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Suffering from Overpopulation or Gaining from Demographic Dividend

Suffering from Overpopulation or Gaining from Demographic Dividend?

23 Oct 2019
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India has the largest section of the youth population in the world. By the year 2020, India will have a median age of 28, compared to 37 of the US and China, 45 of Western Europe, 49 of Japan. Such a dynamic shift in the nature of the workforce would inevitably stir the market, as it had with China in the 1970s when the Asian economic giant had seen its young population growing. Between 1978 and 2015, China saw steady growth in its gross national income — a growth of 9.6 percent, which was the greatest in the world.

Suffering from Overpopulation or Gaining from Demographic Dividend

 

Now, India sees a similar advantage of the economic dividend where its working-age population has grown to be larger than its dependent population. This proportion is expected to last till 2015, or 37 years from the time it started. United Nations Population Fund (UNFPA) defines demographic dividend as the potential of growth in a country that comes with a shift in the population's age structure. Such an economic dividend has been a contributing factor for other Asian economies such as Japan and South Korea.

However, for India, the challenges that come with employing people in the workforce and battling other industry outcomes such as automation of technology, the dire need of skill-training and employment for 15 million young people who will be entering the workforce annually for the next four years. On the social and cultural front, it would be looking at preventing such large numbers of youth from political polarisation which runs through altering the channels through which information or news is broadcasted.

 

The greater, the merrier?

Can the population of India be blamed when it comes to finding solutions to the prevailing crises of unemployment or social distress? According to the National Sample Survey Office, the unemployment rate in India for FY18 stood at 6.1 percent, hitting a 45-year high. 

For India, there is a mounting pressure to utilize the workforce in ways where there are enough engagement and employment opportunities provided by corporations and the government. There is another trouble on these fronts of unemployment — the lack of skilled and trained individuals to fill the vacant positions in the workforce. According to a question answered in the Rajya Sabha in early 2018, 24 vacant posts are lying under the state and central governments in India.

 

Suffering from Overpopulation or Gaining from Demographic Dividend

 

The present-day government has made far-fetched claims on turning the numbers around unemployment, and it has done so over time. The figures, however, show that the government's introduction of skill training programs, like the Skill India, has a long way to go. According to a 2017-18 data obtained from the Periodic Labour Force Survey (PLFS), 1.8% of the population reported receiving some form of formal vocational or technical training, while 5.6% reported receiving informal vocational training, such as self-learning, hereditary, or learning while on the job. Out of these, the youth — aged between 15 and 29 — comprised of more than half of the population that received training. The survey which collected data on training categorized under 22 sub-points, also revealed that around 33% of the formally trained youth was unemployed in 2017-18.

 

The effect of automation

A 2017 report by a government-appointed committee found out that the plans laid out under the Skills India plan were too ambitious, and that the funds that were spent under this scheme did not have adequate monitoring. The data released by PLFS only confirmed the implications of such a program. If Skill India is to achieve something — meet the exceedingly high requirements of the future workforce — then it has to see seeded reforms over time. As per Budget 2020, the Government has increased spending on educational reforms and revised the income tax slabs to encorage spending among India's earning population.

Suffering from Overpopulation or Gaining from Demographic Dividend

 

For China, such a boom in the working population came at a time when the IT industry was yet to take to automation, and positions were filled manually than people. For India, the time is quite the contrary. A recent report by the International Labour Organization (ILO) revealed that 51.8 percent of the Indian workforce could be automated. Automation is said to impact "most jobs involving highly structured physical activity in predictable environments, such as manufacturing and retail, alongside data collection and processing". Another crucial which was made by the IPO was that 66 percent of Indian businesses are looking for newer skill sets than they did three years ago.

While the government may go on stating the various ways through which the emergence of a massive workforce could help the Indian workforce, it cannot be denied that India has an existing and impending job crisis. A lot of it could be blamed on the rusted educational system which fails to equip the students with the various sets of diverse skills that are needed to address the ever-changing demands of the workforce. 

To truly address such a bend between availability and utilization which comes with the current workforce, India needs to address the root of skill training and must see a wide scale implementation of its policies. This done, India can truly look at the positive shifts that come with demographic dividends, such as an economic growth forefronting a period of financial security and stability. 

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