The Grim Reality of Employment in India

By: Vaishali S.

In 2022, the share of unemployed youth in the total unemployed population of India was 82.9%. Additionally, the proportion of educated youth among all unemployed individuals rose from 54.2% in 2000 to 65.7% in 2022 (India Employment Report, ILO,2024).

India boasts of the largest youth population globally. According to the Report of the Technical Group on Population Projections by the Ministry of Health and Family Welfare, individuals aged 15-29 constituted 27.2% of the population in 2021. This percentage is anticipated to decline to 22.7% by 2036, yet it will still represent a substantial number, amounting to 345 million in absolute terms.  

However, this demographic advantage is accompanied by a significant challenge: unemployment, which remains a major issue among this age group. It is particularly noteworthy that 83% of the unemployed population in India is under the age of 35. 

Following chart depicts the rate of unemployment in India over the years which calls for immediate responses from our policymakers and government.

India's demographic dividend is encountering a significant challenge due to a shortage of jobs and work opportunities. In 2022, educated youth made up 65.7 percent of the total unemployed population in India, an increase of nearly 11.5 percent over the past two decades. Despite the country's growth narrative, the nation is facing a concerning trend of jobless growth. India's economic growth has largely been fueled by the services sector and capital-intensive manufacturing, which generally produce fewer employment opportunities compared to their economic contribution. We need to identify the sector that employs the highest number of people and delve into the details to determine if we are doing enough to generate jobs in that area. 

Agriculture is the largest employer in the country, but we need to assess whether it has the capacity and standards to accommodate and provide opportunities for highly skilled individuals. While India's economic growth has largely been driven by the services sector and capital-intensive manufacturing, these areas usually create fewer jobs in relation to their economic output. For example, the IT sector makes a substantial contribution to the GDP, yet it directly employs only around 4.5 million people. 

A recent RTI response indicates that more than 7,000 IIT students across the 23 IITs have not yet secured jobs through campus placements this year. Two years ago, this figure was only 3,400. While the number of students participating in placements has increased by 1.2 times, the number of those who remain unplaced has doubled. According to the India Skills Report, only 47% of Indian graduates were considered employable in 2019. This highlights a significant disparity between academic qualifications and job preparedness. This gap results in unemployment among graduates and creates inefficiencies in the labor market, where companies find it challenging to locate suitable candidates despite the abundance of job seekers. 

India sees about 12 million people entering the workforce each year, placing significant pressure on job creation. To accommodate these new workers and tackle existing unemployment, the economy needs to generate 10-12 million jobs annually. However, job creation has consistently lagged behind this requirement. This shortfall in job creation threatens to transform the demographic dividend into a demographic burden, potentially causing social unrest and economic instability. 

The issue of employment often takes center stage during election campaigns, only to lose momentum once the election cycle concludes. It is crucial to treat job creation not as a temporary electoral strategy but as a sustained policy priority. By committing to robust, long-term employment initiatives, we can ensure economic stability and fully harness the potential of our young population, paving the way for a prosperous future.