Kuznets’ Hypothesis
The hypothesis by Simon Kuznets suggests that as an economy develops, market forces increase then decrease the overall economic inequality of the society. The hypothesis implies that in the early development of an economy, new job opportunities cause the influx of rural labor to the cities for earning. As per the Kuznets hypothesis, as job opportunity increases with industrialization and infrastructure development, the centre of the economic activities shifts from rural areas to the cities. The rural population begins to migrate from rural to urban areas in search of better-paying jobs. This process worsens the income gap between urban and rural areas and escalates economic inequality. There is an increase in the urban population and a decrease in the rural population. But Kuznets’ hypothesis also states that economic inequality starts reducing as an average income level is reached, and the processes associated with industrialization and development become stable for economic needs. At this point, the development of society is meant to benefit people by increasing per-capita income and effectively decreasing the income gap and economic inequality.
India’s Unique Job Crisis
The job crisis in India has been a crucial factor for economic development because more employment contributes to economic growth by providing goods and services for consumption and infrastructure development. The job opportunities are shrinking considering the vast population and great socio-economic disparity between different levels of society. The major causes of unemployment in India can be attributed to a large population, lack of vocational skills, or low educational levels of the working population. The labor-intensive sectors suffering from the slowdown are also an important factor related to the job crisis. The demonetization of 2016 negatively impacted the informal sector, causing a crunch in industrial output and a lack of job opportunities. In 2020, the covid-19 pandemic caused a drastic setback in India’s job scenario, and the effects are still visible in the economy. The unemployment percentage was low in 2017 but rose and became highest in 2020. Organizations have used the pandemic to trim their workforce and reduce costs which mainly affected the salaried jobs in the private sector. The job crisis has been aggravated over the years and only gets a steep rise due to the impact of the pandemic on new job creation and the recruitment process. In April 2022, India’s overall unemployment rate is around 7.8% in which the unemployment rate in urban areas was 9.22% and 7.18% in rural areas. The state of Haryana has the highest unemployment of 34.5%.