Over 40% of India’s graduates under 25 unable to find jobs, says report

The unemployment rate in India has declined post-COVID-19 for all education levels but it remains above 15 percent for graduates and has reached as high as 42 percent for graduates under 25, a report titled State of Working India 2023 showed on September 20, Wednesday. The report was published by the Azim Premji University citing data from the latest Periodic Labour Force Survey (PLFS) 2021-22.

“There is large variation in the rate of unemployment even within the higher educated group. The unemployment rate falls from over 40 percent for educated youth under 25 years of age to less than 5 percent for graduates who are 35 years and above,” the report said.

It noted that the findings indicate that eventually graduates do find jobs but the key questions about the nature of jobs they find and if these match their skills and aspirations remain, for which more research is needed.

The report said that the relationship between growth and employment became weaker over time. “Over the long-run GDP growth and employment growth have been uncorrelated in India suggesting that policies oriented towards achieving faster GDP growth will not necessarily speed up job creation,” the report claimed.

The loss of jobs during the pandemic forced workers to fall back on agriculture or self-employment in order to survive. As a result, the share of employment accounted for by these two sectors rose sharply in the lockdown quarter (April-June 2020), it said, adding that two years later, employment had declined to pre-pandemic levels for men but continued to remain elevated for women.

Reflecting on the difference in the impact of structural changes on women and men, the report explained that for men, exit from agriculture meant a large increase in the share of construction while for women it meant an exit from the workforce.

Older, less educated women working in agriculture exited while younger more educated women entered. As a result, the large decline in the employment rate for rural women was accompanied by a significant increase in the proportion of women workers who had regular wage jobs — going from just under 10 percent in 2004 to 25 percent in 2018 before falling to 20 percent due to the pandemic.

The report also pointed out that between 2004 and 2017, around 3 million regular wage jobs were created annually. Between 2017 and 2019, this jumped to 5 million per year. However, since 2019, the pace of regular wage job creation has decreased due to the growth slowdown and the pandemic.

Between 2017 and 2021, there was a slowdown in overall regular wage job creation but formal jobs (with a written contract and benefits) as a share of all regular wage work rose from 25 percent to 35 percent. In 2020-21 (pandemic year), regular wage employment fell by 2.2 million. But this net change hides an increase in formal employment by 3 million and a loss of about 5.2 million of semi and informal regular wage employment, according to the report.

“While half of the lost employment is accounted for by women, only a third of the increase in formal employment accrued to women. So, in net terms, women lost out on formal employment in this period. Not only that, there was a shift towards self-employment due to distress,” the report shows.

After falling or being stagnant since 2004, female employment rates have risen since 2019 due to a distress-led increase in self-employment. Before COVID, 50 percent of women were self-employed. After COVID this rose to 60 percent. As a result earnings from self-employment declined in real terms over this period. Two years after the 2020 lockdown, self-employment earnings were only 85 percent of what they were in the April-June 2019 quarter.

It highlights two main challenges with respect to women’s employment - the decline in the rural female workforce participation rate (WPR) and the stagnant, low urban rate.

In 2004, salaried women workers earned 70 percent of what men earned. By 2017 the gap had reduced and women earned 76 percent of what men did. Since then the gap has remained constant till 2021-22.

However, gender norms continue to remain. According to the report, as the husband’s income rises, women are less likely to work. In urban areas, after the husband’s income crosses Rs 40,000 per month, the chance of the wife working increases again (i.e. there is a U-shaped relationship).

There is also a strong intergenerational effect of gender norms. Compared to households where there is no mother-in-law present, married women, living in households where the mother-in-law is present but not employed are 20 percent (rural) to 30 percent (urban) less likely to be employed. However, if the mother-in-law is employed herself, daughters-in-law are 50 percent (rural) to 70 percent (urban) more likely to be employed.

In 2004 over 80 percent of sons of casual wage workers were themselves in casual employment. This was the case for both SC/ST workers and other castes. For non-SC/ST castes, this fell from 83 percent to 53 percent by 2018 and the incidence of better quality work such as regular salaried jobs increased. It fell for SC/ST castes as well, but to a lesser extent (86 percent to 76 percent).

The report also noted that in the early 1980s Scheduled Caste workers were more than five times over-represented in waste-related work and over four times in leather-related work. This has declined rapidly over time, though it was not completely eliminated as of 2021-22. In the leather industry, the representation index declined sharply to 1.4 in 2021. In waste management and sewerage, the over-representation of SCs decreased to 1.6 times in 2011 before increasing slightly again.

The data sources used for the report include surveys conducted by the National Statistical Organisation, Employment-Unemployment Surveys, Periodic Labour Force Surveys, Unincorporated Enterprises Surveys, Annual Survey of Industries, Census of India, Economic Census, National Family Health Survey, India Working Survey -2020, World Development Indicators and Groningen Economic Transformations Database.