Hindu Editorial Analysis : 19-September-2024
India has a unique demographic advantage, with 63% of its population in the working-age group and a median age of just 28 years. This “demographic dividend” presents a significant opportunity for economic growth. However, realizing this potential requires addressing several employment challenges.
Economic Landscape
Growth Potential
India is currently the fastest-growing large economy and the fifth-largest economy in the world. This growth is largely driven by the services sector. However, the Labor Force Participation Rate (LFPR) was only 55.2% in 2022, indicating that many people are not engaged in the workforce.
Job Creation Challenges
- Service-led Growth: While the economy is expanding, the service sector creates fewer jobs compared to manufacturing.
- Agricultural Sector: 45% of the workforce remains in agriculture, which only contributes 18% to the GDP. This highlights low productivity and underemployment.
- Informal Economy: About 19% of workers are in unorganized, non-agricultural sectors, facing low productivity and poor working conditions.
Social Dimension: The Labor Market
Labor-Intensive Sectors
Certain sectors, such as toys, apparel, tourism, and logistics, have high potential for job creation but are still underdeveloped.
Skill Gap
- Only 4.4% of the workforce aged 15-29 is formally skilled, which creates a significant skill deficit.
- The informal economy lacks social security and suffers from low productivity.
Technological Impact
Automation Threat
The rise of AI and machine learning poses risks for low-skill jobs but also opens doors for high-skill employment in tech sectors.
Skill Mismatch
Despite India having a vast talent pool in AI, there is a 51% gap between the demand and supply of skilled workers.
Policy and Governance
Labor Law Reforms
The ongoing delays in implementing new labor codes create uncertainty in labor-intensive sectors. Streamlining these laws is crucial for easing compliance for small businesses.
Coordination Needed
Effective cooperation between the central and state governments is essential to optimize resources and attract investments.
Government Initiatives
To address these challenges, the Indian government has launched several initiatives:
- Make in India: Promotes manufacturing and job creation.
- Skill India Mission: Focuses on workforce upskilling.
- Production Linked Incentive Scheme: Provides incentives for boosting production in manufacturing.
- PM Gati Shakti: Enhances logistics and infrastructure.
- National Apprenticeship Promotion Scheme: Encourages skill development through apprenticeships.
- Startup India: Supports entrepreneurs and job creation.
Moving Forward
Reforms and Skill Development
To harness the demographic dividend effectively, several steps are necessary:
- State-Level Reforms: States should lead labor code implementation to create a more business-friendly environment.
- Skill Gap Solutions: Emphasize lifelong learning and increase partnerships between public and private sectors to integrate relevant skills into education.
- Boosting MSMEs: Simplify compliance processes and provide financial incentives for small businesses to grow.
- Leveraging AI/ML: Integrate AI education into curricula and skill programs to prepare the workforce for tech roles.
Focus on Labor-Intensive Sectors
Special attention should be given to sectors like toys and logistics to absorb unskilled labor and create higher-paying jobs.
Centre-State Cooperation
Better coordination between the central and state governments is necessary to ensure successful infrastructure projects and job creation efforts.
Why In News
With 63% of its population in the working-age group and a median age of just 28 years, India has a unique opportunity to harness its demographic dividend, positioning itself as a potential global leader in innovation and economic growth. However, realizing this potential requires overcoming significant employment challenges, including skill mismatches and underemployment in various sectors.
MCQs about Harnessing India’s Demographic Dividend: Opportunities and Challenges
- What is the current Labor Force Participation Rate (LFPR) in India as reported in 2022?
A. 45.2%
B. 55.2%
C. 63%
D. 70%
- Which sector employs the largest portion of India’s workforce, according to the essay?
A. Services
B. Manufacturing
C. Agriculture
D. Technology
- What is one of the key initiatives launched by the Indian government to support job creation?
A. Digital India
B. Make in India
C. Green India
D. Clean India
- What challenge does the rise of AI and machine learning pose to the job market in India?
A. Increase in high-skill job opportunities
B. Creation of more low-skill jobs
C. Threat to low-skill jobs
D. Decrease in technological investment
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