On a hot summer afternoon, 23-year-old Nizamuddin Abdul Rahim Khan is playing cricket on the muddy dirt roads of the Rafic Nagar slum in Mumbai, India’s financial capital.
There is little evidence of rapid growth in the Indian economy here. An estimated 800,000 people live in Rafic Nagar and the surrounding area, which border what was once Asia’s largest landfill, mostly in tiny rooms in narrow, dark alleyways.
According to Naseem Jafar Ali, who works for an NGO in the area, young men and women in the area are having trouble finding or working, and most of the time they spend all day hanging around.
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India’s urban unemployment rate surged during the COVID-19 pandemic, hitting a high of 20.9% in the April-June quarter of 2020 while wages fell. Since then, unemployment has fallen, but full-time jobs have declined.
Economists say job seekers looking for low-paying temporary jobs or resorting to unreliable self-employment, even as the overall Indian economy is expected to grow at a world-high 6.5% this year. Especially young people are increasing. Expires in March 2024.
India is overtaking China to become the world’s most populous country with over 1.4 billion people. Nearly 53% of them are under the age of 30, a highly touted demographic benefit, but without jobs, tens of millions of young people are holding back the economy.
“Unemployment is just the tip of the iceberg,” said Radhika Kapoor, researcher at economic research institute ICRIER.
Nizamuddin Abdul Rahim Khan, 23, poses for a photo in a slum alley in Mumbai, India, May 20, 2023. (Reuters/Nihalika Kulkarni)
Khan, for example, has offered himself as a temporary home repair and construction worker, earning only about $122 a month to support his father and four sisters. “If you can get a full-time job, no problem,” he says.
The risk for India is the vicious cycle of the economy. Declining jobs and incomes undermine India’s chances of spurring the economic growth needed to create jobs for its young and growing population.
Economist Jayati Ghosh calls the country’s demographic dividend a “time bomb”.
“The fact that there are so many people who are educated and have spent a lot of money on themselves and their families and still can’t find the jobs they need is terrifying,” she said.
“It’s not just a question of potential losses to the economy…a lost generation.”
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Collapse of small businesses
Unemployment is much more severe in India’s urban areas, the cost of living is higher, and rural areas lack the backup of job guarantee programs offered by the government. Many rural unemployed still flock to cities in search of work.
According to government data, the urban unemployment rate was 6.8% in the January-March quarter, but the share of urban workers with full-time jobs will rise from an already low 50.5% just before the start of the pandemic to 2022. It dropped to 48.9% as of December. .
This means that out of an estimated urban workforce of about 150 million people, only 73 million have full-time jobs.
Adjusted for inflation, the average monthly salary for urban residents with full-time jobs was $212 in the April-June 2022 quarter, the latest period for which government data is available.
This was a modest 1.2% increase from the October-December quarter of 2019, before the pandemic began.
However, self-employed income fell to $178.67 in the April-June quarter of 2022, according to research by Ghosh and CP Chandrashekar of the University of Massachusetts Amherst. It was $184 in the October-December 2019 quarter.
“The big thing that happened was the collapse of small businesses that were the backbone of employment,” Ghosh said.
He said the pandemic was the latest in a series of attacks on the viability of small businesses since the Indian government decided to abolish 86% of the country’s currency in circulation in 2016.
The government announced in parliament in February that more than 10,000 small, medium and micro businesses had closed in 2022-2023 (April-March) alone. Over 6,000 such units closed in the previous year. However, the government did not specify whether new companies were established during that period.
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graduate student painter
The epitome of urban sprawl in a city of 21 million, many households in Khan’s neighborhood have suffered unemployment and declining incomes in recent years. Young workers are particularly vulnerable.
Arshad Ali Ansari, a 22-year-old student, said he saw his brother and sister lose their jobs soon after the pandemic began.
Ansari said she lives with her family of eight in one room with a kitchen and lives on her 60-year-old father’s income of about $242 a month.
My older brother, an alumnus who worked in a bank, lost his job due to the pandemic and had to work with his father painting the house.
“He was educated and experienced,” Ansari said.
His sister, a former social worker, has also lost her job and has given up hope of finding one.
HSBC India chief economist Pranjul Bhandari said in a memo earlier this month that India needs to create 70 million new jobs over the next decade. However, it is highly likely that only 24 million jobs will be created, leaving “46 million jobs lost.”
“From that perspective, 6.5% growth would solve a third of India’s employment problems,” Bhandari wrote.
