Why in the News?

The rise in jobless growth, driven by automation and AI, has led to growing inequality, prompting discussions on implementing Universal Basic Income (UBI) in many countries.

What does the ILO say on Inflation and unemployment in India? 

• The ILO reports that 83% of the unemployed population in India are youth, due to the rapidly changing economy influenced by automation and AI.
  • This trend has exacerbated income inequality, with a 1.6% drop in global labour income share between 2004 and 2024, significantly affecting developing nations like India.
• The report indicates that persistent inflation and geopolitical tensions have led to aggressive monetary policies, which could further strain the labor market.
  • The ILO anticipates a slight increase in global unemployment in 2024, reflecting ongoing structural issues in labor markets.

What will be its implications on Indian growth and development? 

• Social Implications: Falling living standards and weak productivity due to automation could lead to greater inequality, undermining social justice efforts in India.
  • The ILO suggests that increasing unemployment and inflation could result in social unrest and political instability without effective social safety nets.
• Political Implications: It makes it difficult for the decision making and governance due to the drop in global labour income, prompting India to increase budget allocations for welfare programs.
• Economic Implications: The emphasis on generating employment in labor-intensive sectors is crucial. The government policies should prioritize job creation to counteract the effects of automation and ensure that growth benefits a broader segment of the population.

What are the safety nets for India? 

• Cash Transfer Schemes: Programs targeting farmers and women, as well as cash transfers for unemployed youth, represent existing safety nets that provide some level of income support.
• Employment Guarantee Schemes: Initiatives like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) aim to provide employment and income security to rural households, although funding and implementation have faced challenges.
• Universal Basic Social Safety Nets: Experts suggest that rather than a full UBI, India should focus on enhancing existing social safety nets to ensure they are more universal and effective in addressing the needs of the unemployed and underemployed populations.

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