Unemployment is India’s biggest problem? Think again, Niti Aayog says it’s not; here’s why

Niti Aayog says unemployment is a lesser problem in India. (Representational image/PTI file)

For long, unemployment has been considered as one of the biggest problems of India. A UN Labour report released in January this year had predicted that job creation is not expected to pick up in the country in 2017 and 2018 due to a marginal increase in unemployment.

“Unemployment in India is projected to increase from 17.7 million last year to 17.8 million in 2017 and 18 million next year. In percentage terms, unemployment rate will remain at 3.4 per cent in 2017-18,” the report had said.

In the last three years, the Centre has taken several initiatives to empower youth with skills, but there hasn’t been any proven improvement in jobs scenario. The opposition has also often trained guns against the Centre over its apparent failure to increase job opportunities for youth.

However, Centre’s top thinktank Niti Aayog thinks unemployment is not as big a problem for India as it is often claimed. Instead, the policy thinktank believes the bigger problem is “underemployment”.

In its three-year action agenda released on Thursday, the Aayog said, “Indeed, unemployment is the lesser of India’s problems. The more serious problem, instead, is severe underemployment. A job that one worker can perform is often performed by two or more workers. In effect, those in the workforce are employed, but they are overwhelmingly stuck in low-productivity, low-wage jobs.”

Niti Aayog refutes claims that India’s growth has been “jobless”. Citing the Employment Unemployment Surveys (EUS) of the National Sample Survey Office (NSSO), the thinktank said they “have consistently reported low and stable rates of unemployment over more than three decades. Even under the most demanding definition of employment, the unemployment rate consistently remains between 5% and 8%.”

To illustrate the “underemployment” problem, it cited three examples: “First, in 2011-12, as per the NSSO Employment Unemployment Survey, 49% of the workforce was employed in agriculture. But agriculture contributed only 17% of India’s GDP at current prices. Second, in 2010-11, firms with less than 20 workers employed 72% of India’s manufacturing workforce but contributed only 12% of manufacturing output.

“Finally, services are no different. According to the 2006-07 NSSO survey of service firms, the 650 largest enterprises accounted for 38% of services output but only employed 2% of services workers. Put another way, the remaining services firms employed 98% of the workforce but produced only 62% of the output.”