Working-age population growing, job creation shrinking: An alarming situation

Prof. Mithilesh Kumar Sinha
Finance Officer, Nagaland University, Lumami

Unemployment is the greatest economic challenge facing India. India’s economy may be growing more than twice as fast as the rest of the world but the story on the jobs creation front is just the opposite, according to the Organisation of Economic Cooperation and Development (OECD). The United Nations International Labour Organisation (ILO) released its 2017 World Employment and Social Outlook report, which finds economic growth trends lagging behind employment needs and predicts both rising unemployment and worsening social inequality throughout 2017. The number of unemployed people in India is expected to rise by 1 lakh in 2017 and another 2 lakh in 2018, according to the International Labour Organisation (ILO).


Virtually all major economic policy issues derive from this central challenge. What is the current unemployment situation? Is it improving or deteriorating? Can the government crack the unemployment problem, or will the problem crack the government?


India’s rate of employment has declined and job creation has not kept up with the growing working-age population. India’s rate of employment has declined and job creation has not kept up with the growing working-age population. The stock is growing at 1.5% per year, adding about 5.5 million people to the workforce every year. Population in the working-age years is set to expand massively in India. Between 2010 and 2030, World Bank estimates suggest, the population in the 15-59 age group will increase by more than 200 million in India While Unemployment in India is projected to witness marginal increase between 2017 and 2018, signalling stagnation in job creation in the country, according to a UN labour report. According to estimates by International Labour Organization (ILO), India’s employment elasticity, a common measure of how employment growth responds to GDP growth, hovered around 0.3 between 1991 and 2007. Basically, 1% of overall economic growth produced 0.3% of employment growth. That number has been coming down quite alarmingly since, and now stands at only about 0.15%.


More than 30 per cent of Indians aged 15-29 years are neither in employment nor in education and training. This is more than double the OECD average and almost three times that of China. A perfect storm is brewing across India’s industrial complex, one that will truly test the country’s demographic dividend. Restructuring in many existing industries is leading to layoffs in thousands while a future in which new projects could be driven largely by automation and robots could put paid to the aspirations of millions of young men and women readying to join the workforce every year. Simply put, we could be looking at a future in which there are just no new jobs.



The Indian economy should urgently seek ways to generate decent jobs in large numbers. A failure to do so would result in frittering away the energies of the country’s young population. The ILO advocates policy approaches that address root causes of secular stagnation as well as structural impediments to growth. “Boosting economic growth in an equitable and inclusive manner requires a multi-faceted policy approach that addresses the underlying causes of secular stagnation, such as income inequality, while taking into account country specificities,” said Tobin. Such progress, the ILO emphasised, is only possible through international cooperation. A coordinated effort to provide fiscal stimuli and public investments would go a long way to provide an immediate jump start to the global economy and could eliminate an anticipated rise in unemployment for two million people.