Economists Sound Alarm Over Flawed Job Data as Real Unemployment May Be Twice as High; Sources Says

Economists Sound Alarm Over Flawed Job Data as Real Unemployment May Be Twice as High; Sources Says

New Delhi: India’s official unemployment figures have come under intense scrutiny, with a significant number of independent economists asserting that the reported jobless rate grossly underrepresents the actual employment crisis. While the official data suggests a national unemployment rate of 5.6% as of June, many experts estimate that the real figure may be closer to 10%, or even higher in certain demographic segments.

At the heart of the debate lies India’s current method of calculating unemployment. Under the present system, an individual is considered employed if they have worked even a single hour in an entire week. Economists argue that this standard fails to capture the scale of underemployment and informal labor that dominate large portions of the economy. In effect, millions engaged in menial or irregular work are being categorized as employed, distorting the true picture of joblessness across the country.

Former officials and academic experts have described this methodology as archaic and unsuitable for a modern, fast-evolving economy. Many highlight the mismatch between the official narrative and the lived reality of a significant portion of the population struggling to find consistent and meaningful employment.

India’s economy has been posting impressive GDP growth, with the first quarter of the fiscal year recording a 7.4% increase. However, economists are increasingly concerned about the disconnection between economic expansion and job creation. Despite strong output, employment figures have not kept pace. This divergence is seen as a warning sign that growth is being driven by capital-intensive sectors that generate few jobs, leaving the country’s vast labor pool underutilized.

The need for a shift in focus toward labor-intensive industries, especially manufacturing, has been emphasized. While government-backed schemes aimed at production-linked incentives have been launched, experts believe these efforts need to be expanded and restructured to produce tangible job growth.

The unemployment crisis is particularly severe for women and young people. Female labor force participation remains abysmally low, with many women confined to informal or unpaid domestic work. Projections indicate that it could take India another two decades to match the average female workforce participation rates seen in other G20 nations.

Youth unemployment is another pressing concern. While the overall jobless rate is disputed, the figures for young adults are consistently higher, indicating a generational employment gap. Many young Indians remain either unemployed or employed in positions that do not match their qualifications, which raises concerns about a long-term productivity drag.

Economists are urging the government to update its labor data collection methods and revise outdated definitions of employment. Suggestions include adopting a more nuanced classification that reflects both the number of hours worked and the quality of employment. Additionally, there is a strong push for broader reforms that encompass vocational training, better access to formal jobs, and investment in labor-intensive sectors.

Policymakers are being called upon to acknowledge the scale of the issue and prioritize comprehensive labor market reforms. Without addressing these structural weaknesses, experts warn that India risks squandering its demographic dividend and exacerbating social and economic inequalities.

While government agencies continue to defend the existing methodologies, citing international standards and digital advancements in survey methods, the widening gap between public statistics and expert analyses suggests a deepening crisis of confidence. The debate over job data accuracy is now shaping into a larger conversation about transparency, accountability, and inclusive economic development.

As India eyes global leadership in the coming decades, its ability to generate meaningful employment will remain a critical factor in determining the sustainability and fairness of its growth story.

Source: News Agencies


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