On a hot summer day, Nizamudin Abdul Rahim Khan, 23, plays cricket on a muddy dirt road in the Rafik Nagar slum in India’s financial capital, Mumbai.
There is little evidence of India’s rapidly growing economy. Bordering what was once Asia’s largest garbage dump, Rafik Nagar and surrounding areas are home to an estimated 800,000 people, most of whom live in tiny rooms in narrow, dark alleys.
Young men and women in the area struggle to find jobs or jobs, and they basically goof off all day, said Naseem Jafar Ali, who works with a local NGO.
Unemployment rates in India’s cities rose sharply during the COVID-19 pandemic, peaking at 20.9% in the April-June 2020 quarter, while wages fell. Although the unemployment rate has fallen since then, there are fewer full-time jobs.
Economists say more and more job seekers, especially younger ones, are looking for low-paying odd jobs or resorting to precarious self-employment, even as the Indian economy as a whole is growing at 6.5% in the fiscal year. ends March 2024.
India overtakes China to become world leader most populous nation with a population of over 1.4 billion people. Nearly 53% of them are under 30, a much-touted demographic dividend, but without jobs, tens of millions of young people are becoming a burden on the economy.
“Unemployment is just the tip of the iceberg. Beneath it lies a serious crisis of underemployment and disguised unemployment,” said Radhika Kapoor, a researcher at the economic research agency ICRIER.
Khan, for example, offers himself as odd jobs to renovate or build a house, earning only about $122 a month to help support his father and four sisters. “If I get a permanent job, then there will be no problems,” he says.
The risk to India is a vicious cycle for the economy. Falling employment and incomes are undermining India’s chances of spurring the economic growth needed to create jobs for its young and growing population.
Economist Jayati Ghosh calls the country’s demographic dividend a “time bomb”.
“The fact that we have so many people who have received education, spent a lot of their own or family money, but cannot find work they need it, it’s terrible,” she said.
“It’s not just a matter of potential losses to the economy… it’s a lost generation.”
Small business collapse
Unemployment is much worse in cities in India, where the cost of living is high and there is no support in the form of the employment guarantee program that the government offers in rural areas. As before, many of the army of rural unemployed rush to the cities in search of work.
While urban unemployment stood at 6.8% in the January-March quarter, the share of urban full-time workers dropped to 48.9% as of December 2022 from an already low 50.5% just before the start of pandemic, government data show. .
This means that of the city’s estimated 150 million workforce, only 73 million have full-time jobs.
For full-time urban residents, the inflation-adjusted median monthly wage was $212 in the quarter from April to June 2022, the latest period for which government data is available.
This was a modest 1.2% higher than between October and December 2019, before the start of the pandemic.
But for the self-employed, earnings dropped to $178.67 in the April-June 2022 quarter, according to a study by Ghosh and C.P. Chandrashekhara of the University of Massachusetts Amherst. In the October-December 2019 quarter, it was $184.
“The main thing that happened is the collapse of small businesses that were the backbone of employment,” Ghosh said.
Because the Government of India The decision to demonetize 86% of the country’s currency in circulation in 2016, she said, shows ongoing attacks on the viability of small businesses, the latest being the pandemic.
More than 10,000 micro, small and medium enterprises will be closed in 2022-23 (April-March) alone, the government said in parliament in February. More than 6,000 such installations were shut down last year. But the government did not specify whether any new businesses were created during these periods.
Many families in the Hana area, typical of a city of 21 million, have suffered job losses and declining incomes in recent years. Young workers are especially vulnerable.
Arshad Ali Ansari, a 22-year-old student, said he saw his brother and sister lose their jobs shortly after the pandemic began.
Sitting in a single room with an attached kitchen where his family of eight lives, Ansari said they survive on his 60-year-old father’s salary of about $242 a month.
His brother, who was a graduate and worked at a bank, lost his job during the pandemic and was forced to join his father in painting houses.
“My brother had an education, he had experience,” Ansari said.
His sister, once a social worker, also lost her job and lost hope of finding one.
India will need to create 70 million new jobs over the next ten years, Pranjul Bhandari, HSBC’s chief economist for India, wrote in a note earlier this month. But it is likely that only 24 million will be created, leaving behind “46 million missing jobs.”
“From this perspective, a growth rate of 6.5% would solve a third of India’s jobs problem,” Bhandari writes.