The latest figures from the Periodic Labour Force Survey (PLFS), released by the National Statistical Office (NSO) on May 17, 2024, reveal a troubling rise in urban unemployment in India. The urban unemployment rate has climbed to 6.7% in the fourth quarter of FY-24, up from 6.5% in the previous quarter. Despite a modest increase in the labour force participation rate (LFPR) from 49.9% to 50.2%, the disconnect between the growing number of job seekers and the availability of employment opportunities draws attention to deeper systemic issues within the economic framework.
These statistics are not merely numbers but indicators of inherent contradictions and imbalances within our economic system. The rise in unemployment, particularly among the youth and men, indicates the cyclical crises that the system perpetuates. While the LFPR increase suggests a greater desire to work, the system fails to provide corresponding opportunities, reflecting structural inadequacies.
The PLFS data show a rise in youth unemployment, with rates climbing from 16.5% in Q3 to 17% in Q4 among those aged 15-29. This demographic is critical for the future of any economy, yet the system’s failure to integrate them into the workforce reveals its inability to utilise human potential effectively. This growing disenchantment among the youth can lead to increased alienation, where workers become estranged from their labour and its products, leading to broader social discontent.
Furthermore, the gender disparity in employment trends is striking. The unemployment rate among women has declined slightly to 8.5%, while it increased among men from 5.8% to 6.1%. This disparity highlights the gendered nature of labour exploitation, where patriarchal structures intersect with economic systems to marginalise women’s labour.
Despite the increase in LFPR, the share of people engaged in self-employment slightly declined from 40.6% to 40.5%. This decline, though seemingly minor, is significant. It indicates a reduction in small-scale entrepreneurs, who often serve as a buffer within economic societies. This is also a pointer towards the increasing concentration of wealth and the growing economic precarity of the workforce.
Moreover, the discrepancy between PLFS and the Centre for Monitoring Indian Economy (CMIE) data, which reports a rise in India's overall unemployment rate from 7.4% in March 2024 to 8.1% in April 2024, signalises the volatility and unreliability inherent in our economic structures. These variations reflect the precarious nature of employment, where economic stability is continually undermined by market fluctuations.
The slight decrease in the unemployment rate from 6.8% to 6.7% over the year might seem like an improvement, but it masks the underlying reality of persistent joblessness and underemployment. This superficial progress fails to address the root causes of unemployment, such as technological displacement and the commodification of labour.
These unemployment trends are symptomatic of a larger systemic crisis. The mode of production, which prioritises profit over people, inevitably leads to periodic crises of overproduction and underemployment. The urban unemployment rate, particularly among the youth and marginalised sections, reflects the failure of the system to provide for its labour force.
Addressing these issues requires more than superficial policy adjustments; it demands a fundamental restructuring of the economic system. One potential approach to mitigating these challenges is the implementation of an urban employment guarantee scheme. While such a scheme should not be seen as a panacea for all economic woes, it represents a significant step towards providing immediate relief to the jobless and underemployed.
An urban employment guarantee scheme could offer several benefits. By providing guaranteed employment, the government can ensure a steady income flow to urban households, thereby boosting consumption and aggregate demand. This increase in demand can lead to higher production and, consequently, more job creation in the private sector. The income generated from employment guarantee programs can have a multiplier effect on the economy. Each rupee earned and spent by the beneficiaries circulates through the economy, creating further economic activity and additional employment opportunities.
Additionally, such a scheme could help address the alarming rise in youth unemployment. By specifically targeting younger workers, the program could offer them not only employment but also opportunities for skill development and training. This dual approach would enhance their employability and better prepare them for the job market, addressing both immediate needs and long-term economic goals.
The gender disparity in employment trends also brings out the need for targeted interventions within an urban employment guarantee scheme. Women, who often face greater barriers to employment, could benefit from dedicated programs that provide training, childcare support, and flexible working conditions. This would not only help reduce the unemployment rate among women but also promote greater gender equality in the workforce.
Furthermore, the scheme could be designed to support small-scale entrepreneurs and self-employed individuals, who play a crucial role in the urban economy. By providing financial support, training, and access to markets, the scheme could help these entrepreneurs maintain their businesses and even expand, contributing to overall economic stability.
Implementing an urban employment guarantee scheme, however, comes with its own set of challenges. Ensuring adequate funding, preventing corruption, and effectively targeting beneficiaries are crucial for the scheme's success. The government could explore multiple funding avenues, including public-private partnerships, international grants, and budget reallocation from less impactful programs. Proper financial planning and prioritisation can ensure sustainable funding for the scheme.
Leveraging technology for transparent and efficient management is also essential. Implementing a robust digital platform for job allocation, payment disbursement, and monitoring can minimise corruption and ensure accountability. Accurate identification of beneficiaries is crucial to ensure that the benefits reach the truly needy. Collaborations with local bodies and community organisations can aid in this process, ensuring that the scheme is effectively implemented at the grassroots level.
India's urban workforce is a vital component of its economic engine. Ignoring the employment needs of this demographic not only undermines economic redistribution but also risks exacerbating social inequalities. While the idea of an urban employment guarantee scheme has merit, it must be viewed as an alleviation scheme rather than a solution to the systemic contradictions. The long-term solution lies in transitioning towards a system that prioritises human needs over profit, ensuring equitable distribution of resources and opportunities.
Yadul Krishna is a policy economist. As the Parliamentary Secretary to a Rajya Sabha MP, he drafted ‘The Bhagat Singh National Urban Employment Guarantee Bill, 2022’, which was introduced in the Parliament.
Views expressed are the author’s own.