India's Aging Workforce Amid Youthful Demographics

Balancing India's Youthful Demographics with an Aging Workforce

India's Demographic Landscape In his recent Independence Day address, the Prime Minister lauded India's youthful population and its potential for growth. However, a closer examination of the workforce using CMIE's Economic Outlook data reveals a concerning trend - India's workforce is aging at an alarming rate.

Understanding the Aging Workforce Phenomenon "India's Workforce is Aging": This term signifies a shift in the age composition of employed individuals, with a declining share of young workers under 30 and an increasing proportion of those approaching 60 years of age.

Analyzing Workforce Composition by Age Groups

Percentage Data Trends:

• Defining youth as those aged above 15 and below 25 (adjusted for the PM's under-30 categorization), the workforce divides into three groups: 15-30, 30-45, and 45+.

• The share of youth in the workforce plummeted from 25% (2016-17) to 17% (end of the last fiscal year).

• The middle age group's share decreased from 38% to 33%, while the oldest category's share grew from 37% to 49%.

• The workforce shifted dramatically in seven years, with the share of those aged 45+ increasing from one-third to nearly half.

Absolute Numbers Insight:

• Total employed individuals fell from 41.27 crore to 40.58 crore.

• Notably, the youth experienced the sharpest decline. In 2016-17, 10.34 crore under-30s were employed; by 2022-23, this plummeted to 7.1 crore.

• Simultaneously, employment numbers increased among those aged 45 and above, despite overall employment level dips.

Reasons for Workforce Aging: Diminishing Youth Employment

Employment Rate Tracking:

• The "Employment Rate" measures the employed proportion of a population or age group.

• Ages 15-30:

  • Youth population grew from 35.49 crore (2016-17) to 38.13 crore (2022-23).

  • However, employed youth dropped by 3.24 crore, reflecting a 31% employment decline over seven years.

  • Employment Rate fell from 29% to 19%.

• Ages 30-45:

  • Although employment rates decreased, the decline was less pronounced due to initial higher rates.

• Ages 45+:

  • Employment rates decreased minimally, and this age group is the only one with growing absolute employment numbers.

  • Population growth contributed to a slight decrease in Employment Rate.

Extrapolating from Employment Rate Analysis: The Bigger Picture

• Analyzing five years of data highlights a rising Employment Rate in the 25-29 age group. However, this is primarily due to a significant drop in the age group's total population.

Challenges and Policymaker Considerations

• Youth Unemployment: Despite a significant youth population growth, many struggle to find employment, with youth unemployment rates notably high.

• Policy Alignment: Policymakers must address this issue by aligning strategies with demographic shifts. Focus areas include skill development, socio-economic support, education, vocational training, labor policies, and governance.

Conclusion: Striking a Balance

• India's promising youth population, compared to other developing nations, must be harnessed through strategic measures that provide substantial employment opportunities.

• Neglecting this challenge risks perpetuating the paradox of India being a youthful nation with an aging workforce.

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