In his recent Independence Day address, the Prime Minister of India drew attention to the country’s youthful population and underscored the potential it holds for the nation’s future. However, an analysis of India’s workforce, based on data from CMIE’s Economic Outlook, reveals a contrasting reality: despite India’s reputation for youthfulness, its workforce is undergoing a rapid process of aging.
The Aging Workforce Phenomenon
The concept of an aging workforce refers to the gradual shift within the employed population, wherein the proportions of young individual’s declines while the share of those approaching the age of 60 increases. This phenomenon is illuminated through an examination of the Composition of Workforce by Age Group.
Age Groups and Their Composition
CMIE’s data categorizes youth as individuals aged above 15 years and below 25 years. However, for the sake of alignment with the Prime Minister’s reference to individuals under 30 years as youth, we can delineate three distinct groups: those aged 15 years or more but less than 30 years, those aged 30 years or more but less than 45 years, and those aged 45 years and older.
Over the years, the share of India’s youth has dwindled significantly, plummeting from 25% in 2016-17 to a mere 17% at the close of the last fiscal year in March. The middle age group has also experienced a decline in its share, diminishing from 38% to 33% over the same period. In stark contrast, the oldest age category has witnessed a surge in its share from 37% to an impressive 49%. In essence, within a span of seven years, the workforce has aged to the extent that the segment of individuals aged 45 years and above has burgeoned from one-third to nearly half.
The numerical data underscores the trend: while the overall employed population has dropped from 41.27 crore to 40.58 crore, the most substantial decline has been registered within the cohort of India’s youth. Specifically, in 2016-17, the workforce included 10.34 crore individuals under 30 years of age; by the conclusion of 2022-23, this figure had plummeted by over 3 crores to a mere 7.1 crore. Interestingly, the number of those aged 45 and above increased, even as the overall employment levels contracted.
Despite this growth in numbers, young individuals are seemingly being pushed out of the job market. This is evident through the metric of “Employment Rate” (ER), which reveals the proportion of a particular age group that is gainfully employed. A closer examination of Employment Rate by Age Group unveils the complex dynamics.
For the category of individuals aged 15 to 30, although the population swelled from 35.49 crore in 2016-17 to 38.13 crore in 2022-23, the employed youth within this group dwindled. This signifies that while the youth population expanded by 2.64 crore, the number of employed youth plummeted by a staggering 3.24 crore. In essence, the employment among India’s youth experienced a distressing 31% decline over the past seven years, resulting in a sharp fall in the Employment Rate for this age group, from 29% to 19%.
Varied Trends in Different Age Groups
The downward trajectory in employment rates is discernible across different age groups. However, the decline has been less pronounced among individuals aged 30 to 45. On the other hand, the oldest age group has witnessed the least reduction in employment rates. In fact, the segment of individuals aged 55-59 within this category has shown a commendable increase in both employment rate and overall employment over the past seven years.
Implications and Future Projections
Drawing from a five-year dataset, the age group of 25 to 29 seems to display a rising employment rate over the past seven years. Yet, this uptick can be attributed to a significant decrease in the total population within this age bracket. This prompts a critical realization: despite India’s burgeoning youth populace, job opportunities for them are far from assured.
Challenges for Policy Makers
Policymakers are faced with significant challenges in light of these developments. The demographic advantage India enjoys will only bear fruit if policies are attuned to this evolving workforce landscape. Skill development, access to education, vocational training, and robust labor policies will play pivotal roles in harnessing the demographic dividend.
UPSC Mains Questions
- What factors have contributed to the declining employment rate among India’s youth population?
- Analyze the implications of the youth exodus from the job market on India’s future economic prospects.
- In light of the data presented, discuss the key challenges policymakers need to address to tap into India’s demographic dividend effectively.
