Unemployment rates rise steadily with the level of education

Over half of India’s working population in 2011-12 was under the $2-per-day poverty line, new research has found, raising serious questions over the quality of work most Indians find. In fact, the incidence of poverty is higher among the employed than the unemployed.

Researched and prepared by the Delhi-based Institute for Human Development (IHD), the India Labour and Employment Report 2014 was released by the Union Rural Development Minister Jairam Ramesh on Sunday. The report analyses decades of data up to the 2011-12 round of the National Sample Survey and presents original research.

A quarter of the workforce is under the official Tendulkar poverty line of Rs. 27.20 a day in rural areas and Rs. 33.33 a day in urban areas, according to the IHD report. If a slightly more generous poverty line of $2 per day (at Purchasing Power Parity) is used, the proportion jumps to 58.5 per cent. While the incidence of poverty is declining among both the unemployed and the employed, the numbers show that “low earning from employment, rather than unemployment, is the main source of poverty,” the report says. Among workers, the incidence of poverty is the highest among casual workers.

Data from the report suggests that the unemployed in India might primarily be those who haven’t found the right job. “In poor countries, unemployment tends to be very low because almost everyone needs to do some type of work,” Alakh Sharma, director of IHD and principal author of the report told The Hindu. Unemployment rates, which range between two and four per cent for the general population, rise steadily with the level of education and are higher still among women who are educated. In 2011-12, a third of the total unemployed were graduates or post-graduates. Unemployment is highest in the 15-25 age group, meaning new entrants to the job market — the cohort that is poised to see big growth in the coming years.

In general, the educational and skill levels of the workforce are extremely low: one in three workers is illiterate; for women the number is one in two. This raises the worrying sceptre that India’s much-heralded demographic dividend is already slipping away. “India is among the bottom of all countries in terms of years of schooling of its workforce,” Mr. Sharma said. “In many States, the demographic transition has already begun. There is a huge challenge of providing some functional education to the existing workforce, apart from educating and skilling the future workforce,” he said.

For the report, IHD researchers created a new Employment Situation Index (ESI) to compare the numbers across the States. The composite index is composed of seven indicators that measure the extent of formal and casual employment, work participation rate, unemployment, wages, unionisation and the incidence of poverty among the self-employed. Using the index, Himachal Pradesh, Delhi, Haryana, Karnataka and Punjab are in the top five and Bihar, Odisha, Uttar Pradesh, Madhya Pradesh and Chhattisgarh in the bottom five. Himachal Pradesh and Kerala are the top-ranking States in female employment.

There is also a strong social dimension to employment, the IHD found. The Scheduled Castes, the Scheduled Tribes and large sections of the Other Backward Classes have lower educational attainments and are concentrated in low productivity sectors, while Muslims are concentrated in low-paying petty self-employment. ‘Upper’ caste Hindus, Jains, Sikhs and Christians have a disproportionate share of good jobs, the report says.