{"id":19948,"date":"2023-12-26T17:30:56","date_gmt":"2023-12-26T12:00:56","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=19948"},"modified":"2023-12-27T21:51:45","modified_gmt":"2023-12-27T16:21:45","slug":"macroeconomic-reasons-for-indias-jobs-crisis","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/26-12-2023\/macroeconomic-reasons-for-indias-jobs-crisis","title":{"rendered":"Macroeconomic Reasons for India\u2019s Jobs Crisis"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Indian Economy<\/strong><\/p>\n\n\n\n<p><strong><span style=\"text-decoration: underline;\">Context<\/span>:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Official data sources and reports found that India continues to be going through a jobs crisis.<\/li>\n<\/ul>\n\n\n\n<p><span style=\"text-decoration: underline;\"><strong>Key Highlights : Macro-economic reasons<\/strong> <strong>Low Labour Demand:<\/strong><\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Indian economy has historically been characterised by <strong>the presence of open unemployment<\/strong> as well as high levels of <strong>informal employment (i.e. disguised unemployment)<\/strong> consisting of the <em>self-employed as well as casual wage workers.<\/em>\n<ul class=\"wp-block-list\">\n<li><strong>Economic policy<\/strong> is generally framed in terms of output growth (GDP or value-added), rather than the level of output.<img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/lh7-us.googleusercontent.com\/Xq1z-GDFYjEyOKyOQlIguqvAfE1mNPbfm3N23_Sl58tNd7ceGw3y45zHxEEJQ8EyE09dTjY5crDqZfvQbJ2VIjePZ6DpBOs1I__hHtcClPWQrDGJozJtzAs9gHatqf_f0BTmBOsrbdov1cTt-TQuzAHUU6L4iW6LYwpJGZjGDFnkQ1AIbZC9-Dw9PAaewg\" width=\"217\" height=\"158\"><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The labour demand in the <strong>formal non-agricultural sector <\/strong>is determined by <strong>factors <\/strong>like<strong>:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Labour demand rises when demand for output rises under any given level of technological development.<\/li>\n\n\n\n<li>Introduction of<strong> labour-saving technologies<\/strong><em> like automation<\/em> enables firms to produce the same amount of output by hiring a lower number of workers.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><span style=\"text-decoration: underline;\"><strong>Growth and Labour Productivity:<\/strong>&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Employment growth<\/strong> is determined by the relative strength of<strong> two factors<\/strong> \u2014 <strong><em>the output growth rate and the labour productivity growth rate<\/em><\/strong>.\n<ul class=\"wp-block-list\">\n<li>If labour productivity growth rate does not change, higher output growth rate increases employment growth rate.\n<ul class=\"wp-block-list\">\n<li>In other words, policies that promote higher economic growth would also achieve higher employment growth.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>On the other hand, if labour productivity growth rate rises, employment growth rate falls for a given output growth rate.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><strong><span style=\"text-decoration: underline;\">Jobless Growth:<\/span><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The employment growth rate of the <strong>formal and non-agricultural sector<\/strong> remained <strong>unresponsive<\/strong> despite a <strong>significant rise in the GDP growth rate<\/strong> and the value added growth rate during the 2000s as compared to the decade of the 1980s and 1990s.\n<ul class=\"wp-block-list\">\n<li>The lack of responsiveness of employment growth rate to changes in output growth rate reflects a phenomenon of jobless growth.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>It indicates a <strong>strong connection between labour productivity growth rate and output growth rate.<\/strong><\/li>\n\n\n\n<li>If the responsiveness of labour productivity growth rate to output growth rate is weak, the <strong>possibility of jobless growth<\/strong> emerges exclusively on account of automation and the introduction of labour-saving technology.<\/li>\n<\/ul>\n\n\n\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/lh7-us.googleusercontent.com\/_-Xv6K7RCaq1etjNLundUZnfulNBhoGlPqqD3tDh6iC6vIqsD6jnArb2gwflZ-VMsDfBRhesAmFx1_4nHQjeuo1AoauQg2xVGdDgD3zWQneq6-LluOuHEKDMgz_PC--1AavNiN3Jb-6C5Mh7Ozr8NRsFORpCqscYm3BX_BHI2Ier_8M7v9r82G3e2JuFQQ\" width=\"247\" height=\"212\"><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Under weak responsiveness of labour productivity, the positive effect of GDP growth rate on employment would dominate over the adverse effect of labour-saving technologies.<\/li>\n<\/ul>\n\n\n\n<p><strong><span style=\"text-decoration: underline;\">Solution to the Jobs Crisis:<\/span><\/strong><\/p>\n\n\n\n<p><strong>Macroeconomic Policy Framework:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Implementing the objectives of <strong>National Employment Policy (NEP):<\/strong> A separate policy focus is needed on employment, focusing on both demand side and supply side components in addition to the focus on GDP growth.<\/li>\n\n\n\n<li>Increasing the quality of the workforce through better public provisioning of education and health care, as well as bridging the skills gap.\n<ul class=\"wp-block-list\">\n<li>On the demand side, direct public job creation will be needed.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Other measures <\/strong>like introduction of the <strong>Urban Version of MGNREGA<\/strong>, increasing industrialization and investment in agriculture with diversification to generate more employment along with the promotion of agro-processing industries near urban centres.<\/li>\n\n\n\n<li>There is a need to expand education and healthcare and provide vocational and technical training to enhance the skills and employability of the workforce.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><span style=\"text-decoration: underline;\"><strong>Do you know ?<\/strong><br><\/span><strong>Keynesian revolution in Macroeconomics:<\/strong><br>&#8211; Keynes states that in times of economic crisis, the government needs to increase public spending and cut indirect taxes, to revive the economy.<br>&#8211; The <strong>public expenditure on capital assets<\/strong> leads to a<strong> crowd-in effect<\/strong>.<br>A. The role of aggregate demand is the binding constraint on employment.<br>&#8211; Similarly, the cut in taxes induces demand, thereby raising production, leading to the revival of economic activity in the country.<br><strong>The Mahalanobis Strategy:<\/strong><br>&#8211; It identified the availability of capital goods as the binding constraint on output and employment, putting forward the policy for heavy industrialisation.<br><span style=\"text-decoration: underline;\"><strong>The Kaldor-Verdoorn Coefficient:<\/strong><br><\/span>&#8211; The extent to which <strong><em>labour productivity growth rate responds to output growth rate<\/em><\/strong>.<br>A. <strong>India\u2019s non-agricultural sector<\/strong> is characterised by a higher than average Kaldor-Verdoorn coefficient, as compared to other developing countries.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong><span style=\"text-decoration: underline;\">Conclusion<\/span>:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The unemployment rate impacts the Indian economy by influencing spending, growth, and job opportunities. A high rate hinders economic progress and can lead to social unrest, while a low rate indicates a thriving job market and a growing economy.<\/li>\n\n\n\n<li>Policymakers need to <strong>trade-off<\/strong> GDP growth rate with addition of workforce in the economy for job creation and economic development simultaneously.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><span style=\"text-decoration: underline;\"><strong>Additional Information:<\/strong><br><\/span>&#8211; The data on Employment and Unemployment is collected through <strong>Periodic Labour Force Survey (PLFS)<\/strong> conducted by <strong>National Statistical Office (NSO)<\/strong>, Ministry of Statistics &amp; Programme Implementation (MoSPI) since 2017-18.<br><strong>Employment prevailing in an Indian economy.<\/strong><br>1. <strong>Wage employment: <\/strong>It is a result of labour demanded by employers in their pursuit of profits.<br>2. <strong>Self-employment:<\/strong> Labour supply and labour demand are identical, i.e., the worker employs herself.<br>&#8211; The wage labour includes all forms of labour done for an employer including daily wage work at one extreme and highly paid corporate jobs at the other.<br><img loading=\"lazy\" decoding=\"async\" width=\"279\" height=\"216\" src=\"https:\/\/lh7-us.googleusercontent.com\/BtuD5nLMp161P97AuQVl3HpaAYH4x8q4r6gINPz4l7wbjrI6vBwRX4GHUdOVTlZWDwWxkkVXkoNq6lbVylgXbOuHp1StlxajQs4lSeTQfvRJg61akkZ0Tv-Yp4UC1zOFfm2Lr0uqiUXAI_olVL93RakKFm1Yf6hsIAj9C119iLX_tFQA1iB2KbB2teXNTQ\"><br>&#8211; Jobs generally refer to relatively better paid regular wage or salaried employment.<br>&#8211; In other words, <strong><em>all jobs are wage labour, but all wage labour cannot be called jobs.<\/em><\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><a href=\"https:\/\/epaper.thehindu.com\/ccidist-ws\/th\/th_delhi\/issues\/64836\/OPS\/GFCC6HVCK.1+GORC6IJSR.1.html\" rel=\"nofollow noopener\" target=\"_blank\">Source: TH<\/a><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong><span style=\"text-decoration: underline;\">Mains Practise Question&nbsp;<br><\/span>[Q] <\/strong>What are the major reasons for India&#8217;s &#8216;jobless growth&#8217;? Analyse its impact on the Economy of India and highlights the efforts to tackle the issue of jobless growth in India.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.nextias.com\/ca\/wp-content\/uploads\/2023\/12\/Daily-Editorial-Analysis-26-12-2013.pdf\">Download PDF<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Syllabus: GS3\/Indian Economy Context: Key Highlights : Macro-economic reasons Low Labour Demand: Growth and Labour Productivity:&nbsp; Jobless Growth: Solution to the Jobs Crisis: Macroeconomic Policy Framework: Do you know ?Keynesian revolution in Macroeconomics:&#8211; Keynes states that in times of economic crisis, the government needs to increase public spending and cut indirect taxes, to revive the [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-19948","post","type-post","status-publish","format-standard","hentry","category-editorial-analysis"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/19948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=19948"}],"version-history":[{"count":7,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/19948\/revisions"}],"predecessor-version":[{"id":20019,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/19948\/revisions\/20019"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=19948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=19948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=19948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}