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Unemployment in Indian States

Context:  Examining the unemployment situation in key Indian states by utilizing data sourced from the Periodic Labour Force Survey (PLFS) conducted in the fiscal year 2022-23.

Insights from ILO and IHD Report

  • A recent joint report by the International Labour Organization (ILO) and the Institute for Human Development (IHD) uncovered that two-thirds of unemployed individuals were young graduates, signaling a pressing need for immediate policy action.

Unemployment Rates Across States

  • Goa: Registers the highest unemployment rate, nearly 10%, with Kerala, Haryana, and Punjab closely following suit.
  • Economic Status Impact: Surprisingly, these states are relatively affluent.
  • Western States: Maharashtra and Gujarat, economically robust states in western India, exhibit unemployment rates below the national average.
  • Regional Disparities: Northern states (J&K, Punjab, Haryana, Uttarakhand, and Himachal Pradesh) and most southern states (excluding Karnataka) report unemployment rates surpassing the national average.

Labor Force Composition

  • States with a higher proportion of the labor force engaged in self-employment, predominantly informal, tend to exhibit lower unemployment rates.
  • Conversely, states with a greater urban labor force share tend to experience higher rates of unemployment.
  • Highly urbanized states often have a reduced agrarian sector, resulting in fewer informal job opportunities.

Education and Unemployment

  • There is a positive correlation between the percentage of graduates in the labor force and unemployment rates.
  • Example: Kerala, renowned for its highly educated workforce, contends with elevated unemployment levels.
  • Despite their affluence and urbanization, states like Gujarat and Maharashtra maintain lower unemployment rates due to a smaller proportion of graduates within their labor force.

Causes of Graduate Unemployment

  • Skills Mismatch: Graduates may face unemployment due to a lack of skills suited for the contemporary job market, emphasizing the necessity for enhanced educational standards.
  • Preference for Formal Employment: Graduates often pursue higher-paying jobs aligned with their qualifications rather than informal work opportunitie.
  • Impact of Sectoral Growth Insufficient expansion of the modern sector can contribute to unemployment among graduates.

Key Insights

  • Structural Changes: Shifts such as decreased reliance on agriculture, increased urbanization, and higher education levels can escalate unemployment rates.
  • Policy Emphasis: Efforts should concentrate on generating employment opportunities to counteract these trends.
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