Harnessing demographic dividend amidst the Covid-19 pandemic

The Covid-19 pandemic has amplified the challenges to the youth as regards employment opportunities. The policy steps taken by the government have led to a slowdown in economic activities, leading to loss of jobs and mass unemployment. According to the report, ‘Covid-19 and the world of work’ by the International Labour Organisation around 94 percent of the world’s workers are living in countries with some sort of workplace closure measures in place.

There is an urgent demand for comprehensive policies that protect the youth and create new employment opportunities. Keeping this in mind, on the occasion of the world population day, the Center for Work and Welfare, Impact and Policy Research Institute (IMPRI), New Delhi organized a panel discussion on ‘Harnessing the demographic dividend amidst the Covid-19 pandemic in India: The way forward for youth employment and opportunities’.

“India’s growing population with the highest youth population i.e. 28 percent of the total population poses a challenge and is a demographic dividend if equipped with quality education and skills training, and decent and relevant jobs. This could lead to the country’s economic development,” says Dr Simi Mehta, CEO and Editorial Director IMPRI.

“Demographic dividend is a technical term that denotes the growth in an economy as a result of a demographic transition or change in the age structure of a country’s population. It is a slow process that typically happens in countries due to a decline in fertility and mortality rates,” says P C Mohanan, Former Acting Chairperson, National Statistical Commission, Government of India.

The country was expected to be in a position to maximise its demographic dividend, in the pre-Covid times. But, with Covid, will the Indian youth be the first casualty of the poor state of employment? Chairing the panel discussion, Mohanan highlighted the need for a discussion on the theme of youth employment during the times of the pandemic.

“The median age of the population is 28 years in India, 48.6 years in Japan and 42 years in China. This numerical data clearly shows the demographic advantage in favour of India as of now. But things are likely to change with time. While 51 percent of people were below the age of 20 in the 1970s, now it is 41 percent and will decline to 22 percent in 2050, resulting in a demographic shift. By 2050, India will lose its demographic advantage,” says Mohanan.

For India to reap the demographic dividend, its youthful workforce needs to be employable. “The data on employment indicates that we have the highest rate of unemployment i.e. 15 to 29 percent. With the impact of the pandemic on employment and economic activities, India is already set to miss its demographic dividend,” says Mohanan.

“Demographic dividend is the benefit a country gets when its working population outgrows its dependants such as children and old people,” says Dr Simi Mehta, CEO and Editorial Director IMPRI.

She discussed the stages of demographic transition - (i) Stage 1: Improved income and health reduce the infant mortality and a baby boom arises, (ii) Stage 2: the baby boomers, once regarded as the population curse, grow up to create an unprecedented large army of income earners, thereby boosting the GDP, (iii) Stage 3: Demographic dividend starts disappearing.

While explaining Stage 3, Dr Simi Mehta gave examples of Japan, Germany, Russia, Italy, etc., where people began to retire, and the proportion of non-earning population rose rapidly.

“The countries in the subcontinent including India have a demographic advantage and can take benefit by utilising the demographic transition wisely and diligently. As of now, two-thirds of our population is of working age, while only a third get employment. This leads to the problem of unemployment and under-employment. The demographic transition is happening largely because of a decrease in the total fertility rate,” says Dr Arjun Kumar, Director IMPRI and China-India Visiting Scholar Fellow, Ashoka University.

Dr Kumar stressed that the demographic dividend situation looked grim as survey reports indicate that many educated women in our society are not entering the labour market. Further, most of the youth who are educated have poor employable skills. 

“Demographic dividend in India varies from state to state and is influenced by various government policies. By 2030, India will be the most populous country with 1.46 billion people surpassing China’s projected population of 1.39 billion. Data indicates that the median age of India will be 32 years in 2030, which is much younger than the US (39), UK (42), China (43) and Brazil (35),” says Prof Balwant Singh Mehta, Research Director, IMPRI, Lucknow and Senior Fellow, Institute for Human Development (IHD), Delhi.

He discussed the role of education and skills in the demographic dividend. “Data indicates that 28 percent youth in India belong to the age group of 15-29 years. Half of the youth have less than secondary education or are illiterate and only 13 percent are graduate. Only 5.5 million additional jobs had been created in the country during 2017-18 against 8 million youth, who entered into the job markets. India is facing a huge unemployment problem with 6.1 percent overall unemployment, which is the highest in 45 years. Covid-19 lockdown has slowed the economic growth and led to structural weakness in the financial sector. As per the Centre for Monitoring Indian Economy (CMIE), the unemployment rate is a record high of 24 percent,” says Dr Balwant Singh Mehta.

“Although the number of corona cases in Nagaland is low, the sudden shut down of industries has impacted the economic activities hugely. Data indicates that around 70 percent of the construction workers have left the state and shutdown of transport have hugely crushed the transport and tourism activities. Comprehensive steps are needed from government and civil society to revive the state’s economy and boost employment to the people of the state and migrants,” says Toshi Wungtung, Member of Legislative Assembly, Shamator Constituency, Nagaland. 

“Demographic dividend does not exist in isolation but is attached with the demographic transition of an economy which is closely linked with its structural transition. For instance, there is always a shift from agricultural to service to the secondary sector. This was the case with the structural transition in European countries. But in India, we have had a demographic transition, not structural transition,” says Prof Vinoj Abraham Centre for Development Studies, Thiruvananthapuram.

“Without considering the female workforce participation rate – the core of the demographic dividend, we cannot get a true picture. Cultural norms lead to low participation of females in the labour market. Also, the large workforce in the market is highly unskilled and lacks proper training, raising questions on employability and leading to the high unemployment rate in the country,” says Prof Abraham.

The challenge created by the pandemic need solutions which help generate employment such as decentralisation of the economy, deregulation of the economy, reimagining the economic approaches, promotion of small scale industries.

“There was massive unemployment among women in both urban and rural regions during the lockdown. Urban women lost their jobs, while the household chores of women in the rural regions increased. Data of CMIE suggests that 27 million youth in the age group of 20-30 years lost their jobs in April 2020,” says Prof Anjana Thampi Assistant Professor, Jindal Global Law School, Sonepat.

“The challenges faced by the youth include lack of knowledge on where and how to look for jobs, outdated skills that do not address the labour demands, and education and job mismatch,” says Ritika Gupta, Senior Research Assistant, IMPRI. Discussing the sectoral composition of labour she pointed out that there is a gradual shift from the agricultural sector and manufacturing sector to non- manufacturing sector and service sector.

“Rural to urban migration can be attributed to good quality of education, higher-paying jobs and good quality of life. Analysis of the data on employment points to the gender divide. The unemployment rate among male youth is 18.7 percent while among female youth is 27.2 percent. The work participation rate among male is three-fifth while that among females is one-fifth. Among graduated youth, the figures are 47.7 percent for males and 29.7 percent for females,” says Gupta. She also highlighted the social and psychological facets of unemployment faced by the youth in India.

Challenges faced by the youth during the pandemic can be attributed to institutional failure; ill organised labour market and skill mismatch; low prevalence of technical training among youth workforce; and demand drive employment and supply driven education,” says Anshula Mehta, Senior Research Assistant, IMPRI.

“There are opportunities for the youth in the private sector and government schemes such as Atma Nirbhar Bharat, assured employment schemes, expansion of apprenticeship and training and curriculum as per industry,” says Anshula Mehta.