India’s youth faces significant challenges with high unemployment rates, where approximately 83% of the unemployed individuals are youth, according to the India Employment Report 2024 report released by the International Labour Organization (ILO) and the Institute of Human Development (IHD).
The report, released by chief economic advisor V Anantha Nageswaran, highlights a worrying trend showing that the percentage of educated young individuals, with at least a secondary education, among all unemployed youth has almost doubled from 35.2 per cent in 2000 to 65.7 per cent in 2022.
Dropout numbers up in secondary education
Dropout rates following secondary education continue to be elevated, especially in less affluent regions and among marginalized communities.
While there is an increase in enrollment in higher education, there are ongoing quality issues, with notable learning deficiencies identified in both school and higher education settings, according to the report.
The study indicates that there was a notable increase in youth employment and underemployment from 2000 to 2019, but these rates decreased during the COVID-19 pandemic years.
Interestingly, educated young individuals faced notably higher levels of unemployment during this time frame.
Moreover, the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR) all showed a consistent decline from 2000 to 2018, followed by signs of recovery after 2019, as emphasized in the report.
However, the report’s authors advise careful interpretation of this improvement due to uncertainties about the factors driving these changes. Wages have mostly stayed the same or decreased, with real wages for both regular employees and self-employed individuals declining post-2019. Many unskilled part-time workers did not receive the required minimum wages in 2022.
Significant differences in employment results are evident among states, with specific states consistently performing poorly in employment metrics.
Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Jharkhand, and Chhattisgarh have faced challenges with employment outcomes, showcasing the impact of regional policies. India faces a critical moment regarding youth employment, given its demographic advantage. With a considerable part of the population in the working age group, India has the opportunity to leverage its demographic dividend, the report said.
But the advantage of having a significant youth population, which made up 27% of the total population in 2021, is expected to decline to 23% by 2036.
Impact of COVID-19
The impact of the COVID-19 pandemic worsened issues in the youth labour market, causing a temporary deterioration in key indicators during peak times. Despite some improvement after lockdowns, there was a rise in low-quality employment, especially in self-employment and unpaid family work.
Technological progress has influenced the need for skills and job types, leading to a higher presence of young individuals in high- and medium-skill roles and the gig economy.
Despite this, job instability persists in these sectors. Moreover, there are differences in youth employment results among Indian states, with regions in different demographic transition phases encountering diverse employment scenarios. While certain states demonstrated positive results, others, notably in the northern and eastern parts, encountered obstacles in youth employment.
The report highlighted that despite certain positive changes in labour market indicators over the last twenty years, India’s employment scenario still struggles with inadequate growth in non-farm sectors and their capacity to accommodate workers transitioning from agriculture.
“This is notwithstanding the fact that non-farm employment grew at a higher rate than farm employment over the different periods prior to 2018,” the report said.
90% workers in informal sector
Nearly 90% of workers are involved in informal employment, while the proportion of formal employment, which had been rising since 2000, decreased post-2018. Livelihood uncertainties are prevalent, with minimal coverage by social safety nets, especially in the non-agricultural, formal sector.
“Worse, there has been a rise in contractualisation, with only a small percentage of regular workers covered by long-term contracts,” the report said.
Challenges faced by SC, ST communities
The report highlighted that despite affirmative action and targetted policies, the Scheduled Castes and Scheduled Tribes continue to face challenges in accessing higher-quality employment opportunities.
“Scheduled Castes and Scheduled Tribes have greater participation in work due to economic necessity but engaged more in low-paid temporary casual wage work and informal employment,” it said, adding that “despite improvement in educational attainment among all groups, the hierarchy within social groups persists.”
The nation is currently grappling with a significant gender disparity within the workforce, characterized by a notable lack of female labour force participation. ”
“The unemployment challenge among young women, especially those who are highly educated, is enormous,” the report said.
