Out of work

The Global Employment Trends 2013 report put out by the International Labour Organisation confirmed what economists had already noted: after a recovery fuelled by stimulus spending that is now winding down, the portents for the global economy appear to be uncertain once more. In India, growth slowed to 4.9 per cent, according to the ILO, leading to sluggish job growth, especially problematic in a country where much of the growth in the last decade has been attributed to improvements in labour productivity, rather than job creation. The report notes two major trends in the Indian labour market that lowered net employment growth: young people’s and women’s receding from the labour force.

A fall in female participation in the labour market appears to be a setback. India’s average female labour force participation rate is, according to the World Bank, less than half of sub-Saharan Africa’s. But the data paints a more complex picture. Although the participation rate for women fell from 37.3 per cent in 2004-05 to 29 per cent in 2009-10, this is partly due to an increase in secondary school enrolment among women of working age (15 and above). However, unemployment among female diploma holders is higher than their male counterparts, with unemployment rates reaching 34.5 per cent for women — much higher than the 18.9 per cent recorded for men during 2009-10. This has costs for a developing economy, particularly as an increase in the number of women entering the workforce could be just the low-hanging fruit needed to get growth back on track.

The report also showed that young people have been particularly affected by the slowdown, with an unemployment rate of over 10 per cent, much higher than the average. It is significant that young diploma holders suffer more, implying that India is doing a poor job of reaping its demographic dividend, with most graduating individuals lacking the skills sought by employers.