Question.
Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.
(UPSC 2023 General Studies Paper 3 (Main) Exam, Answer in 150 words)
Answer.
Structural unemployment is when the structure of the economy undergoes significant changes, leading to a mismatch between the skills of the workforce and the skills demanded by employers.
Most of the unemployment in India is structural in Nature as it is contributed by many factors like:
- Skill-Gap
- Agriculture dominance
- Informal Sector dominance
- Poor Quality of Education
- Technological shift in economic activities
The major challenge contributing to structural unemployment in India is the existence of large informal sectors and the lack of skill of workforces for working in Formal sectors.
Many workforces do not have access to quality education and training, which makes it difficult for them to transition into sectors with evolving skill demands.
Methodology Adopted to Compute Unemployment in India:
Data Sources:
Periodic Labor Force Survey( PLFS) is the major source of data for unemployment computation in India, which is conducted by the National Statistical Office ( NSO).
This survey is conducted as per the methodology recommended by the International Labour Organization ( ILO).
Sampling Method:
Periodic Labor Force Survey( PLFS) is a household survey conducted on a sample of households covering both rural and urban areas.
Labour Force Participation Rate:
It represents the proportion of the working-age population ( 15 years and above) that is either employed or actively seeking a job.
Unemployment rate:
Unemployment rate= ( Number of unemployed/ Labor Force)* 100.
Suggestions for improvements:
Frequent Surveys:
There is a need to increase the frequency of surveys to capture more frequent changes in employment and unemployment patterns.
Inclusion of Informal Sector:
The informal sector, which constitutes a significant portion of India's economy, however it is not adequately represented in surveys. The survey should include the employment opportunities of informal sectors.
Skill Mapping:
Surveys should gather skill information and skill mismatch information to know the correct structural unemployment in India.
Real-Time Data Collection:
Delays in survey results do not provide real-time insights into emerging trends. We can collect real-time data, through mobile applications and digital platforms.
In summary, India's unemployment measurement system can be refined to better capture the complexity of the labor market, including structural unemployment, and facilitate evidence-based policy interventions for inclusive and sustainable employment.
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