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India's Demographic Duality

A Youthful Nation with an Aging Workforce
GS3 - Economy

Why in the news?

A study of India's workforce using CMIE's Economic Outlook data indicates that despite having a predominantly young population, the workforce is experiencing rapid ageing.

India's Workforce Trends

A look at India's workforce data reveals:

1. Youth Population Decline: The proportion of India's youth (below 30 years) has decreased from 25% in 2016-17 to 17% by the end of the last fiscal year in March.
   
   
2. Middle Age Group Shift: The segment aged 30 to less than 45 years has also seen a decline, dropping from 38% to 33% during the same period.
   
   
3. Rise in Oldest Age Group: In contrast, the oldest age group (45 years and above) has seen its share grow significantly, rising from 37% to 49%.

Significance of Ageing Workforce in India

The data presents a significant perspective on India's demographic dynamics and its implications for the job market:

1. Youth Population vs. Job Opportunities: Despite the country's rapid growth in the youth population, the data highlights a mismatch between this demographic advantage and increased job availability for the youth. The mere presence of a sizable youth segment doesn't guarantee ample job prospects.
   
   
2. Youth Struggles in Job Market: India's young workforce is encountering challenges in establishing a substantial presence in the job market. This indicates that factors beyond population size are at play when it comes to youth employment.
   
   
3. Competition from Older Workers: The rising prominence of not-so-young individuals in the job market is crowding out opportunities for the younger workforce. This shift suggests that older workers are actively competing for jobs traditionally associated with the younger demographic.
   
   
4. Remarkable Workforce Ageing: Over just seven years, the workforce's age distribution has experienced significant change. The proportion of individuals aged 45 and above has surged from one-third to nearly half, underlining the speed at which the workforce is ageing.
   
   
5. Policy Considerations: While higher education pursuits might account for some of the youth's absence from the workforce, the overall trend is substantial enough to warrant policy makers' attention. It calls for an exploration of the underlying factors affecting youth employability.

Challenges in India's Employment Landscape

1. Skill Mismatch and Labor Surplus

Despite a large workforce, skill gaps persist in various industries.

Sectors like transportation, steel, healthcare, and construction lack qualified professionals.

2. Sectoral Disparities

India's service-dominated growth has left manufacturing with a shortage of skilled workers.

Limited access to quality education and capital-intensive manufacturing contribute to this disparity.

3. Post-Pandemic Job Crisis

The aftermath of the pandemic has led to widespread unemployment, hitting young and educated individuals particularly hard.

4. Gender Disparity in Workforce

Societal norms, inadequate infrastructure, and safety concerns limit women's participation in the workforce.

Many women choose to remain within the confines of their homes, due to these constraints.

5. Informal Sector Prevalence

Despite efforts toward formalisation, a significant portion of the workforce remains employed in the informal sector without job security or benefits.

6. Impact of Automation and AI

Automation, artificial intelligence, and data analytics are altering job requirements.

Anticipated job displacement includes roles in administration, data entry, and routine tasks.

7. Quality of Employment

A considerable portion of the workforce is engaged in low-paying, insecure, and informal jobs, lacking social protection.

8. Underemployment and Low Wages

Many employed individuals are underutilised in terms of skills, leading to low wages and dissatisfaction.

9. Educational Discrepancies 

The education system's mismatch with industry needs exacerbates unemployment as graduates lack relevant skills.

10. Urban-Rural Divide

Rural areas experience higher underemployment and disguised unemployment, contributing to rural-urban migration.

Government Initiatives for Employment Enhancement

1. National Career Service (NCS) Project

• A Ministry of Labour and Employment initiative.
• Transforms the National Employment Service into a platform offering job matching, vocational guidance, career counselling, skill development course information, internships, and apprenticeship opportunities.

2. Pt. DeenDayal Upadhyaya Grameen Kaushlya Yojana (DDU-GKY)

• A component of the National Rural Livelihood Mission (NRLM).
• Aims to diversify rural families' incomes and cater to the career aspirations of rural youth.

3. PM- SVANidhi Scheme

• Prime Minister Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi) Scheme.
• Offers collateral-free working capital loans to urban street vendors, aiding post-COVID business revival.

4. Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

• Ministry of Skill Development & Entrepreneurship flagship scheme.
• Implemented by National Skill Development Corporation.
• Focuses on skill development and upskilling across various sectors.

5. Rural Self-Employment and Training Institutes (RSETI)

• A Ministry of Rural Development initiative.
• Establishes dedicated training institutes in each district for rural youth.
• Imparts training and skills for entrepreneurship development.
• Managed by banks in collaboration with government authorities.

Way Ahead 

Seizing the abundant potential of India's youthful population is imperative for sustainable growth. With a sizable working-age cohort, the country holds a unique advantage to fuel its economy, innovation, and global competitiveness. Harnessing this demographic dividend requires strategic investments in education, skill development, and job creation. By aligning policies to cater to diverse sectors, fostering entrepreneurship, and enhancing technological readiness, 

India can unlock a workforce that not only meets domestic demands but also contributes significantly to the global workforce. Embracing this demographic opportunity stands as a pivotal pathway towards a prosperous and dynamic future.