Why is unemployment high among the youth?

GS Paper III

News Excerpt:

The India Employment Report 2024, focuses on youth employment, education, and skills. It looks at trends in the job market over the past twenty years, including during the COVID-19 pandemic. The report highlights new challenges in employment and the effects of economic growth on jobs.

What are the key findings?

  • The report’s authors note that the proportion of India’s working-age population (aged 15–59) increased from 61% in 2011 to 64% in 2021 and is projected to reach 65% in 2036. 
    • About 7-8 million young people are added each year to the labour force. 
  • Though the proportion of youth getting an education increased from 18% in 2000 to 35% in 2022. 
  • The percentage of youth involved in economic activities decreased from 52% to 37% during the same period. 
  • Unemployment in the country is “predominantly a problem among youth”, especially those with a secondary level of education or higher, and it has intensified over time. 
  • In 2022, the share of unemployed youth in the total unemployed population was 82.9%; the share of educated youth among all unemployed people also increased from 54.2% in 2000 to 65.7% in 2022. 
    • Also, among the educated (secondary level or higher) unemployed youth, women accounted for a larger share (76.7%) than men (62.2%). 

Is the crisis the result of a lack of jobs?

  • It's a question of both lack of opportunities and unemployability of educated youth due to poor quality of education. 
  • He urged the government to ensure that the development of skills was separated from formal education.
  • The ILO and IHD said the share of technically qualified youth was low in India
    • 15.62% youth had vocational training in 2022, but out of them only 4.09% had formal vocational training.
  • The fact that employment in the agriculture sector has increased after 2019 is because of 
    • The lack of quality education among the youth, 
    • By making it difficult for them to get jobs in other sectors.
  • According to the report most jobs in 2023 (90.4%) were in the informal sector;  
    • Around half the jobs in the formal sector (45.2%) were also informal.
  • The report stressed the importance of creating more jobs in the formal sector, 
    • It pointed out that the unemployment rate among youth had tripled between 2012 and 2018.

What is the quality of employment?

  • The ILO and IHD stated that the jobs remained low-productive and low-earning. Real wages and earnings showed a decline or had stagnated. 
  • A large proportion of regular workers (40.8%) and casual workers (51.9%) did not receive the average daily minimum wage prescribed for unskilled workers. 
    • The government-prescribed rate is ₹480 per day.
  • Central trade unions and the Samyukt Kisan Morcha are concerned about the report’s findings.
  • According to a senior trade union leader, the ILO report flags the “wage depression” prevalent in the country, especially when food inflation is not under control.
    •  She adds that formal employment is merely 9% of total employment and that most of the workforce is kept out of any social security net. 
    • This itself adds to unemployment and underemployment as workers without formal employment may not be able to build a base of education and skill enhancement for the next generation.
    • According to Report: The  individuals attain higher levels of education, they are more likely to have access to more secure and formal employment options, leading to higher average returns. 
    • Youth residing in the southern, western and north-eastern regions had greater probabilities of being in formal employment. 
      • They noted, also flagging the larger presence of socially marginalised youth in informal jobs.

Why are jobs scarce in the formal sector?

  • Trade unions contend that thousands of posts have not been filled for years and the policy of letting one-third of the vacancies lapse after retirements have resulted in the decrease of formal employment. 
    • The trend of contractual appointments and clamour for consultancies are also blamed for the dip in formal jobs. 

What about the gender gap? 

  • There is a significant gender gap in the labour market, with low rates of female labour force participation. 
  • The gender gap in the LFPR has remained almost consistent over the past two decades, the report’s authors observed. 
  • In 2022, the LFPR of young men (at 61.2%) was almost three times higher than that of young women (at 21.7%); the gender gap was similar in both rural and urban areas. 
    • The report’s authors have noted that there is a large proportion of young persons, particularly women, who are not in education, employment or training. 
  • Between 2012 and 2019, there was an alarming increase in unemployment because of the decrease in women participation in the workforce. 
    • A trend which has been slightly reversed post 2019
      • Young women are more likely to engage in agriculture than young men
  • The ILO and IHD recommended that measures such as crafting policies to boost women’s participation in the labor market including
    • larger provision for institutional care facilities, 
    • adaptable work arrangements,
    • improved public transport, 
    • improved amenities and enhanced workplace safety must be taken in mission mode to address this gender gap in employment.

What has the report recommended? 

  • India was expected to have a sustained economic growth of 5-6% in the next 15 years or so the report noted. “Rapid technological changes and high growth have increased the gap between skill supply and demand.
  • They said, urging policymakers to take adequate steps to ensure rapid integration of youth into the labour market through well-targeted supply and demand measures. 
  • The report's authors have recommended “five missions” to address the challenges:
    •  Make production and growth more employment-intensive;
    • improve the quality of jobs; 
    • overcome labour market inequalities; 
    • make systems for skills training  active labour market policies more effective;
    • bridge the deficits in knowledge on labour market patterns and youth employment. 
  • They have recommended measures such as integrating employment creation with macro and other economic policies to boost productive non-farm employment. 
  • They also said micro, small and medium-sized enterprises must be supported and decentralized.
  • They have urged the government to take steps to increase agriculture productivity, create more non-farm jobs and promote entrepreneurship.
  • Calling for a focus on policies that boost women’s participation in the labour force, they also sought a minimum quality of employment and basic rights of workers across all sectors.