Unemployment scenario in Jammu and Kashmir – Structural challenges and the road ahead

Authored by AIPC Research Team (J&K)

Introduction

Indian economy has undergone significant changes over the last several decades. Despite global economic concerns, the country has achieved average economic growth of more than 6% yet, one of the nation's major difficulties has been unemployment. JK has also been impacted severely by this challenge with both urban and rural populations facing the brunt of this crisis. Complex socio-economic challenges like political instability, limited opportunities to work in manufacturing and services sector etc. have further acted as a catalyst to promote this challenge. In this context, employment report 2024?released by the International Labour Organization (ILO) indicates that the unemployment issue in JK has grown to concerning proportions and is becoming worse every year. For e.g., as per 2001 census report, the unemployment rate in JK stood at 4.21%, however as per 2024 employment report released by ILO, the current unemployment rate in JK stands at 21% indicating a steep increase in the last 10 years.

Unemployment in Jammu and Kashmir – A structural analysis

JK has always experienced complex socio-economic challenges, its economy has always been volatile due to the region's complex political climate. There have been many announcements to reduce unemployment in the region especially after the repeal of Article 370, however the employment data released by ILO shows a sad picture indicating an increase in unemployment scenario raising eyebrows about current governments intent, its policies and benefit of committed investments in the region. ?

When we discuss about unemployment scenario in JK, it becomes imperative to present a comparative analysis vis a vis national average. JKs unemployment rate has always been considerably higher than the national average. For e.g., form a report given by Centre for Monitoring of Indian Economy (CMIE), JKs unemployment rate for the month of March 2022 was 25%, which was almost three times the national average of 7.6% for the same month.

Some of the structural challenges that have worsened this crisis are:

1.?Structural Mismatch – While primary sector contributes roughly 16% to JKs GSDP, the employment in this sector stands at roughly 34%, indicating a structural mismatch in sectoral contribution and employment generation.

2. Lack of skilled workforce – Despite boasting a high literacy rate, JK faces an immense gap in the requirements of corporate/manufacturing conglomerates and the skill set being offered by the workforce. For e.g., Despite being one of the youngest states in India, with more than 54% population being less than 25 years of age, JKs formally skilled workforce stands abysmally low at 2%.

3. Limited Industrialization – Industrial scenario in the region has always been dismal. Core manufacturing ecosystem hasn’t been able to sustain in the region making the scope for employment opportunities limited. For e.g., in the logistics index for 2018, JK finished at bottom[3].

4. Supporting Infrastructure – JK has always lacked basic infrastructure facilities like roads, sewage, un-interrupted power etc. making it difficult for the investors across the country to see it as a viable investment option thus feeding unemployment in the region.

5. Over-reliance on Government as an employer – In FY 2023-24, Government of JK spent Rs. 1,18,500 Crores[4], roughly 39% of its annual budget in salaries and pensions implying a massive burden on the state exchequer. Presence of private sector is minimal in JK which forces the youth in the region to focus on Government jobs. For e.g., the Jammu and Kashmir service selection board posted an advertisement for 1200 sub-inspectors. The application form was filled by around 1 lakh youth aged 21-28. While 1200 youth were successfully employed by this advertisement, the remaining tend to fall in the vicious cycle of preparing for government exams rendering them unemployed in their youth. In reports and surveys, it come forth that the unemployment rate is much higher among educated youth. In 2022 the Government of India’s Ministry of Statistics and Programme implementation published its Periodic Labour Force Survey claims that unemployment percentage among educated youth in J&K has surged to 46.3 percent, second highest in India.

The road ahead – Immediate steps to tackle structural challenges

It is high time that this prevailing issue is dealt with some serious intent and the prevailing government understands the gravity of the situation that unemployment has created in the region. Going forward, AIPC believes that the following measures may be taken to promote employment in the region:

1.?Mandatory local employment: The present regime has conceptualized various industrial development initiatives like NCSS. However, there is no provision of giving preference to local population in the scheme. Industrial development in the region should not be in isolation from the local population. Locals should be able to bear the fruits of development in the region.

2.?Sector Specific Initiatives: Tourism currently has produced major employment, especially in the Kashmir region but it can engage more people with sector specific outreach amongst youth. Similarly, the government needs to focus on high yield traditional sectors like horticulture, handloom and handicrafts, sericulture to generate more avenues for employment.

3. Skilling keeping current market needs in focus: Despite high unemployment rate, JK has one of the lowest migration rates at 22.1 percent, as per ILO. This indicated that the people of JK share a special bond with their region and crave better opportunities from their elected representatives. Thus, it becomes paramount to improve job placement and vocational education. Government should provide students with access to cutting-edge technology and infrastructure to enhance their learning experience.

[1] Contribution of major economic sectors in GSDP of JK - Rukhsana Majeed and Dr. Radha Gupta

[2] Recent trends in JKs employment landscape – Vijay Kumar, Bharat Singhal, Sachin Sharma

[3] Times of India

[4] Kashmirlife – Masood Hussain