Experts' views: Why unemployment rate is rising in India

New Delhi: The count of people being without a job is on the rise in India as economic slowdown and slower business expansion activities cast a shadow on employment generation, say experts.

Indicating sluggishness in the country’s job market, the International Labour Organisation (ILO) has said in its recent report that the unemployment scenario in India over the last two years has been showing a rising trend.

Going by ILO’s latest estimates, India’s jobless rate could be 3.8 percent this year.

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Ritu Mehrotra, VP Global HR and Talent Management of Bristlecone, a Mahindra Group company, said that due to migration to urban areas there is a sharp rise in the unemployment rate in rural areas as well.

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“Government should step up their efforts to support skill and retraining activities to address the gaps between demand and supply of work skills and qualifications and to address long-term unemployment,” she told PTI.

In South Asia, labour markets continued to suffer from high rates of informal/agricultural employment where jobs are poorly paid and unprotected, ILO said in the report.

Unemployment rate in India is showing an increasing trend since 2011 when it was 3.5 per cent. The same rose to 3.6 percent in 2012 and climbed to 3.7 per cent last year.

This year, jobless rate is expected to rise to 3.8 per cent, according to the report ‘Global Employment Trends 2014’.

According to the ILO report, it has been argued that India was experiencing ‘jobless growth’ due to the fact that total employment grew by only 1.1 million from 2004/05 to 2009/10 (based on the National Sample Survey), representing an employment elasticity of almost zero.

However, total employment in India expanded from 2009/10 to 2011/12 by a much healthier 13.9 million, “though many of these jobs are in the informal economy,” it added.

Executive search firm GlobalHunt’s MD Sunil Goel said in the last couple of years Indian and global economies have been facing slowdown. New business expansions are also not happening at all or has gone down, he added.

A large pool of youth in the age group of 18-25 years despite being skilled are facing unemployment issues since there are not enough opportunities for them, Goel said.

In India, ILO report showed, 21.2 per cent of working men (aged 15 59) had a regular salaried job (in 2011/12 period). “India’s biggest worry and centre of all debates essentially needs to be the growing informal employment which counts for 94 per cent of the workforce and is growing faster

than formal employment,” Indian Staffing Federation Vice President Rituparna Chakraborty said.

Chakraborty further said there is a need to seriously invest and build skills amongst the youth. It means “a complete overhaul of our education system closely integrating it with an effective apprenticeship regime,” he noted.

PTI