Daily-wage workers en route to their site of work, Adilabad, Telangana, March 2020. Photo: Sujeeth Potla/Unsplash
- India is in a demographic dividend phase, with half the total population being in the working-age group as of 2011, and will be in this zone for over two decades.
- However, demographic dividend phases don’t automatically translate into economic growth, and without effective policymaking, they may increase unemployment.
- A study by researchers at Harvard University and the World Bank also showed that the Indian situation is in a ‘capability trap’.
- If India does not create enough jobs, and its workers are not adequately prepared for those jobs, we may have a demographic liability within this capability trap.
India is in a demographic dividend phase, with half the total population being in the working-age group as of 2011, and will be in this zone for over two decades. In this time, the country will add another 183 million people to this age group by 2050. This means, as the UN Population Fund in 2019 observed, a whopping 22% of the global workforce added over the next three decades will come from India.
However, demographic dividend phases do not automatically translate into economic growth, and without effective policymaking, they may beget adverse outcomes such as rising unemployment. The contrasting experiences of East Asia’s and Latin America’s demographic dividend phases evidence this. The evidence in India also brews pessimism. With unemployment at a 45-year high and poor health and education, India’s demographic dividend, actually poses a risk. A recent graphic anecdote is the violence in Bihar related to job recruitment woes (where 10 million aspirants signed up for 35,000 jobs), which shone a harsh spotlight on India’s worsening job crisis.
Employment scene
The Indian economy has been underperforming for some time now, which the pandemic only aggravated. The unemployment rate, 7.6% in April 2022, according to the Centre for Monitoring Indian Economy, is still high despite a mild reduction. According to the 2021 ‘State of Working India Report’, the working-age population grew by 115.5 million between 2017 and 2021, but the labour force grew only by 7.7 million, and the workforce actually shrank by 11.3 million.
The unemployment rate across education levels is equally concerning. The 2022 ‘State of Inequality Report’ observed that the rate of unemployment and education levels ascend together, with things even worse for educated young women, for whom the unemployment rate rose to 42%. The public sector has done little to help, as several state-run employment-oriented programmes have been subjected to budget cuts, if not shelved entirely. Even growth-driving sectors such as IT are not very large employers, accounting for only around 4 million out of a 500 million total workforce.
It is well known that more than eight out of 10 workers are informal, mostly from socio-economically marginalised groups. A May 2020 International Labour Organisation report shows that more workers have fallen into precarious and informal forms of work. Noticeably, young people are willing to accept less pay and poor working conditions out of sheer desperation, if not exiting the formal labour force altogether.
Female employment also does not resonate with the optimistic combination of high economic growth, low fertility rate, and rise in female schooling. In fact, India has recorded one of the lowest female workforce participation rates in the world – only 25%, according to the Periodic Labour Force Survey (PLFS) 2020-21 – consistently declining for nearly seven decades since 1950.
Women work disproportionately more in the informal economy than men, are concentrated in labour-intensive, low-paying, and highly precarious sectors, and suffer the highest gender age gap in Asia, according to an Oxfam report of 2019. Per the Global Gender Gap Index 2021, India’s position is 140 out of 156 countries, despite legal guarantees. And despite several schemes and programmes, early and child marriage still persists, child sex ratio is still negatively skewed, and discrimination prevails.
Education and skill
A demographic dividend needs to be supplemented by high-quality school education, relevant higher education, and skill development to bear fruit. However, this is again doubtful in the case of India.
UNICEF, in 2019, reported that at least 47% of Indian youth will not possess the education and skills necessary for employment by 2030. While over 95% of India’s children attend primary school, the National Family Health Surveys confirm that poor public education infrastructure and teacher training, plus malnutrition have ensured poor learning outcomes.
The Centre for Science and Environment found in 2021 that an astounding 375 million children may suffer long-lasting health and educational impacts due to the pandemic, affecting economic productivity. Over 250 million children were already forced out of school during the pandemic, with state-run mid-day meals taking a hit, and sharp digital divides glaringly visible.
In 2018, the Annual Survey of Education Report showed that just half of the children in Grade 5 could read a Grade 2 text. Worse, as shown by the Survey in 2021, the proportion of primary school children who could not recognise letters of the alphabet has doubled since 2018.
Coming to vocational training, according to a UN Population Fund report, in 2019-20, only 15% of India’s workforce received any such training. PLFS 2017-2018 showed that more than 40% of those aged 15-29 who received formal technical training are not part of the labour force at all, while only 3% of the total workforce is formally skilled (which is 24% in China, 52% in the USA, 68% in the UK, and 80% in Japan).
Capability trap
Thus, India’s success with its demographic dividend phase ultimately depends on strong state institutions and sound policy. In this backdrop, it is critical for India to acknowledge the diversity between the states based on the stages of demographic transition they are in. For instance, as noted by the Population Fund, Kerala has an ageing population, while in Bihar, the number of working people will keep increasing.
So ageing Kerala would need policies to attract migrant labour from young states such as Rajasthan and Bihar, while relatively young states such as Bihar and Madhya Pradesh require a strong health and education system to prepare their workforce for the future.
A study by researchers at Harvard University and the World Bank assessing the state capability showed that the Indian situation is in a ‘capability trap’ – where the destination and route are known but the country lacks the ability to implement the strategy. As the Confederation of Indian Industry has noted, if India does not create enough jobs, and its workers are not adequately prepared for those jobs, we may have a demographic liability within this capability trap.
A comprehensive and inclusive economic and social strategy will foster an environment of empowerment, protection, and investment in people. Singapore, Taiwan and South Korea have already shown us how demographic dividend can be reaped. On World Population Day today, there are important lessons to learn from them.
Neethi P. is a senior researcher at Indian Institute for Human Settlements, Bengaluru. Her work focuses on the broader themes of urban employment, informality and women’s work. The views expressed here are personal.