020. Hence, the 900 million figure seems to be exaggerated. 

What next?

Looking beyond the CMIE report, there is no doubt that India's job crisis demands immediate attention.

As per the study conducted in 2020 by McKinsey Global Institute, if India has to keep pace with the growing working-age population, it needs to generate non-farm jobs for at least 90 million workers by 2030. For this, India needs to strive for an annual GDP growth of 8 to 8.5 percent. If India doesn’t act decisively to spur growth, it risks a decade of stagnating incomes and quality of life.

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