ILO India Unemployment Rate – Key Findings and all you need to know about it!

ILO India Unemployment Rate

According to the “India Employment Report 2024” released by ILO and IHD, 80% of India’s unemployed population comprises young individuals. The ILO projects the national unemployment rate for 2023 to stand at 5.1%.

ILO India Unemployment Rate

The report “India Employment Report 2024,” jointly released by the ILO and the IHD, highlights a troubling trend: youth unemployment.  Over 80% of India’s unemployed workforce falls under the youth category.

The current unemployment rate in India, according to the International Labour Organization (ILO), is 2.1% for males and 2.3% for females. These figures reflect the ILO estimates for the total labour force in India.

This issue is further compounded by the fact that a significant portion (around 65.7% in 2022) have secondary education or higher. This indicates a growing mismatch between skills and job demands.

Key Findings of the ILO Report

The report reveals a worrying trend:  

  • Youth unemployment rate more than doubled between 2000 and 2019 (from 5.7% to 17.5%). While the pandemic years saw a decline (12.4% in 2022), the situation remains precarious.  Graduate unemployment is particularly concerning, impacting women disproportionately.
  • Gender Disparity: The report exposes a stark gender gap. In 2022, nearly five times more young women (48.4%) were not in employment, education, or training compared to men (9.8%). This highlights the need for targeted policies to enhance female labour force participation.
  • Informal Sector Reliance: Another key takeaway is the dominance of the informal sector.  A vast majority of jobs in India are informal, offering limited social security and career progression. This lack of formal employment opportunities further complicates the unemployment picture.
  • Labour Market Dynamics: Despite recent improvements in labour force participation and employment rates, challenges persist, especially in the non-farm sector’s ability to absorb workers effectively.

ILO India Unemployment Rate

Recommendations of ILO to address unemployment in India

The ILO has outlined several key recommendations to address unemployment in India, focusing on five main policy areas:

Promoting Job Creation:

  • Boosting productive non-farm employment: Encouraging growth in sectors like manufacturing can generate a higher number of formal jobs.
  • Promoting decent work in Micro, Small and Medium Enterprises (MSMEs): Supporting MSMEs through access to credit, skilling initiatives, and streamlining regulations can create more employment opportunities.
  • Investing in infrastructure: Public and private investments in infrastructure can create jobs in construction and related sectors.

Improving Employment Quality:

  • Strengthening labour market regulations: This can ensure minimum wages, safe working conditions, and social security benefits for workers in both the formal and informal sectors.
  • Promoting formalisation of the informal economy: Providing incentives and streamlining processes for informal businesses to transition to the formal sector can improve job quality and worker protections

Addressing Labour Market Inequalities:

  • Bridging the gender gap: Policies like affordable childcare facilities, flexible work arrangements, and tackling workplace discrimination can encourage increased female labour force participation.
  • Addressing regional disparities: Tailored policies are needed to address unemployment issues specific to different regions in India.

Strengthening Skills and Active Labour Market Policies:

  • Skilling initiatives aligned with industry needs: Reforming education and training programs to equip the workforce with relevant skills for in-demand jobs is crucial.
  • Active labor market programs: This includes providing career counselling, job placement services, and unemployment benefits to facilitate job seekers’ re-entry into the workforce.

Bridging the Social Protection Gap:

  • Expanding social protection schemes: Extending social security benefits like unemployment insurance and healthcare access can provide a safety net for job seekers and vulnerable workers.

Consequences of High Unemployment Rates in India

High unemployment rates in India cast a long shadow, impacting individuals, society, and the overall economy. The consequences are:

Individual Level:

  • Financial Strain: Joblessness translates to a loss of income, leading to financial hardship for individuals and their families. This can impact basic necessities like food, housing, and healthcare.
  • Reduced Standard of Living: Unemployment can significantly decrease a person’s standard of living, forcing them to cut back on expenses and potentially leading to debt.
  • Loss of Skills: Long-term unemployment can lead to a decline in skills and experience, making it harder to re-enter the workforce.

Societal Level:

  • Increased Poverty: High unemployment rates can exacerbate poverty, creating a vicious cycle where joblessness leads to a decline in living standards, making it harder to afford basic needs and education, further hindering future job prospects.
  • Social Unrest: Frustration and desperation stemming from unemployment can contribute to social unrest and crime.
  • The strain on Public Services: Increased dependence on social welfare programs due to unemployment can put a strain on government resources.

Economic Level:

  • Lower Productivity: When a significant portion of the workforce is unemployed, the overall productivity of the economy suffers. This can lead to slower economic growth.
  • Reduced Consumption: With job losses comes a decrease in consumer spending, impacting businesses and further hindering economic activity.
  • Underutilization of Resources: A large pool of unemployed individuals represents a waste of human capital and potential economic growth.

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