Despite boasting a stellar GDP growth of 8.2 per cent in 2023-24, India grappled with a concerning unemployment rate of 8 per cent (CMIE). This paradox is increasingly dire as the nation’s youth, including graduates from premier institutions like IITs and IIMs, face a daunting job market.

Shockingly, nearly 22 per cent of students at IIT-Delhi over 2019-23 have been unsuccessful in securing placement offers. IIM-Lucknow among others resorted to requesting its alumni for help with placements. Clearly, not all is well on the jobs front.

The ILO-IHD’s India Employment Report 2024 cites that in 2022 the youth (15-29 years old) constituted 82.9 per cent of the total unemployed population. The PLFS (Q4 FY24) shows that Kerala (31.8 per cent), J&K (28.2 per cent) and Telangana (26.1 per cent) had the highest youth unemployment whereas Delhi (3 per cent), Gujarat (9 per cent) and Haryana (9.5 per cent) ranked the lowest.

The unemployment rate of educated youth increased from 54.2 per cent in 2000 to 65.7 per cent in 2022, according to the report. The report’s most surprising and worrying estimate is that the more educated persons among the young population find it much harder to land a job than the uneducated and unskilled persons. Quite shockingly, those with a graduate degree or higher qualifications faced a 9x higher unemployment rate than unskilled workers. The situation was slightly better for those with secondary level qualification as their unemployment rate was 6x higher than the unskilled.

The annual influx of job seekers is approximately 10 million. There is also a substantial backlog of people without employment. This has prompted some observers to comment that India needs to generate about 20 million jobs per year for the next 10 years to reach near full employment levels specially for its youth, which represent the real demographic dividend.

In stark contrast, SKOTCH Group has stated in its report that “51.4 million person-years of employment have been generated every year” with “PMMY (Mudra Yojana) alone adding 25.2 million steady and sustainable employment on an average per year since 2014”. This seems to be a huge overestimate since 19 million people applied for 63,202 Level-I vacancies in the Railways as reported recently.

India’s working population (20-59 years) is projected to peak at 59 per cent of the total population in 2041 (Economic Survey 2018-19). Then the working age population to total population ratio will begin to decline with dependents outnumbering the working population after 2055. India thus has a 30-year window to fully utilize its demographic advantage and use it to maximise its economic growth. The large numbers of unemployed educated youth cited above, shows that this so far has not been achieved.

Women’s employment

Alongside youth, women also need to be systematically facilitated with employment opportunities to ensure prolonged economic growth. Female Labour Force Participation Rate (LFPR) had been continuously declining from 2000-2019 but has seen a gradual increase since then (ILO-IHD). PLFS (2019-20) recorded the national female LFPR at meagre 28.7 per cent.

It also showed only five out of 37 States and union territories having a rate over 50 per cent, signifying a greater female labour force than males. 12 other States and union territories had a rate of less than 25 per cent, portraying less than a quarter female presence in the total workforce of the region.

Though PLFS (2022-23) stated female LPR of 37 per cent of the total labour force, the corresponding report by CMIE stood abysmally low at 8.8 per cent, which raises serious questions at the true situation of female employment in the country. It is imperative that PLFS and CMIE data is reconciled to better address this predicament.

Despite their differences, both the figures indicate suboptimal female presence due to deep-rooted barriers like the gender pay gap, social stigma, poor working conditions, unequal access to employment and educational opportunities.

The government and the corporate sector both need to take immediate steps to address these issues.

The dominance of the informal sector coupled with reignited significance of agriculture in providing livelihoods since the pandemic, highlight the nuances of employment statistics. There is also a considerable increase in self-employment, attracting different sections especially youth and women, in both rural and urban areas.

Self-employment dominates

This trend of higher self-employment most often masks disguised unemployment or under-employment. Self-employment is categorised as employers, own-account workers and unpaid family helpers. It accounts for 57.3 per cent of the total employed population.

Among these, the unpaid family helpers single handedly constituted 18.3 per cent of total workers compared to 20.9 per cent regular wage workers in 2022-23 (PLFS). Most of these people are either working in poor conditions with no formal contract and lesser pay or have seasonal and irregular work throughout the year.

It is interesting to mention that this kind of unpaid work is not included in employment statistics globally. Since India includes unpaid family helpers as part of the employed workers, it perhaps implies that unemployment may be higher than current estimates.

With the NDA government returning to office, there are high expectations for accelerated employment intensive economic growth. However, it is essential to recognize that beyond increasing national GDP, job creation is equally — if not more — crucial, for maximising the benefits of India’s demographic dividend.

The LFPR of merely 57.9 per cent, sadly signifies that the rest 42.1 per cent of the population are not just non-working but are also not looking for work. This points to a huge wastage of the social capital and economic resources of the country- its employable but currently idle population. We, therefore, second the proposal made by some economists that it is time for making employment growth and not GDP growth as the central objective of policy making.

Rajiv is Chairman, and Bharti is Research Assistant, Pahle India Foundation

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