Unemployment in J&K: Rising Challenges and the Need for Economic Transformation

Introduction:

The Indian economy has undergone significant transformations over the past few decades. Despite global economic challenges, the country has achieved an average growth rate of over 6%; however, unemployment remains a critical issue. Similarly, Jammu & Kashmir has experienced considerable changes. Although average income for casual workers has increased over the years, signalling some economic progress, the sharp rise in unemployment—especially among educated youth—compared to the national average is a cause for concern. According to the International Labour Organization’s (ILO) Employment Report 2024, the unemployment rate in Jammu & Kashmir has reached alarming levels and continues to worsen each year, with thousands of young individuals joining the ranks of the unemployed. In 2001, the Census recorded Jammu & Kashmir’s unemployment rate at 4.21%. Between 2001 and 2014, the region saw an increase of approximately 1.19% in its unemployment rate. However, the 2024 Employment Report reveals concerning data, indicating an increase of nearly 16% over the last 10 years, bringing the rate to 21%.

Unemployment Scenario in J&K:

Jammu and Kashmir’s economy has been volatile due to the region’s complex political climate. The previous effort to foster peace through reconstruction, as outlined in the Economic Survey of Jammu and Kashmir 2006-07, was not successful. Following the repeal of Article 370 in 2019, the government recognized the need to increase youth employment and open up the J&K economy. However, recent reports showing a drastic rise in the unemployment rate have raised concerns about the effectiveness of government policies and investments.

The population of Jammu and Kashmir grew from 10.14 million in 2001 to 12.55 million in 2011. During this period, the labor force increased by 15.15%. According to the 2011 Census, the work participation rate in Jammu and Kashmir was estimated at 34.5%, compared to 39.8% across India. Jammu and Kashmir had 4.32 million workers, with main workers accounting for 2.64 million (61.77%) and marginal workers for 1.68 million (38.83%). Female workers made up 26.09% of the total workforce. However, in Jammu and Kashmir, women comprised only 12.80% of the main workforce, compared to 47.02% of marginal labor.

Over the past decade, Jammu and Kashmir has witnessed a significant shift. The Centre for Monitoring Indian Economy (CMIE) reports that Jammu and Kashmir’s unemployment rate stands at 25%, in stark contrast to the national average of 7.6%. According to this report, among all the Union Territories and states, Haryana has the highest unemployment rate, followed closely by J&K. Notably, due to the lack of a robust private sector in J&K, many people have little choice but to pursue government jobs, which is often cited as a major factor contributing to the region’s growing unemployment rate. The desperation among youth for government jobs is evident in the overwhelming response to job postings. For instance, the Jammu and Kashmir Service Selection Board held an exam in 2022 for 1,200 sub-inspector positions, attracting 97,793 candidates. Despite government promises of increased national and foreign investment following the abrogation of Article 370, J&K has yet to see these investments materialize.

According to the ILO report, the unemployment rate among educated youth (aged 15-29) in Jammu and Kashmir was 21.80% in 2005 but rose to 34.80% by 2022. The unemployment rate for males (aged 15-29) with secondary or higher education in Jammu and Kashmir increased from 17.6% in 2005 to 25.86% in 2022. Similarly, the rate for females was 40.32% in 2005 and has risen to 57.41% in 2022. The report further reveals that in Jammu and Kashmir, the percentage of male youth (aged 15-29) not in employment, education, or training was 5.67% in 2005; this rate has increased to 11.72% in 2022, while the percentage for females in the same category has decreased.

Reports and surveys reveal that the unemployment rate is significantly higher among educated youth. In 2022, the Government of India’s Ministry of Statistics and Programme Implementation, in its Periodic Labour Force Survey, reported that the unemployment rate among educated youth in J&K has surged to 46.3%, the second-highest in India. Although some reports present contradictory data, it is clear that the unemployment rate in Jammu and Kashmir has reached an alarming level, which is highly concerning.

Why the Unemployment Rate Has Increased in Jammu and Kashmir:

Approximately 70% of Jammu and Kashmir’s population depends on agriculture and its allied sectors, which have historically provided employment to a large segment of the population. However, with rising literacy rates, most educated youth now prefer to pursue careers in the service sector rather than returning to agriculture. Due to the lack of industries, however, there are limited job opportunities in the service sector. This structural transformation is evident in the declining share of the primary sector in both GSDP and employment, while the secondary and service sectors are increasingly dominating the economy. Despite being an agrarian region, Jammu and Kashmir is witnessing economic diversification, transformation, and structural shifts.

According to the Directorate of Economics and Statistics J&K 2017, the primary sector’s share has declined to 16.67%, while the industrial and service sectors’ shares have risen to 27.26% and 56.07%, respectively. Despite the secondary sector’s higher employment elasticity, it has not provided sufficient employment opportunities in the region, offering only limited jobs. Although agriculture remains the backbone of J&K’s economy, the sector has suffered from backwardness, stagnation, and a lack of mechanization and technological advancement. Additionally, the secondary sector in Jammu and Kashmir has stagnated in terms of development, failing to create adequate job opportunities for the unemployed youth.

Politically, J&K has remained one of the most unstable and volatile regions in India over the past three decades. Since 2008, it has experienced a series of prolonged lockdowns, including those due to the 2014 floods and COVID-19 restrictions. These events have severely impacted Jammu and Kashmir’s economy, damaging all aspects of development. No country can expand its manufacturing sector overnight; it takes years of consistent investment and planning to build a strong economic base. However, in J&K, any progress made is often undone by subsequent turmoil. Creating a peaceful environment is essential to establishing industries and attracting foreign investors, but J&K has struggled to guarantee this stability.

To generate employment and foster economic growth, it is crucial for all sectors to grow. However, the economy of J&K has remained stagnant, with only a few sectors, such as tourism and horticulture, managing to produce some employment despite setbacks from political turmoil. In contrast, other sectors, including handicrafts, handlooms, and small and medium enterprises (SMEs), have experienced a decline, resulting in significant job losses.

Recommendations:

Tourism has generated some employment, but it has the potential to engage more people. However, this requires the establishment of skill training institutions and further development of the sector. Similarly, the government should focus on other sectors, including horticulture, agro-based industries, handlooms, handicrafts, and sericulture, to create more employment opportunities.

Government schemes designed to generate employment remain underutilized due to a lack of financial literacy, among other reasons. While J&K has made progress in literacy rates, it lacks the necessary acumen regarding investment and business. It is essential to teach young people how to start businesses and generate income. Financial literacy must be imparted to enable this.

In J&K, people are either unaware of or hesitant to use various government schemes aimed at reducing unemployment. As a result, these programs are underutilized and fall short of their original goal. There is a trust gap, with residents continuing to perceive that the primary goal of banks is to generate profit rather than create jobs. This is why the RBI classifies Jammu and Kashmir as an unbanked state. Other factors also contribute, such as the lengthy documentation process, corruption, and the fear of financial losses, as experienced during past shutdowns.

Despite the high unemployment rate, Jammu and Kashmir has one of the lowest migration rates, at 22.1%, according to the ILO. Even though a large proportion of people are working in Jammu and Kashmir, this indicates a lack of skill-based education. Notably, the ILO estimates that 58.7% of young people are highly qualified, yet only 6.3% are employed in the formal sector, with the majority—around 80.8%—classified as NEET (Not in Education, Employment, or Training). Therefore, it is crucial to improve job placement, and vocational education should be prioritized over higher education due to its direct relevance to the job market. Government institutions should provide students with cutting-edge technology and infrastructure to enhance their learning experience.

References

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