An economist explains why more and more Indians are choosing not to work

Where is the data?
Where is the data?
Image: Reuters/Babu
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A member of India’s leading think tank says that as the country gets richer and more educated, many Indians are choosing to stay away from the job market, further exacerbating unemployment numbers in Asia’s third-largest economy.

Bibek Debroy, a member of NITI Aayog, says that latest data from CMIE, a private database, shows that voluntary unemployment could be a bigger headache for India in the coming years.

When I am talking about unemployment, it can be voluntary or involuntary. What the CMIE survey shows, what has gone up in India is (not) involuntary employment, but voluntary unemployment. Involuntary unemployment has not increased dramatically, but voluntary has. And, intuitively we know about this. Whether this is girls getting enrolled in schools, children getting enrolled in schools, income levels going up and women opting out, whether it is poorer households investing in education, and therefore not willing to engage in traditional pursuits and more, we intuitively know all this.

People are unwilling to settle for jobs, particularly after having ‘invested’ in education, that do not give you a salary above this level.

For the Narendra Modi government, job growth has been a priority ever since it came to power in 2014, but it has so far struggled to deliver. By 2020, India will have the world’s largest young workforce, and it is crucial for the government to record healthy job numbers before the next general elections.

According to Debroy, the government first needs to put in place a system for timely and reliable job data.

“But, in some sense we need to create 10 to 12 million (jobs) and I don’t know yet how many we are making…We don’t have data that is eminating in the government sector,” he said at a conference hosted by FICCI, an industry body, in New Delhi on May 12.

Currently, job data in India is available through two government sources, the National Sample Survey and the Labour Bureau. The government has now formed a task force under Arvind Panagariya, vice-chairman of the NITI Aayog to suggest a method to capture job data in the country.