Underemployment in India and Actions Taken to Reduce the Issue

Many people believed that India’s greatest challenge is unemployment. It was assumed to be true until the present Indian government agency known as NITI (National Institute for Transforming India) Aayog, shed some light on it, NITI states that “unemployment is not the problem but a severe underemployment” is the major problem the country is facing. Underemployment and unemployment have been one of the major factors that are slowing down the efforts of the government and making it seems difficult to meet the 2030 sustainable development goals (SDGs).

In this project, I shall be focusing on the meaning of underemployment, the difference between it and unemployment, factors leading to underemployment, and I will conclude with suggestions that can possibly serve as solutions to the problem of underemployment in India.

Definition of underemployment:

Underemployment can be defined as an acute underutilization of skills. In other words, under-employment describes the employment of workers with high skill levels (in most cases) with post-secondary education working in relatively low-skilled and low-wage jobs.

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For example, someone with a college degree may be tending bar or working as a factory assembly line worker.

According to the popular online study platform, study.com, underemployment is a situation in which workers are employed below their education or skill level, or their availability. Common kinds of underemployed workers includes skilled workers in low-paying jobs, and or part-time employees who prefer to work full-time.

Underemployment is the measurement of employment and the labour utilization in an economy which deals with how well the labour force is being utilized in terms of skills, expertise, experience and availability to work.

Underemployment is a more serious problem than unemployment because the job that is meant to be done by one employee is given to 2 or more employees. Such employees in India get paid small salaries that is inadequate to cater for their basic needs and in most cases, their salaries lesser than what they should earn normally based on their educational qualifications.

Unemployment on the other hand is when people who are qualified for jobs and willing to work cannot find jobs. The Employment Unemployment Surveys (ESUS) has indicated continuously the low and stable rates of unemployment in India for over three decades, while unemployment rates seemed to have remained low over the years in India, the underemployment gap has continued to widen.

Unemployment implies an economic situation where an individual who is energetically searching for an employment but is unable to find one.

Causes of underemployment in india

Caste System: The prevalence of the caste system in India makes some work prohibited for people of certain caste, which implies that candidates whose qualification matches the job are not allowed to take such jobs, hence, people with lower or higher qualifications (as the case may be) in communities/caste where the job favours occupy such positions without given priority to professionalism and qualification.

Slow Growth Rate of Indian Economy: Since the Indian economy is categorized as developing, and the role of economic growth which could have generate more balanced employment is slow.

Overpopulation: Constant population growth is a major problem that is causing inadequacies in several aspects of the Indian economy. In a bid to reduce the unemployment rate, more people are employed to carry out jobs meant for just a few people thereby leading to small salaries.

Agriculture been a Seasonal Occupation in India: Agriculture in India is still largely subsistent based and seasonal, hence, most subsistent farmers are on temporary or part-time employment due to a seasonal rain fall, which automatically leads to underemployment.

Inadequacy of the Micro Irrigation Scheme: Due to partial implementation of the Micro Irrigation Scheme, farming in places in Deccan and central India is practically impossible without irrigation. He was reported that many farmers didn’t get the needed supplies of irrigation and other technological materials; hence, only about 39% of total cultivable land areas could get irrigation facilities. This inadequacy led to a situation where just one crop could be grown on a large portion of land and leaving the farmers jobless for many months within each year.

Effect of Joint Family System: In big families owning businesses, many people in such families are engaged in family businesses occupying positions lower than their education qualifications especially when they cannot get their dream job, for instance, people whose families own retail shops or restaurants - work to assist their family as sales assistants, and some of them add very little to such businesses. Such people are literally dependent of their family business and are seen as working even though their input may be insignificant.

Unemployment due to Slow Growth of Industrialization: The slow growth rate of industrialization despite the emphasis of the government on industrialization, the changes in employment is still few compared to the level of employed people, which has resulted in educated workers taking on jobs requiring little or no prior education.

Inadequate of Infrastructures: Inadequate supply or availability of infrastructure and means of production such as shortage of electricity supply, coal and other raw materials needed for production by industries results situations where workers who wishes to work full time works part-time due to low production.

A Shift in Employment Pattern: The shift in the employment pattern has seen many employees who would prefer full-time employments taking on part-time jobs because most employers are taking advantage of it to cut costs on labour, leaving many employees with smaller take home and lack of job security.

Difference in Demand and Supply of Labour: There is an obvious wide gap between demand and supply of educated job hunters and the labour market. Still hundreds of thousands of university students graduate every year and they are searching for jobs. Employers usually receive an overwhelming applications for few vacant positions, which gives opportunity to employers to pay low salaries to workers knowing that potential employees have very limited choices.

Expansion and commercialization of Universities: The rate at which the number of universities in India increased in the last decade is alarming, currently there are 850 universities in India which leads to hundreds of unemployed and underemployed graduates in their hundreds of thousands.

Societal pressure: The societal pressure and unnecessary expectations of parents from fresh graduates could sometimes make them settle for whatever job is available rather than consciously searching for jobs matching their educational qualifications which could sometimes take time. Such workers may end up working in positions they are overqualified for.

Government efforts to reduce underemployment

Creation of Coastal Employment Zones

• NITI Aayog, as a government agency recommended in its “Three Years Action Plan” that Coastal Employment Zones (CEZ) be created to attract multinational companies in labour intensive countries like China to India.
• This is also intended to encourage small and medium scale businesses (local) to increase their productivity and therefore enabling them to pay their employees better. Import-substitution strategy
• The aim of the policy is to encourage local firms who can produce substitutes of goods that were used to be imported.
• By this, such firms will be able to hire more staffs with good packages.

The Make in India initiative

• The ‘Make in India’ campaign is an initiative the Prime Minister Narendra Modi, it was launched on 25th September, 20114 with the aim of boosting the manufacturing sector of the Indian economy.
• No doubt, if its aims are achieved, it will produce better paying jobs in the long run.

Amendments in Apprenticeship Act

• In apprentice system, trade workers, engineers (both diploma holder and graduates), 10+2 passed vocational students, need to undergo training in industry to enhance their skill.
• Apprentice Protshan Yojanaand the Effective Implementation of revamped Rashtriya Swasthaya Bima Yojana (RSBY) for labour in the unorganized sector were also launched.

Startup India

• The government of India under this Startup India encourages banks to provide affordable loans to young entrepreneurs to start their own businesses. It is also meant to encourage innovation and full utilization of genuine skills among among the Indian youths.

Suggested solutions

• Underemployment is usually a situation where two to three employees are performing a task originally meant for one worker, which translates into low productivity and low pay, hence, government and all the stakeholders need to do everything it takes to reduce that.
• There is the need to create high productivity jobs, this implies creating jobs in the formal sector, especially in labor-intensive manufacturing sectors.
• There should be more direct governmental efforts to encourage industries where India stands strong; such sectors include engineering of goods, auto parts manufacturing and pharmaceutical. These sectors needs to be strengthened, especially by reducing challenges they face as producers and exporters.
• The Indian labor laws need serious revamp and amendment that will be able to create formal-sector jobs.
• The presence of Coastal Employment Zones will give rise to an ecosystem in which local small and medium firms will be induced to become highly productive thereby multiplying the number of well-paid jobs.
• The Make In India campaign needs to succeed by manufacturing for global markets.