Rising youth and female employment are good signs for India’s economy

Rising youth employment: Driven by northern and central states: Over the years, youth employment has been rising in tandem with India’s youth population. According to the PLFS, the youth (age 15-29 years) unemployment rate has declined from 17.8% in 2017-18 to 10% in 2022-23, while the youth’s labour force participation rate (LFPR) has risen from 38.2% to 44.5% over this period. For the proportion of employed youth to rise from 31% to 40.1% in six years is no mean feat for a populous country on the upside of a demographic transition. Zooming in to state-level data, India’s decline in the youth unemployment rate has been led by states with larger chunks of a young population, such as Uttar Pradesh (with 69 million youth as per the health ministry’s population estimates for 2021), Bihar (with 35 million youth), and Madhya Pradesh (with 23 million youth). Example: UP’s youth unemployment rate has declined from 16.7% in 2017-18 to 7.0% in 2022-23, accompanied by a rise in youth LFPR from 33.7% to 41.4% in the same period. Thus, the states driving India’s youth bulge are also leading the rise in youth employment.

Rising female labour force participation rate: Nothing to be stressed about: While the popular narrative sees India’s FLFPR as low and falling, its level and change need to be seen in both long and short time-frames in the light of latest numbers, various measurement issues (bit.ly/3QLcwCP) and rising gender parity in education.

The long decline in India’s FLFPR in the 21st century has been accompanied by a steep incline in the enrolment of females in education. Take, for example, the female gross enrolment ratio (GER) in senior secondary education, which has more than doubled from 24.5% in 2004-05 to 58.2% in 2021-22, and the female GER in higher education, which quadrupled from 6.7% in 2000-01 to 27.9% in 2020-21. Young female cohorts are increasingly taking to higher studies, which enables more rewarding workforce participation in the decades to come, thereby actualizing Goldin’s U-curve on the FLFPR as related to education in the Indian context. The pursuit of studies limits the current FLFPR for a country whose one-fourth population is below 15 years (and more than half below 30), while refining the quality of the future workforce.

As for the short run, the FLFPR in India has been rising for at least six years now. It rose from 23.3% in 2017-18 to 37% in 2022-23. While the urban FLFPR has also been rising, the rural rate has seen a sharp pick-up. This has led to claims of distress-driven FLFPR in rural India, painting a bleak picture of conditions in the country’s hinterland. While this sounds like a good plot for art cinema, it does not stand up to scrutiny.

The primary argument behind the distress-driven FLFPR position is that the rise in India’s rural female LFPR has been accompanied by a rise in the share of self-employment and agricultural work among working women. However, there are many plot holes there.

First, the rise in the share of self-employed (both own account workers/employer and unpaid helpers) indicates a rising contribution of females to rural production. This is plausibly a culmination of many factors, including continuous high growth in agriculture output and the freeing up of women’s time by a substantial expansion of access to basic amenities such as piped drinking water, clean cooking fuel, sanitation, etc. In a paper presented at the Kautilya Economic Conclave recently, Biswanath Goldar and Suresh Aggarwal show that the rise in access to tap water is associated with a rising FLFPR in a district-level analysis. This is also reflected in PLFS data showing a significant shift in females away from domestic duties, reiterated in the State of Working India report by Azim Premji University.

Second, while the composition of the female workforce has been tilting towards agriculture, that of the male workforce is tilting away from the farming sector. A rise in the share of agriculture as an occupation among the rural female workforce from 73.2% in 2017-18 to 76.2% in 2022-23 coincides with a more significant decline in the share of agriculture among the rural male workforce from 55% in 2017-18 to 49.1% in 2022-23. This exposes the limitations of the distress argument and paints an opposite picture of men taking up rising opportunities in non-agricultural sectors and women at home filling in for men on the farm.

Third, within the rural female workforce, there has been a structural shift marked by a rising proportion of skilled agriculture labour (up from 48% in 2018-19 to 59.4% in 2022-23) and a decline in the share of elementary agriculture labourers using considerable physical effort, from 23.4% to 16.6% over the same period. Among skilled agriculture workers, market-oriented workers have driven the expansion, possibly filling up for men leaving agriculture and contributing to family income. Thus, the feminization of agriculture also points to a much-needed structural shift within agriculture, where excess (male) labour moves out and the remaining (female) labour is utilized efficiently.

Lastly, the fact that the FLFPR has been rising continuously since 2017-18 (i.e., the first round of the PLFS) and did not decrease post-covid is a tell-tale sign of it stemming not from distress, but from a structural shift in the rural economy. The monetary contribution of women to rural family incomes also matters from the lens of intra-household bargaining power and decision-making, propelling a tectonic shift in the societal gender dynamics.

Summing up, youth employment in India has risen steadily over the last six years and is the keystone to utilizing the country’s demographic advantage. Second, the FLFPR incline remains a veritably excellent opportunity to tap the rising availability and willingness of rural women to participate in the labour force, rather than seeing it as a sign of a distress-driven push for greater female employment in the countryside. It makes for more of a Chak De India plot than art cinema.

These are the authors’ personal views.