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The Need for a National Employment Policy


Arjun Kumar, Simi Mehta, Anshula Mehta, Ritika Gupta, Sunidhi Agarwal, Sakshi Sharda, Swati Solanki, Mahima Kapoor

Employment is the source of growth of the nation. The drastic recession of the country during the Covid 19 phase has taken the employment to nadir. Employment is the need of the hour as the unemployed workforce is a downfall productivity of the nation. Rising population should ensure rising demand and thus, increase in supply and employment. But this phase of falling employment with rising population and stagnant demand is a spiral that would continue if not handled with an effective and efficient policy.

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In order to tackle the complexities of the unemployment while charting out ideas for creating an employment hub nation, the Center for Work and Welfare(CWW) at IMPRI Impact and Policy Research Institute, New Delhi, organized an online discussion on The Need for a National Employment Policy the state of employment and Livelihood– #Employment Debate series on 12 August 2021.


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The discussion was initiated by the moderator, Prof K R Shyam Sundar, who drafted that the employment has not only become a social issue but a political issue as well. He stated that labor market is experiencing a huge distress with little or no job opportunities.

Then he introduced two new terms that are emerging in today’s economic scenario:

  1. The first one is underemployment and
  2. Second is disguised unemployment.

He also emphasized about the emerging job opportunities that could be dwarfed because of various exogenous factors.

Prof KR Shyam Sundar pointed out that the proportion of people working and are poor is higher than the proportion of unemployed poor.

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Prof S K Sasikumar, Senior Fellow, V.V. Giri National Labour Institute, Noida, Uttar Pradesh magnificently pointed out the need for a coherent policy framework on an employment-intensive recovery and growth strategy. He suggested that this should be the cornerstone around which the National Employment Policy should be conceived. In fact, the current situation is the most opportune time for the National Employment Policy as technology is transforming the work and work relations, highlighted more so in the face of the pandemic and the global economy is slowing down after the financial crisis, with investment falling.

He further went on to emphasize the first prerequisite of the National Employment Policy which is the need to restore the balance between quantity and quality of employment which has been deteriorating since 2011-12 and real wage growth falling.

Macroeconomic Framework

Linking the National Employment Policy framework to Macroeconomic policies, he highlighted that in the last three decades, the policy framework has excessively favored excessive use of capital relative to labor. Even though this led to an increase in growth, but the simultaneous distortion in factor prices could not be ignored. In fact, the incentive has shifted to using more capital as against labor. This can clearly be seen in the context of manufacturing which sadly employs only about 12% of our total workforce, the major growth being restricted to capital-intensive sectors of manufacturing. Hence, a job-rich recovery merits sectoral diagnostics and analyzing those sectors which have employment-intensive potential.

Growing Informalisation

He also brought to everybody’s attention the growing informalisation of the Indian economy, especially within the formal sector which is a recent phenomenon. Even though agriculture employment has been declining, most of the workers have ended up landing in the construction sector which itself is unorganized.

Important Pillars

The five pillars of National Employment Policy, according to Prof Sasikumar should be Employability, Employment, Social Security, Active Labor Market Programmes, and Working Conditions.

Prof Sasikumar suggested that we need to identify the challenges and opportunities within each of the five pillars around the National Employment Policy and need interventions to strengthen these pillars. For employability, India should focus on demand responsiveness. The apprenticeship system has not picked up in India and the state of instructors is not very good. In terms of employment, a low female labor force participation rate is a cause of worry. There is a need to leverage technology as it is generating new forms of employment particularly platform labor. Promoting platform labor has the potential to significantly raise the Female Labor Force Participation Rate.

Besides, the existing social security system which is contingency-based is not working in India. The ones at the top end of the occupational spectrum with very low insecurities have the best social security schemes as opposed to those at the bottom of the pyramid. When it comes to active labor market programmes, care and education need to be factored in within the public employment programmes. Furthermore, public employment exchanges did not serve their function. Technology-enabled national carrier service should become the pivotal point for job-matching. Lastly, working conditions, especially of the vulnerable sections including migrant workers need to be pitched in as a crucial pillar.

Data Analysis

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Prof Jayan Jose Thomas have the analysis through data presentation and analyzation. He presented the data on impact of covid 19 pandemic on informal sector in India. He stated that our working age population(youth population) is increasing.

Prof Jayan Jose stated that workers are moving and pulling away from agriculture and there is structural transformation in all sectors.

The analysis followed with presenting data on demand for labor which has slowed down in manufacturing and construction sector. Also, there are job losses in MSMEs. Nevertheless, the situation with service sector is the opposite with demand for labor growing in this sector. He presented data on disequilibrium between demand and supply of labor in India.

Then he presented with the solutions for ongoing crisis, stating that public investment can boosts job opportunities and multiplier effects are huge.

Policy Perspective

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Urvashi Prasad, Public Policy Specialist, Office of Vice-Chairman, NITI Aayog forwarded her views on need of financial employment policy planning. She emphasized on the need for federalism and how the employment perspective depends on policies and planning at state as well as district level. Also, there is a need for an overarching framework for development and initializing of these policies.

She emphasized the gender gaps and population explosion as the factors for employment problems in our nation. She laid the foundation of her debate by acknowledging that covid 19 has badly impacted our economy but has also opened the doors for various opportunities in field of technology etc.

There is a need for inter and intra state commitments for implantation of the policies regarding employment.

Urvashi Prasad

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Prof Swarna Sadasivam Vepa expressed her views on employment by scrutinizing the impact of emergent technologies on employment. She stated that software engineers left there jobs as there work was done by machines.

Prof Swarna Sadasivam Vepa emphasized on need of asking how to use technology to leverage employment.

She also added her views on women’s employment decrease in India whereas it increased in developed countries.

She stated that it’s been both in urban as well as rural areas and provided two reasons for it. The first reason cited was the increase in machinery in rural areas that doesn’t require women’s to work as these are luxurious jobs.

In urban sector, although women enrolment in higher education is rising but enrolment in jobs is declining as job opportunities are decreasing and corporates preferring men in spite of huge innovative women workforce.

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 Dr Sandeep Chachra added his views and emphasized the need for minimum land holdings for agricultural peasants and thus, rise in income and no unorganized debts. These factors and initiatives would lead to an effective and efficient national employment policy implementation.

Concluding Discussion

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Prof Vinoj Abraham discussed that earlier government(central and state) we’re focusing on demand side policies and then they shifted to supply side policies. But, now states are drifting from supply-side policies as well and are focusing on labor markets. He emphasized the need of focusing on the labor markets as this would allow equilibrium and eliminate the mismatch between the market of supply and demand of labor and thus employment. The capitalism and labor collusion have led to shrinking policies by state governments in employment area.

“Are we worried about employment or are we worried about livelihood?” asked Prof Vinoj Abraham.

He emphasized on the need for having employment policies for not only those who are working but also, literate unemployed population. He emphasized on need for life long learning skills by the working population.

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Dr Sandhya S. Iyer further pointed out the inequality that the pandemic has exasperated resulting in the situation regarding labor market and job creation. She further argued that those with digital acumen and skills remain employed and guaranteed stable jobs.

She emphasized on the need for labor market transformation in gig economy where workers are employed on daily basis but are paid less for their freelancing services.

Social customs, cultures and traditions are discriminatory factors influencing the need for policies that are equitable and accessible to all, emphasized Dr. Sandhya S. Iyer.

She then, explained the need for aligning employment and environment policies together for betterment of society and livelihood. She then expressed on the need to focus on Capability-Employability-Employment chain linkages.

Prof Sasikumar stressed the importance of technology. Workers should be a part of on-the-job training even in smaller firms and should be technology efficient rather than relying on traditional methods of work. In addition, evaluation and monitoring of the policies demands utmost attention as it will enable us to understand whether the existing data structures are sufficient enough to understand the movements within the five pillars.

The discussion was concluded by Dr Arjun Kumar on the need for effective employment policies and connecting employment with the climate change factors as well. It was concluded and emphasized of the need for pushing this agenda with the government to get out of the unemployment spiral and make India a far more developing country.

Acknowledgement: Vaibhav Aggarwal is a research intern at IMPRI.

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