Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (150 words)

India’s unemployment scenario is complex, with structural factors playing a significant role.

Structural Unemployment in India:

  • Definition: Structural unemployment arises from a mismatch between the skills that workers offer and the skills demanded by employers.
  • Industrial Shift: As India transitions from an agrarian to a service-based economy, many lack the skills required for newer jobs.
  • Technological Advancements: Automation and digitization have reduced the demand for manual labor.
  • Rigid Labor Laws: Stringent laws make it challenging for employers to hire and lay off workers, leading to reluctance in hiring.
  • Education System: The education system often doesn’t equip students with skills aligned with industry demands.

Methodology to Compute Unemployment:

  • Periodic Labour Force Survey (PLFS): The main source of unemployment data. The 2019-20 PLFS showed a decrease in unemployment to 4.8% from 6.1% in 2017-18.
  • Usual Status (UPSS): Classifies individuals based on their activity for a longer period in the previous year. This can under-represent unemployment as even short-term work is counted.
  • Current Weekly Status (CWS): Measures economic activity over the previous week. It showed unemployment remained around 8.8% from 2017 to 2020.
  • Challenges: Seasonal employment, informal sector prominence, and varying reference periods complicate accurate measurement.

Suggested Improvements:

  • Shorter Reference Periods: To capture dynamic changes in employment.
  • Skill Development Programs: Align education with industry needs to reduce the skill mismatch.
  • Labor Law Reforms: Make laws flexible to encourage employers to hire.
  • Promote Female Workforce Participation: Address societal norms and provide safe working conditions to encourage more women to join the workforce.
  • Inclusive Data Collection: Ensure representation from all sectors, including the informal sector.
  • Regular Updates: Frequent surveys to capture real-time data.

In conclusion, while India has made strides in measuring unemployment, there’s room for improvement. A multi-pronged approach addressing structural issues, refining data collection methods, and promoting skill development can pave the way for a more accurate and actionable unemployment metric.

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