India Needs to Create 7 Million Non-Agri Jobs Annually by 2034

Chennai: India will have to create 7 million non-agri jobs per year till 2034, amidst challenges from technological advancements like Artificial Intelligence (AI) and automation. Besides, there is also a need to shift the excess farm labour to non-farm jobs that have a higher value-added per worker (VAPW).

As per the Periodic Labour Force Survey, India is estimated to have created 114 million jobs between 2017-18 and 2022-23, implying a CAGR of 4.4 per cent, higher than that of 0.9 per cent in population over this period, which boosted the worker-population ratio (WPR) and dampened the unemployment rate.

However, the headline numbers mask several underlying issues, finds ICRA. For instance, nearly 53 per cent of the job creation between 2017-18 and 2022-23 stemmed from the agriculture sector, which saw a decline in value-added per worker (VAPW), during this period.

This implies a fall in labour productivity, thereby suggesting an increase in disguised unemployment in the sector. Besides, the regular/salaried jobs rose at a tepid CAGR of 2.6 per cent between 2017-18 and 2022-23, compared to the 6.4 per cent growth in the self-employed segment, which was mainly led by the sharp rise in helpers in household enterprises. This points to household stress and/or a lack of adequate salaried job opportunities.

While the unemployment rate declined to 3.2 per cent in 2022-23 from 6.1 per cent in 2017-18, the rate in urban areas remained elevated at 5.4 per cent. Unemployment levels were much higher among the higher educated cohorts – 13.4 per cent among graduates.

ICRA finds that India will have to create 7 million non-agri jobs per year between 2024-25 and 2033-34, amidst challenges from technological advancements like Artificial Intelligence (AI) and automation. There is also a need to shift the excess farm labour to non-farm jobs that have a higher VAPW.

The three-part ‘Employment-Linked Incentive’ scheme and a skilling programme with a total outlay of Rs. 2 trillion over five years announced in the FY2025 Budget aims at addressing some of the issues prevailing in the Indian labour markets, it said. Given the issues in the labour market such as sluggish growth in salaried jobs, low levels of formalisation, high unemployment rates for educated youth, and inadequate skills and the challenging task of creating a large number of formal sector non-agri jobs over the next decade, the schemes are a step in the right direction.

However, the success would be contingent on their execution.