Budget 2025: On Job Crisis, Need To Go Beyond Rhetoric

However, for young workers — between the ages 15 and 29 — looking for jobs, the unemployment rate is consistently around 16-17 per cent of the total over the same period. Within this group, women's unemployment rate is well over 20 per cent throughout. So, the same dataset highlights the plight of young men and women struggling to find stable employment.

The data is collected and measured in current weekly status (CWS). In simple words, it means that a person willing to work is considered employed if he or she has worked even for an hour during the reference week for data collection.

This broad technical definition, along with relatively high youth unemployment, indicates that jobs created in the economy probably offer low wages and limited upward mobility.

The government floated quite a few incentive schemes for the private sector in last year's Budget to generate meaningful employment, particularly for the fresh entrants into the job market.

Last Year’s New Budget Employment-Related Schemes 

The government announced three major schemes for employment-linked incentives to encourage the private sector to create more jobs in the full Budget presented last year.

Scheme A promised a one-month wage to all first-time workers, Scheme B provided incentives directly to employees and employers for their EPFO (employee provident fund) contribution in the first four years of employment, and Scheme C proposed to reimburse up to Rs 3,000 for two years in EPFO contribution for each additional employee (within a monthly salary ceiling of Rs 1 lakh).

The top private companies also were asked to provide one-year internships to 1 crore youth in the next five years. The monthly allowance was fixed at Rs 5,000. Companies were supposed to bear the training cost and 10 per cent of the internship cost from CSR (corporate social responsibility) funds. However, the fine print revealed that participation is voluntary.

Expectations from the industry did not stop there. The government also wanted it to be the catalyst in raising women’s participation in the workforce. The Budget proposed the construction of working women's hostels and creches in collaboration with industry. The government, in turn, was slated to do its bit by marketing for women’s self-help groups.

Existing skill gaps hinder job creation, and the Budget naturally progressed into that zone. A new centrally sponsored skilling scheme was also proposed to skill 20 lakh youth over the next 5 years. Industry, once again, was treated as a partner — with state governments the other node.

Loan schemes for skill and educational development were unveiled. A Model Skill Loan scheme was proposed to facilitate loans up to Rs 7.5 lakh, with a government guarantee. A target to help 25,000 students every year was set.

Another loan scheme was created for youth who were not eligible for any government benefits. They were proposed to get financial support for loans up to Rs 10 lakh for higher education in any domestic institution. The government would directly provide e-vouchers to 1 lakh students each year for an annual interest subvention of 3 per cent of the loan amount.

Jury Is Still Out On Flagship Schemes’ Implementation

The government formally launched the internship in top companies programme on a pilot basis, in October 2024. The pilot was estimated to cost around Rs 800 crore for covering over 1.25 lakh applicants. The pilot scheme was slated to be implemented from December 2024 to the end of fiscal 2024-25.

So, the effectiveness and results of this pilot internship programme will only be known once the details come out in the public domain after March 2025.

However, the graduate candidates studying in some of the top institutes in the country and seeking internship opportunities are generally not very optimistic about good prospects under this government programme.

Some even expressed suspicion that the companies may misuse this programme to underpay the interns. A few opined that instead of this scheme, the creation of a regulatory framework to address the problems related to unpaid internships could have been a better option.

Parts of the employment-linked incentives in last year’s budget were logical extensions of proposals of earlier budgets. The government’s partial contribution to employers’ and employees’ EPFO (Employee Provident Fund Organisation) was one of those.

As a result, a rise in EPFO enrolment is often cited as evidence of increasing employment. EPFO enrolment undoubtedly is a basic indicator of the formalisation of employment. However, quite a few doubts have been raised about the nature of the EPFO data.

This EPFO payroll data is the monthly net addition of EPFO subscribers. In other words, this is the gross additions minus exits but also includes re-subscription of earlier exited members. Moreover, it captures only a small part of formal employment simply because not all formal employments have EPFO contributions.

Economists pointed out that often existing employees, particularly in smaller companies, are enrolled whenever there is a government incentive available. So, new enrolment may not exactly reflect the creation of new employment.

Hence, the jury is still out on the impact of the last Budget’s main flagship endeavours to boost employment. More official data is needed to assess it.

Detailed Look At Official Employment Data Raises Questions

The distribution of urban employment, as revealed in the Periodic Labour Force Survey (PLFS) July-September 2024, shows a distinct pattern. Regular wage or salaried employees constitute around 49 per cent of total employed people in urban areas. Around 11 per cent are casual labour and the rest 40 per cent are self-employed.

The self-employed segment has two different sub-categories — (a) own account worker and employer combined together, and (b) unpaid helper in household enterprises. The first category employs approximately 33 per cent of the total employed, while the second one accounts for close to 7 per cent.

‘Own account workers’ refer to persons who run their own small businesses independently, usually without hiring any employees. An ‘employer’ within the self-employed category runs a business and hires workers.

This substantial proportion of total employed people working as ‘own account workers’ has generated enough heat within policy circles and academia. Unlike regular wage earners, self-employed people may have irregular or seasonal incomes, particularly in agriculture.

A substantial proportion (around 14 per cent) of employed individuals in the Consumer Pyramids Household Survey (CPHS) report zero incomes, compared to only 0.75 per cent in PLFS. This mismatch in two different but important databases indicates issues around data collection methods and interpretation.

The rise in self-employment, particularly among women, may not necessarily represent economic progress if it's driven by distress or lack of alternatives. It may partially reflect a rise in unpaid work in family enterprises and households.

Statistically, there has been a decline in the share of regular-wage or salaried jobs, along with a rise in self-employment over the last decade or so. This proportionate change brings issues related to job quality and economic security to the fore.

For all workers, of age 15 years and above, this self-employed category is consistently around 40 per cent of the total in the last five quarters. This is not a good sign and needs to be analysed in detail.

These concerns and debates underline the importance of revisiting the methodology of data collection and analysis of surveyed employment data and information, which is essential to understand the nature of self-employment in India, and finally to formulate effective policies for employment generation.

The upcoming Budget proposals need to go beyond the conventional rhetoric of skill development and find ways to generate gainful employment opportunities in the economy, particularly for the youth and women.