Efficient job market

Gainful job creation remains a challenge

Policy challenges in India are often complex and layered. In the context of employment, even as the headline unemployment rate declined to a six-year low of 3.2 per cent in the July-June 2022-23 period, India has a serious employment problem. In the absence of remunerative work, a large potential pool of talent remains underutilised and is engaged in casual work. To improve job prospects, the government plans to upgrade the National Career Service (NCS) portal in the coming months. Leveraging artificial intelligence and machine learning techniques, the revamped portal is expected to improve job matching, recommend personalised skilling programmes, and provide other employment-related services like career counselling, job mela, vocational training, and apprenticeship. The upgraded website will also have micro sites for states and districts.
 

The NCS portal has witnessed a strong surge in the number of vacancies and active employers in the nine years since it was launched. In 2023-24, for instance, over 10 million vacancies were put up on the portal, compared with 3.5 million the previous year. Vacancies advertised were mainly in finance and insurance, operations and support, and construction. The proposed changes in the website will help both employers and those seeking employment in terms of better matching and reduced costs. While the initiatives must be welcomed, it must also be noted that it will not solve the employment problem. The real issue in India is that the economy is not creating enough remunerative jobs. Data from the Periodic Labour Force Survey suggests that India has been witnessing a consistent surge in self-employment, with well over half of the country’s workforce being self-employed. Over 57 per cent of workers in usual status were self-employed in 2022-23. In 2021-22 and 2020-21, the self-employment rates were 55.8 and 55.6 per cent, respectively.
 

Much of the increase in self-employment is said to be distress-led. Worse, the rise in the self-employed category has mostly been driven by those identified as “unpaid helpers in household enterprises”, who comprised 18.3 per cent of the workforce in 2022-23, up from 13.6 per cent in 2017-18. Alongside, the shares of both casual labourers and salaried workers have declined. Worryingly, the lack of jobs has also pushed many working-age Indians to move back to the farm sector. Agriculture employed 45.76 per cent of the total workforce during 2022-23, indicating that job creation in India is still slow.
 

Such aggregate trends observed in the labour market in terms of both quantity and quality of jobs call for a need to go back to the basics. One of the biggest policy failures over the years has been India’s inability to create enough jobs in the manufacturing sector, which would have helped bring the surplus workforce out of agriculture. It is to be hoped that sustaining higher economic growth will help kickstart the private-investment cycle and create jobs. Thus, the revamped career service portal will help improve efficiency in the job market but will not help solve the employment problem, which should remain the top policy priority.