Over 80% of India’s unemployed population comprises its youth, revealed a report by the International Labour Organisation (ILO).
Released jointly by the ILO and the Institute of Human Development (IHD), ‘The India Employment Report 2024’ highlighted that the proportion of young individuals with secondary education or higher among the total unemployed youth rose from 35.2% in 2000 to 65.7% in 2022.
The report, released by Chief Economic Adviser V. Anantha Nageswaran, indicated a surge in youth unemployment and underemployment between 2000 and 2019, which subsequently declined during the pandemic years.
It stated, “The youth unemployment rate more than doubled between 2000 and 2019, rising from 5.7% to 17.5%, but then dropped to 12.4% in 2022.” The report highlighted that the highest youth unemployment rates were observed among those with graduate degrees, a trend particularly impacting women.
In 2022, women not engaged in employment, education, or training accounted for nearly five times the proportion of their male counterparts, constituting 48.4% compared to 9.8%. This disparity affected around 95% of the total youth population in this category.
The report emphasised that young women were significantly more likely to be out of employment, education, or training than young men. This gender discrepancy was especially pronounced among older youths aged 20–24 and 25–29 compared to younger ones aged 15–19 in 2022.
The report underscores that employment in India has largely remained dominated by self-employment and casual employment from 2000 to 2022. Nearly 90% of the workforce is involved in informal employment, while the proportion of regular employment, which steadily increased post-2000, started declining after 2018.
The findings highlight widespread concerns about job security, with only a small portion, particularly in the non-agricultural organised sector, benefitting from social protection measures. Additionally, there has been a noticeable surge in contractual employment, resulting in only a minority of workers having long-term employment contracts.
The rise in contractualisation exacerbates the situation, leaving only a small percentage of regular workers covered by stable, long-term agreements. Wages in India remained subdued between 2012 and 2022. While casual labourers experienced a slight upward trajectory in wages during this period, the real wages of regular workers remained stagnant or declined.
Similarly, self-employed individuals saw a decline in real earnings after 2019. There was a marginal improvement in labour participation indicators such as the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR) post-2019, following a prolonged decline from 2000 to 2018.
However, this improvement was tempered by concerns about the underlying factors driving these changes, particularly during periods of economic distress and except for two peak Covid-19 quarters.
Despite India’s sizable youthful population, which is often considered a demographic advantage, the report highlights a deficiency in essential skills among the youth. For instance, it revealed that 75% of young individuals struggle with tasks such as sending emails with attachments, 60% with basic file operations like copy and paste, and 90% with handling mathematical formulas in spreadsheets.
Furthermore, the report forecasts a decline in India’s youth population from 27% in 2021 to 21% by 2036, with approximately 7-8 million youths being added to the workforce annually. However, it underscores that youth employment in India generally offers lower quality compared to adult employment, with a higher prevalence of vulnerable occupations or informal sector engagement among young workers.
Challenges in the Indian Labour Market Despite certain paradoxical improvements in labour market indicators over the past two decades, the report highlights persistent challenges, particularly the insufficient growth of non-farm sectors and their ability to absorb workers from agriculture.
Although non-farm employment exceeded farm employment growth before 2018, labor from agriculture predominantly transitioned to the construction and services sectors. V. Anantha Nageswaran emphasized the importance of industry taking the lead in hiring instead of relying solely on government intervention.
Additionally, the report calls for economic policies aimed at strengthening productive non-farm employment, particularly in the manufacturing sector, to accommodate the influx of young labourers in the coming years.
Solving the Indian Labour Market Crises To address these challenges, the report advocates for policies focused on promoting job creation, improving employment quality, reducing labour market inequalities, enhancing skills development and active labour market initiatives, and bridging knowledge gaps on labour market dynamics and youth employment patterns.
It stresses the importance of supporting micro, small, and medium-sized enterprises (MSMEs) through a decentralized, digitally-enabled approach, as well as investing in sectors expected to be significant sources of employment for young people, such as the care sector and the digital economy.
Finally, the report underscores the necessity of formulating an inclusive urban policy to cater to the needs of migrants, women, and economically disadvantaged youth in light of anticipated urbanization and migration trends in India.
