NEW DELHI - A recent State Bank of India (SBI) report has highlighted a significant shift in India's labor market, emphasizing the rise of self-employment and the influence of higher education on employment trends. The findings challenge conventional interpretations of the Periodic Labour Force Survey (PLFS) data, which has shown a decrease in unemployment rates from 6.1% in FY18 to 3.2% in FY23, alongside a decline in youth unemployment.
The SBI report, released today, indicates that self-employment now accounts for 57.3% of the employment estimates for FY23, an increase from 52.2% in FY18. This growth in self-employment is driven by several factors, including government initiatives such as Pradhan Mantri Mudra Yojana and PM-SVANidhi, credit formalization for family businesses, and a growing entrepreneurial spirit among the workforce.
Contrary to perceptions that an increase in self-employment signals reduced job opportunities, the report suggests this has been a consistent trend in India's labor force, reflecting structural changes rather than a lack of employment options. The rise is also linked to the formalization of credit that has enabled growth in family enterprises and household helpers.
Furthermore, the analysis points out that high youth unemployment rates for the 15-29 age group do not necessarily indicate shrinking job opportunities but rather a shift towards extended education periods into the mid-twenties.
The SBI report also observes an increase in female labor force participation, with notable improvements led by states like Odisha, Himachal Pradesh, and Uttarakhand. Female participation has increased to 32% up from 28% in 2019-2020.
In terms of wages, the average monthly salary of casual workers has seen a rise of 1.3 times between FY18 and FY23. This is paralleled by data from the Employees' Provident Fund Organisation (EPFO), which shows nearly 6 million jobs being formalized since FY19 — evidence of economic formalization thanks to government policies.
The SBI report recommends a reevaluation of how higher educational qualifications are weighted within PLFS data due to their significant impact on unemployment rates. It also advocates increasing banking correspondents to 33% to further influence India's socio-economic landscape positively.
Overall, these findings suggest that while there have been misinterpretations of labor market data, India is experiencing a transformative phase with self-employment and education playing critical roles in shaping employment patterns.
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