Crack the employment paradox to avoid a middle-income trap

livemint.com:

Is India’s unemployment problem being exaggerated? Going by the latest KLEMS data released by India’s central bank—which tracks inputs of capital, labour, energy, materials and services—that may seem to be the case. It shows employment in the country grew 6% in 2023-24, up from 3.2% in 2022-23. In absolute terms, the economy added 46.7 million jobs in 2023-24, compared with 19 million in 2022-23 and 11.9 million in 2021-22.

This acceleration, with data partly drawn from the Periodic Labour Force Survey (PLFS), offers hope in the context of a job-market slump reflected in private surveys of joblessness. According to the Centre for Monitoring Indian Economy, our unemployment rate rose to 8% in 2023-24. While measuring job-market gaps is a challenge in a vast country with multiple forms of employment, and the official PLFS classifies workers in a way that may explain its brighter readings, we’d have less to worry about if it’s clear that more jobs are being created than people joining our workforce.

But then, is it? Some KLEMS data-points stick out, such as its record of 31 million jobs generated in covid year 2020-21, drawing job arguments back to what exactly we call being employed. All considered, we still face an apparent paradox of fast GDP growth leaving us short of jobs that can add up to deliver a long awaited all-round boom in consumption. Although our GDP growth has outpaced that of all other major economies, declining labour-intensity in non-farm sectors has also been observed.