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The Employment Crisis in India UPSC NOTE

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  Current State of Employment The government has acknowledged employment as a key issue , evident in the 23 mentions of the word in the 2024...

 Current State of Employment

  • The government has acknowledged employment as a key issue, evident in the 23 mentions of the word in the 2024-25 Union Budget.

  • India has a massive workforce of nearly 56.5 crore, primarily distributed across agriculture (45%), services (28.9%), manufacturing (11.4%), and construction (13%).

  • The official unemployment rate of 3.2% doesn't reflect the ground reality due to underemployment and the inclusion of casual and informal workers in the employed category.

  • Almost one in five workers, mostly women, work without pay in household enterprises.

  • Urban unemployment stood at 6.7% in Q4 FY24, while youth unemployment was 10% in FY23.

  • The percentage of people in regular salaried jobs has decreased from 22.8% in 2017-18 to 20.9% in 2022-23, despite government efforts.

Government's Employment Schemes

  • Three schemes offer wage subsidies for hiring first-time employees, with a total target of 1 crore beneficiaries, wage subsidy of up to ₹15,000 paid to the employee

  • A specific scheme targets first-time employees in manufacturing with wage subsidies for both employees and employers, for four years, with a maximum incentive of 24% of a ₹25,000 monthly wage

  • Employers hiring new workers (not necessarily first-time) can get reimbursement for EPFO contributions, up to ₹3,000

  • The fourth scheme aims to upgrade Industrial Training Institutes and boost skilling efforts, with 20 lakh students expected to benefit

  • Fifth scheme is aimed at on-the-job skilling, with an ambitious target of one crore youth to be given internships in India’s top companies with a monthly allowance of ₹5,000 for one year

Challenges in Scheme Implementation

  • Schemes have conditions like mandatory financial literacy courses and refund obligations for employers, hindering their effectiveness.

  • The manufacturing scheme's requirement of hiring 50 employees or 25% of existing strength is a significant hurdle for small firms.

Effectiveness of the Schemes

  • Economists argue that low wages are not the primary barrier to hiring, but rather insufficient demand and lack of private investment.

  • The schemes might be more effective for small firms with thin margins.

  • Creating formal jobs to absorb the large workforce leaving informal sectors is a major challenge.

Necessary Steps for Job Creation

  • Job creation should prioritize labor-intensive sectors and MSMEs in small towns.

  • Raising wages in sectors like MGNREGA can stimulate demand and create jobs.

  • A focus on grassroots-level economic activities is essential for job creation.

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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: The Employment Crisis in India UPSC NOTE
The Employment Crisis in India UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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