Unemployment crisis: 83% of jobless Indians are youth, says International Labour Organisation Report

According to the study, youth employment and underemployment surged between 2000 and 2019 but saw a decline during the COVID-19 pandemic years

Jocelyn Fernandes, Mint, 27 Mar 2024  : As per the ILO report, the proportion of educated youth (with at least secondary education), who are unemployed, has nearly doubled to 65.7 percent in 2022 from 35.2 percent in 2000.

India’s youth continue to grapple with soaring unemployment rates, with nearly 83 percent of the jobless population belonging to this demographic, as per the India Employment Report 2024 jointly published by the International Labour Organisation (ILO) and the Institute of Human Development (IHD).

The report underscores a concerning trend where the proportion of educated young people, possessing at least secondary education, among the total unemployed youth has nearly doubled from 35.2 percent in 2000 to 65.7 percent in 2022.

Dropout rates after secondary education remain high, particularly in poorer states and among marginalised groups. Despite rising enrolment in higher education, quality concerns persist, with significant learning deficits observed across school and higher education levels, as per the report.

It was released by Chief Economic Adviser V Anantha Nageswaran on March 26.

Rising Unemployment Among Educated Youth

According to the study, youth employment and underemployment surged between 2000 and 2019 but saw a decline during the COVID-19 pandemic years. Educated youths, however, experienced significantly higher levels of joblessness during this period.

Further, the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and the Unemployment Rate (UR) witnessed a sustained decline between 2000 and 2018, only to show signs of improvement post-2019, the report highlights.

However, the authors of the report caution that this improvement needs careful interpretation, especially given the questions raised about the drivers of these changes.

Wages have largely remained stagnant or declined, with real wages for regular workers and self-employed individuals showing a negative trend after 2019. A substantial portion of unskilled casual workers did not receive the mandated minimum wages in 2022.

Significant variations in employment outcomes exist across states, with certain states consistently ranking lower in employment indicators. States like Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Jharkhand, and Chhattisgarh have struggled with poor employment outcomes over the years, reflecting the influence of regional policies.

Challenge of Youth Employment in India

India is at a crucial juncture concerning youth employment as it holds the potential to harness its demographic advantage. With a significant portion of the population falling within the working age bracket, India stands to benefit from what is termed a "demographic dividend."

However, this advantage is facing challenges as the youth population, which constituted 27 per cent of the total population in 2021, is projected to decrease to 23 per cent by 2036.

The COVID-19 pandemic exacerbated challenges in the youth labour market, leading to temporary worsening of indicators during peak periods. Although there were some recovery post-lockdowns, it was accompanied by an increase in poor-quality work, particularly in self-employment and unpaid family work.

Technological advancements have also affected the demand for skills and types of employment, with young people being better represented in high- and medium-skill jobs and the gig economy. However, job insecurity remains a concern in these sectors.

And, regional disparities exist in youth employment outcomes across Indian states, with states at different stages of demographic transition experiencing varying employment outcomes. While some states show promising outcomes, others, particularly in the northern and eastern regions, face challenges in youth employment.

Paradoxical Labour Market Dynamics, Informal Sector and Livelihood Insecurities

Recent years have seen paradoxical shifts in key labour market indicators, reflecting a blend of improvements and setbacks. While the labour force participation rate, workforce participation rate, and unemployment rate experienced a prolonged decline from 2000 to 2019, there was a subsequent improvement, coinciding with periods of economic strain, including the COVID-19 pandemic, except for two peak pandemic quarters.

The trend in overall labour market indicators is echoed more prominently in the female labour market. After a notable decline in previous years, the female labour market participation rate displayed a swifter upward trajectory from 2019 onwards, particularly in rural areas.

There has also been a gradual enhancement in employment conditions over the years, as indicated by the employment condition index. Between 2005 and 2022, there was a steady rise in values, denoting better employment conditions. However, this trend was interrupted and even reversed after 2019, coinciding with the onset of the COVID-19 pandemic, highlighting persistent challenges in employment conditions.

The slow transition away from agricultural employment witnessed a reversal after 2019, with a notable rise in agricultural employment and a decline in non-farm employment, especially in manufacturing. The construction and services sectors absorbed the increase in non-farm employment.

Notably, the increase in employment post-2019 was largely driven by self-employed workers, with a significant portion comprised of unpaid family workers, predominantly women. Informal employment consists of nearly 90 percent of workers engaged, the report notes. Additionally, the share of regular employment, which saw a steady rise post-2000, witnessed a decline after 2018.

The report underscores widespread livelihood insecurities, especially among those not covered by social protection measures. Urbanisation and migration rates are forecasted to increase, with projections suggesting a migration rate of around 40 percent by 2030 and a substantial urban population growth driven by migration, particularly from eastern and central regions to southern, western, and northern regions.

Skill Deficit, Gender Disparities Hinders Youth Employment

Despite India's youthful demographic, there's a concerning lack of necessary skills among the workforce. The report highlights that a significant portion of the youth lacks basic digital literacy skills, hindering their employability. It noted that 90 percent of Indian youth are unable to put a mathematical formula into a spreadsheet, 60 percent cannot copy and paste files, and at least 75 percent of youth are unable to send emails with attachments.

The report also sheds light on the widening gender gap in the labour market, with low rates of female labour force participation. Young women, particularly those with higher education, face substantial challenges in securing employment.

Social inequalities also persist despite affirmative action and targeted policies, with Scheduled Castes and Scheduled Tribes facing barriers to accessing better job opportunities. Although educational attainment has improved across all groups, social hierarchies persist, exacerbating the employment disparity.