Over the past week, there have been several news reports about the “shrinking” Indian workforce and how Crores of Indians among the eligible population (counted as those of working age between 15-64) have simply stopped looking for jobs and are mimicking The Great Resignation that is viral in the West. Except that, in India, these “disappearing” members of the workforce are not looking for alternative jobs or careers (like in the US, among the Millions who resigned, there was a significant portion who entered the Gig economy or just changed jobs), but, have exited the workforce completely. If we do some number crunching, the labor participation rate in the Indian Economy has dropped to 40% (for men) and just 9% (for women). What this means is that among the estimated 90-100 Crore Indians who can take up a job, more than half have “given up” meaning that the participation rate in the overall Economy has reduced drastically. These numbers are comparable to the situation that existed in the United States in the 1930s during The Great Depression and according to the noted social scientist, Yogendra Yadav, if we count those who were part of the informal and the Gig work sectors, it does look and smell like the Indian workforce is in a depression.
Some of the reasons for this awful participation rate are to do with the pandemic having disrupted large sections of the Indian Economy and left Millions without jobs. While some of the jobs are indeed “coming back”, what is worrisome is that Crores of Indians are now in the “discouraged” and “demotivated” categories, meaning that they have lost interest in even looking for employment. This situation is more dire for women, wherein less than 1 in 10 Indian women are working, mainly because of the “challenges” that the post pandemic situation entails and more importantly, as juggling home and work has become very difficult. In addition, the cultural and safety aspects such as having to commute large distances or for that matter, working for longer hours and into the late evening are now seen as aspects that do not warrant their employment. Of course, it is also a fact that the White Collar jobs for Indian women have increased and there are enough indications that such jobs are attracting (want to add that this term does not come with gender stereotyping) the qualified women.
So, essentially what we have is a K shaped Job market where the best and the most well paying jobs and the professionals who are eligible are jumping at the opportunities, the other end of the spectrum is looking atrocious for those with limited qualifications and skills. While the comparison with The Great Resignation in the US seems apt to a certain extent, the alarming trend here is that many Indians don’t want to be employed, not because they are financially stable or well off, but, because they have “lost hope”. Some reasons for this are that the last two years have been very exhausting and draining for these sections of society and with good jobs hard to come by, they have “melted away” altogether from the workforce. Moreover, statistics from CMIE (Center for Monitoring The Indian Economy) that forms the bedrock of the news reports reveal that this aspect of Millions of Indians becoming “invisible” in the overall Economy predates the pandemic years and stretches all the way back to the Demonetization and the GST (Goods and Services Tax) rollout.
This again feeds into the “two India’s” narrative wherein we have a few sectors such as the IT (Information Technology) and the broader services and financial “shining” with ample opportunities and equally full demand for them whereas there are those sectors in the informal and Gig economies, where the hopelessness is visible, where jobs with decent pay and working conditions are hard to come by. Moreover, there is also a sense of despair among the educated in the workforce as can be seen from the Millions of graduates who apply for positions that do not even need a PU qualification. This is a potent recipe for social unrest where the Double Whammy of unemployment and underemployment and the discouraged and demotivated Indian professional/worker is something that needs to be addressed quickly. Moreover, the situation is dire in rural India where the farm jobs and the other menial work are again not enough, which leads to migration to urban areas and risks vicious the loop of no employment leading to underemployment, which in turn, discourages and demotivates those interested. Other reasons include technology taking away menial jobs, rural and poor urban youth falling behind on the “tech curve” leading to the above loops.
Last, India was supposed to have reaped the benefits of what is known as The Demographic Dividend, which means that with more than half of its population under 30, the supply for the jobs was expected to spur demand as more and more firms ramped up to scale as well as foreign firms looking for cheap labor could find them here. However, it sure looks like the Dividend has turned into a Nightmare, with such abysmal statistics about workforce participation and the sheer numbers of Indians who have lost all hope of finding jobs. What is slightly unnerving is that even increasing the supply of jobs may not solve this puzzle of when large numbers of Indians don’t want them. While some would blame this on the “over generous welfare state”, I personally believe that there needs to be more research into these trends as otherwise we risk a Lost Generation of Indians, unproductive and aimless, that can lead to longer term deterioration of the country.