Where is the Work?
Photo: Karan Madhok
India’s high youth unemployment should be a cause for greater alarm. Not only is it a question of under-utilization of the most precious resource of a nation—its young people—but it also raises the spectre of social tension and unrest.
India is amongst the fastest-growing large economies in the world, having recently edged out its former colonial master, the United Kingdom, from its position. Impressive as this has been, the growth is also, arguably, amongst the world’s most unequal and lopsided. While there are jobs to be found by young people in the large cities and metropolitan areas of the country—particularly in the services (i.e. technology) sector—there seems to be an acute shortage of jobs in small towns and the vast rural hinterland.
In a country where 66 per cent of the population is under the age of 35, there is quite rightly a great deal of excitement about the demographic dividend that is waiting to be reaped. But the million-dollar question is: Why hasn’t the potential yet turned to reality? For an economy that grew at a blistering 8.4 per cent in the last quarter of 2023, a youth unemployment rate of 44.49 per cent (among the 20 to 24-year-olds) in the October to December period last year is quite alarming, and portends a grave unemployment crisis in the years ahead.
A major reason for the current crisis is the fact that India’s undoubtedly impressive growth has been driven by the services sector, which is not known to be very labour-intensive in the same manner as the manufacturing sector. A country with the largest population of youth anywhere in the world should be poised to surge ahead, and emerge as a middle-income nation in the not-so-distant future. That is a tantalizing prospect, and it has excited the imagination of many in India and abroad.
Touted as India’s rightful arrival at a place that it more than deserves—given its size and geo-strategic importance—the looming youth unemployment can, however, also prove to be a deal breaker. Far from appearing to be a country on the cusp of achieving its destiny, news about youth from across the towns of India queuing up to take up menial jobs in war-torn Israel, or being duped by unscrupulous people smugglers into fighting as mercenaries on behalf of Russia in the Ukraine conflict, doesn’t paint a very pretty picture of the fifth largest economy in the world.
According to the International Labour Organization, a vast majority (80 per cent) of India’s unemployed people are from amongst its youth. Furthermore, a whopping 65.7 per cent of these unemployed youth are those that possess secondary education or higher.
If these are the dire straits for the educated, the scenario at the bottom of the pyramid, comprising those with fewer skills and earning lower wages, is quite dismal as well. At present, the urban youth are largely employed in the services sector. In the rural areas, meanwhile, most of them find employment in agriculture. In all, fewer than one-third of the Indian youth had regular or salaried jobs in 2022-23.
Most employment in India in fact, is either in the shape of self-employment or casual employment. The former constitutes individuals who deploy their own land, money (capital), labour, and entrepreneurial ability, and include small time businessmen, shop keepers, kiosk and stall owners, traders, and vendors. There is also an army of casual workers in India performing an assortment of temporary jobs. These include local farm workers and migrant labourers working at agricultural and construction sites.
Then there are the labourers who perform odd jobs like cleaning, loading, or packing. It also includes people who work in household jobs, as cooks, cleaners, etc. The casual workers were largely the ones who trudged thousands of kilometres across the country at the time of the COVID-induced lockdowns.
It cannot be that the present unemployment crisis was entirely inevitable, or could not be foreseen and prevented to a large extent, given that the last few years have indeed been extremely volatile and unpredictable internationally. For one, the government faulted in believing that focusing largely on incremental GDP growth would create a trickle-down impact, ultimately leading to enhanced employment. That clearly hasn’t happened. The government could have looked at investing more in labour intensive industries that provide regular employment, alongside the much vaunted mega-infrastructure projects.
For an economy that grew at a blistering 8.4 per cent in the last quarter of 2023, a youth unemployment rate of 44.49 per cent (among the 20 to 24-year-olds) in the October to December period last year is quite alarming, and portends a grave unemployment crisis in the years ahead.
There should also have been a lot of investment towards improving the quality of education for the masses, ensuring that educated youth learnt skills that made them more employable. Also, the low participation of women in the workforce is something that did not get the attention it clearly deserved. The Micro, Small and Medium-Sized Enterprises [MSME] sector which is the backbone of any economy could have been helped more to obtain finance and upgrade their skills and technology as well.
Job creation, therefore, has to be at the heart of any concerted effort to solve the youth unemployment crisis. According to the International Labour Organization [ILO], an attempt has to be made to improve the quality of employment and plug the inequalities that skew the labour market. There must be a concerted effort made towards skill development that addresses the knowledge gaps of prospective employees. Focusing on the growth of MSMEs by leveraging the power of digital technology can help create jobs for the youth. Furthermore, there is a need to invest in sectors like the digital economy and care, which can prove to be significant contributors to youth employment. The ILO’s report stresses on the importance of an inclusive urban policy that is cognizant of the problems and needs of vulnerable sections like migrants, women, and economically disadvantaged youth, against the backdrop of future urbanization and migration trends in the country.
The fact that Indian youth unemployment rates are higher than global levels should send alarm bells ringing amongst those responsible for formulating policy and seeing to its implementation. Not only is it a question of under-utilization of the most precious resource of a nation—its young people—but it also raises the spectre of social tension and unrest.
Could these issue be fixable? Some, like Finance Commission Chairman and former Niti Ayog vice chairman Arvind Panagariya believe so. In Panagariya’s opinion, India’s unemployment problem has to do more with underemployment, rather than unemployment as such. A job which should be done by one person often gets done by two or three people. While agriculture is the most obvious example of underemployment in India, a lot of the underemployment stems from the unorganized manufacturing sector as well. One should strive for creating well-paying jobs that entail towards higher productivity.
Panagariya believes that a small number of workers have a share towards a majority of the capital; while a greater number of individuals in agriculture, or in micro-and-small enterprises, work in an environment where capital is scarce, and so is productivity. Fixing the labour and trade laws—with regard to excessive protection being provided—is of prime importance in his view. Apart from the implementation of labour laws, Panagariya advocates the privatization of public sector enterprises and banks. In his view, the large young population of India is a huge asset—unlike that of an ageing China, with its high-dependency ratio.
Of all the many problems facing India, unemployment amongst the youth has to be dealt with forcefully on an immediate basis. Doing so will help pitchfork India into its rightful position as one of the foremost nations in the world. Then, and only then, will India’s rightful moment arrive under the sun.
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Vipin Labroo is a content creator, author and PR consultant. A member of the Nonfiction Authors Association, he has years of corporate experience working with an eclectic range of clients, writing press releases, articles, blogs, white papers, research reports, website content, eBooks and so on across segments like technology, business & marketing, internet marketing, healthcare, fashion, real estate, travel and so on. You can find him on Twitter: @labroovipin and Instagram: @vipin_labroo.
