Slow Transition to Non-Farm Employment Has Reversed, Says ILO Report

Despite recent improvements in overall labor force participation and employment rates in India, employment conditions remain poor according to the 'India Employment Report 2024'. Released jointly by the Institute for Human Development (IHD) and the International Labour Organisation (ILO), the report underscores concerning trends, notably the reversal of the slow transition to non-farm employment. 

The report indicates women, in particular, account for the surge in self-employment and unpaid family work. Moreover, youth employment suffers from poorer quality compared to adults, marked by a higher proportion of unpaid family work and stagnant or declining wages. This indicates a pressing need to address gender disparities and enhance opportunities for meaningful employment, especially for the younger demographic.

Policy Recommendations

The report advocates for economic policies geared towards boosting productive non-farm employment, particularly in the manufacturing sector, to accommodate the growing youth labor force. It emphasizes the importance of supporting micro, small, and medium-sized enterprises (MSMEs) through a decentralized, cluster-based approach, leveraging digitalization and artificial intelligence. 

Additionally, there's a call for enhancing the quality of jobs by investing in sectors such as the care sector and the digital economy. An inclusive urban policy is deemed necessary to address the needs of migrants, women, and impoverished youth in the face of increased urbanization. 

The report also highlights the role of skills development and active labor market policies (ALMPs) in bridging the supply-demand gap in jobs and making the labor market more inclusive. It advocates for stronger partnerships between state governments, the private sector, and other stakeholders to foster a more robust and inclusive employment ecosystem.

Government Interventions

However, Chief Economic Adviser V Anantha Nageswaran highlighted government facilitative actions for employment, including skill development initiatives and the National Education Policy (NEP), while urging industry to prioritize hiring as a means to address labor market issues. “We need to get out of that mindset. In the normal world, it is the commercial sector, those who engage in for-profit activity, who need to do the hiring,” he said.