Why is unemployment high among the youth? | Explained

Why is unemployment high among the youth? | Explained

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Job seekers at a job fair in Bengaluru. The trend of contractual appointments and clamour for consultancies are also blamed for the dip in formal jobs.
| Photo Credit: AFP

The story so far: The India Employment Report 2024, prepared jointly by the Human Development and the International Labour Organization, and released on March 26, revolves around “youth employment, education and skills.” It has analysed trends and patterns of the Indian labour market for two decades, including the COVID-19 years, and listed the “emerging characteristics of the employment challenges now confronting the economy as well as the impact of growth on employment.”

What are the key findings?

The report’s authors note that the proportion of India’s working-age population (aged 15–59) increased from 61% in 2011 to 64% in 2021 and is projected to reach 65% in 2036. About 7-8 million young people are added each year to the labour force. Though the proportion of youth getting an education increased from 18% in 2000 to 35% in 2022, the percentage of youth involved in economic activities decreased from 52% to 37% during the same period. The authors warn that unemployment in the country is “predominantly a problem among youth”, especially those with a secondary level of education or higher, and that it has intensified over time. “In 2022, the share of unemployed youth in the total unemployed population was 82.9%,” they noted, adding that the share of educated youth among all unemployed people also increased, from 54.2% in 2000 to 65.7% in 2022. Also, among the educated (secondary level or higher) unemployed youth, women accounted for a larger share (76.7%) than men (62.2%). 

Is the crisis the result of a lack of jobs?

Santosh Mehrotra, who taught labour economics at Jawaharlal Nehru University and whose studies have been cited in several chapters in the report, told The Hindu that it’s a question of both lack of opportunities and unemployability of educated youth due to poor quality of education. He urged the government to ensure that the development of skills was separated from formal education. The ILO and IHD said the share of technically qualified youth was low in India15.62% youth had vocational training in 2022, but out of them only 4.09% had formal vocational training.


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According to Mr. Mehrotra, the fact that employment in the agriculture sector has increased after 2019 is because of the lack of quality education among the youth, making it difficult for them to get jobs in other sectors.

The report’s authors pointed out that most jobs in 2023 (90.4%) were in the informal sector; and that around half the jobs in the formal sector (45.2%) were also of an informal nature. Mr. Mehrotra stressed the importance of creating more jobs in the formal sector, pointing out that the unemployment rate among youth had tripled between 2012 and 2018.

What is the quality of employment?

The ILO and IHD stated that the jobs remained low-productive and low-earning. Real wages and earnings showed a decline or had stagnated. A large proportion of regular workers (40.8%) and casual workers (51.9%) did not receive the average daily minimum wage prescribed for unskilled workers. The government-prescribed rate is ₹480 per day.

Central trade unions and the Samyukt Kisan Morcha are concerned about the report’s findings. According to senior trade union leader Amarjeet Kaur, the ILO report flags the “wage depression” prevalent in the country, especially when food inflation is not under control. She adds that formal employment is merely 9% of total employment and that most of the workforce is kept out of any social security net. “This itself adds to unemployment and underemployment as workers without formal employment may not be able to build a base of education and skill enhancement for the next generation,” she observes. The report’s authors said as individuals attain higher levels of education, they are more likely to have access to more secure and formal employment options, leading to higher average returns. Youth residing in the southern, western and north-eastern regions had greater probabilities of being in formal employment, they noted, also flagging the larger presence of socially marginalised youth in informal jobs.

Why are jobs scarce in the formal sector?

Trade unions contend that thousands of posts have not been filled for years and the policy of letting one-third of the vacancies lapse after retirements have resulted in the decrease of formal employment. The trend of contractual appointments and clamour for consultancies are also blamed for the dip in formal jobs. 

What about the gender gap? 

There is a significant gender gap in the labour market, with low rates of female labour force participation. The gender gap in the LFPR has remained almost consistent over the past two decades, the report’s authors observed. In 2022, the LFPR of young men (at 61.2%) was almost three times higher than that of young women (at 21.7%), and the gender gap was similar in both rural and urban areas. The report’s authors have noted that there is a large proportion of young persons, particularly women, who are not in education, employment or training. Between 2012 and 2019, there was an alarming increase in unemployment because of the decrease in women participation in the workforce, a trend which has been slightly reversed post 2019. “Young women are more likely to engage in agriculture than young men,” they said. The ILO and IHD recommended that measures such as crafting policies to boost women’s participation in the labour market including larger provision for institutional care facilities, adaptable work arrangements, improved public transport, improved amenities and enhanced workplace safety must be taken in mission mode to address this gender gap in employment.

What has the report recommended? 

India was expected to have a sustained economic growth of 5-6% in the next 15 years or so, the report’s authors noted. “Rapid technological changes and high growth have increased the gap between skill supply and demand,” they said, urging policymakers to take adequate steps to ensure rapid integration of youth into the labour market through well-targeted supply and demand measures.

The report’s authors have recommended “five missions” to address the challenges: Make production and growth more employment-intensive; improve the quality of jobs; overcome labour market inequalities; make systems for skills training and active labour market policies more effective; bridge the deficits in knowledge on labour market patterns and youth employment. They have recommended measures such as integrating employment creation with macro and other economic policies to boost productive non-farm employment. They also said micro, small and medium-sized enterprises must be supported and decentralised. They have urged the government to take steps to increase agriculture productivity, create more non-farm jobs and promote entrepreneurship.

Calling for a focus on policies that boost women’s participation in the labour force, they also sought a minimum quality of employment and basic rights of workers across all sectors.

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