CMIE data: A dissonant note

India’s workforce is ageing, notwithstanding its youth bulge. Policymakers need to

examine why this is happening

By: Editorial
August 23, 2023 07:00 IST
Indian Express

An Indian Express analysis of employment data sourced from the Centre for
Monitoring Indian Economy (CMIE) has shown that India’s workforce has rapidly aged
over the past seven years. Data shows that the share of India’s youth – defined as
those between ages 15 and 29 — has fallen from 25 per cent in 2016-17 to just 17
per cent at the end of 2022-23. Further, even the share of those falling in the
next 15-year age bracket (30 to 44 years) has fallen from 38 per cent to 33 per
cent over the same period. While the share of these two categories has shrunk, that
of the oldest cohort — 45 years and above — has grown from 37 per cent to 49 per
cent. In other words, just in the past seven years, India’s workforce has aged so
much that the share of people 45 years and older has gone from one-third to almost
one-half. Another way to look at this result is that the Indian youth is
increasingly getting driven out of the job market. In fact, the one cohort that
seems to be doing the best, both in terms of proportion as well as absolute
numbers, is the age bracket of 55 to 59 years.

To an extent, this result is hardly surprising. For one, India has witnessed rising
levels of youth unemployment in the recent past. This means a high percentage of
the youth that joins the labour force, or effectively asks for work, fails to get
employed. Moreover, India has a low labour force participation rate, especially for
women. India’s female labour force participation rate is one of the lowest in the
world. This means a very small percentage of young women enter the labour force
asking for work, to begin with. The combined effect of a low labour force
participation rate and high unemployment rate is that India’s youth has a worsening
employment rate — that is the ratio of employed people in an age bracket and the
total population of that cohort.

India’s ageing workforce should be a matter of concern for India’s policymakers.

That’s because it has one of the world’s youngest populations. In his Independence
Day speech, Prime Minister Narendra Modi underscored India’s comparative advantage
in terms of demography. He pointed out that while many countries are “witnessing an
age structure that is growing old, India is moving energetically towards a youthful
age structure”. “It is a period of great pride because today India has the highest
population under the age of 30”, he said. However, in reality, India’s workforce is
ageing, notwithstanding its increasingly youthful demography. Policymakers need to
examine why this is happening but prima facie this trend suggests a skills deficit.
Raising the employability of India’s youth should be treated at par with the
broader concern of creating more jobs in the economy.

© The Indian Express (P) Ltd

First published on: 23-08-2023 at 07:00 IST