World Bank points to high unemployment, India’s demographic dividend squandered: FT report

Pointing to high rates of unemployment in India and its neighbouring countries, the World Bank has warned that the region risks “squandering its demographic dividend”, despite witnessing world’s fastest economic growth, Financial Times reported.  

The World Bank said it expects the economy of south Asia – comprising Pakistan, Bangladesh, and Sri Lanka – to grow faster than any other region in the next two years. But its employment ratio is declining, in an indication that the countries are unable to create enough job opportunities. 

The south Asian region’s output growth is expected to be 6 percent in 2024 and 6.1 percent in 2025, while India has surpassed China to become the world’s most populous country with 1.4 billion people. 

The employment ratio for south Asia was 59 percent last year against 70 percent in other emerging markets, the report noted. Meanwhile, the youth unemployment rate was 45.4 per cent in India last year, as per think tank Centre for Monitoring Indian Economy. 

The bank said that south Asia was “the only region where the share of working-age men who are employed fell over the past two decades”. It also highlighted that female employment ratios in several south Asian countries, including India, are less than 40 percent – among the lowest in the world. 

The report noted that the “issue of joblessness has become particularly fraught in India, which has struggled to create enough work despite its rapid economic growth”. 

“Prime Minister Narendra Modi’s opponents have sought to make joblessness a political issue ahead of the general election starting this month, with the rival Congress party on Sunday accusing the government of seeking to ‘cover it up’. Modi’s government argues that it has taken important steps to create jobs, including reforms to promote manufacturing and spending heavily on infrastructure construction to boost growth,” the report said.

Franziska Ohnsorge, the World Bank’s chief economist for south Asia, told FT that more reforms are needed to boost employment. “It’s a missed opportunity. It’s almost like the demographic dividend is being squandered.”