December 04, 2022

Dismal Picture of Youth Employment in India

Sanjay Roy

THE alarming fact of India’s labour market in the second decade of the millennium is the increase in youth unemployment compared to the general increase in unemployment in the recent period. Despite the fact that the overall high open unemployment rate of roughly 5.8 per cent in the recent past in India is still much lower than the unemployment rate in advanced countries, that does not indicate a better picture. The open unemployment rate in developing countries has been historically lower compared to advanced economies primarily because people in developing countries cannot afford to remain unemployed for long in absence of any unemployment protection and have hardly been left with any asset to fall back upon. But the recent spurt of unemployment rate in India from a stable 2-3 per cent for the past few decades simply manifests the severity of the job market where people are not being able to get jobs even if they are desperate to accept any but unfortunately not getting one. The pandemic has adversely impacted the youth, quite unevenly. Because of the pandemic when production largely collapsed it was generally a state of misery but in the midst of darkness employers chose to retain their long-serving workers and sacrificed the younger ones. The axe fell asymmetrically on the female workers and the youth. On the other hand, during the turn of recovery employers continued to remain cautious and restrained which further shrank new opportunities for young job seekers.

According to the ILO report globally, the youth unemployment rate reached as high as 15.6 per cent in 2021 which is roughly three times the adult unemployment rate in the same year. It is more important to note that because of the steep decline in family income and pandemic-induced shift towards distance learning a large portion of the students are excluded from the learning process which in turn increased the category of the young population who are neither employed nor engaged in education (NEET). It is estimated that youth belonging to such a category have touched the figure of 282 million which in proportion to the youth population is the highest in the past 15 years. But this is not only because of the pandemic and the employment within the youth age group during the decade 1995 to 2015 declined from 48.8 per cent to 36.9 per cent and region-wise the decline was higher in Eastern and South Asia.


This should be a major concern in the case of India particularly because India is going through the demographic phase of youth bulge when the average age of the population is 28.4 years. The working age (15-59) population as a share of the total population in the 2011 Census was 60 per cent and that increased to 63 per cent in 2021 Census and is estimated to increase to 64 per cent in 2031. This basically manifests the state of ‘demographic dividend’ that India could realize given the fact that the share of the dependent population or elderly population is relatively less. This advantage is going to continue for a decade or so as the share of the young population (15-29) which stood at 28 per cent in 2011 has come down to 23 per cent in 2021.  Hence we have entered the phase where although the working-age population as a share of the total population shows a rising trend youth population share is gradually declining. Currently, it is estimated that the share of youth within the working-age population in India is 43 per cent and the rest adult population (30-59) accounts 57 per cent of the working-age segment.

The worrying fact is the decline in the labour force participation rate (LFPR) among the youth compared to the adult population. Labour force participation rate indicates the proportion of people within a particular segment actively looking for jobs. Hence a low LFPR indicates that a smaller proportion of the population of the reference age group is actively seeking jobs. This may happen in the case of youth for two reasons: one, more people are opting for education and hence opting out from the job market; two, they opt out due to lower expectations of the availability of jobs given the perception that prevails. In the case of India for the entire working-age population, LFPR is 55 per cent which means that more than half of the working-age population is active job seekers. This is as low as 39 per cent for young people in India.

The related fact is educated youth account 37 per cent of the total unemployed in India. Even before the pandemic there has been a consistent decline in youth employment rate. According to a World Bank estimate, the employment rate of youth (15-24) which is the ratio of employed people within the youth population in India stood at 23.2 in 2020 which was 20.6 percent in 2018 and 20.7 per cent in 2019 during the pandemic years. But the decline started much before the pandemic. The youth employment rate was 43.4 per cent in 1994, 40.5 per cent in 2005, and 32.4 per cent in 2010.The number of unemployed youth according to an official estimate was 10 million in 2011-12 which has climbed up to 24 million in 2019-20. The declining employment rate contributes to low expectations of employment and creates ‘discouraged workers’ within the young age population. The huge employment deficit among the youth and the persistence of unemployment simply shows that we are going to miss the opportunity of demographic advantage. Instead, India is actually accumulating unutilized human capacity and not being able to engage the youth population in gainful employment. Unfortunately, persistent unemployment also adds to the number of ‘discouraged workers’ often manifested through low LFPR among the youth.


The decline in the labor force participation rate of youth in India is largely attributed to increases in enrollment in education. This is true that the proportion of the student population particularly the female has increased significantly. This is apparently a good sign as a longer-term trend but not as simple as it appears to be. The share of students within the working-age population was 15 per cent in 2016-17 which increased to 18 per cent in 2019-20 and to 23 per cent in 2021-22. Hence a sharp rise in the student-population ratio is being recorded during the pandemic which is nothing but a manifestation of disguised unemployment, meaning more people opting for education because of a lack of employment opportunities.

Generally speaking, there is a relation between education level and employment. The unemployment rate uses to be lower for people with no education which increases at the middle level, particularly those educated up to the secondary level, and then again declines for those who graduated or attained postgraduate degrees and above. For people with little education, the absorption happens mostly in labour-intensive sectors in various agriculture and non-agricultural occupations. People with a middle level of education face the greatest hurdle in getting jobs, while for educated youth, employment should be easier given their specialised skills and knowledge attainments. In the case of India, this has not been the case, rather unemployment rate increases as we move up the education scale. In 2021-22 unemployment rate within the segment of people with no education was 1.8 per cent, for those having education up to 5th standard it is 1.44 per cent, those up to 10th to 12th. standard is 10.4 per cent and for graduates and above the unemployment rate is as high as 19.25 per cent. It is really shocking if we calculate these figures within the youth population. The unemployment rate for graduates and above stood at 35.7 per cent in 2019-20 which was 22 per cent in 2011-12. Even for technical graduates among the youth, the unemployment rate has increased from 21 per cent in 2011-12 to 39.1 per cent in 2019-20.

What is even more surprising is that despite younger people account for a significant share of total population, the share of aged people within the workforce has increased in recent years. The percentage of people of age below thirty years within the workforce was roughly 25 per cent in 2016-17 which has drastically fallen to 18 per cent in 2021-22. On the other hand, the share of people of age in their 40s and 50s within the employed population has increased from 42 per cent in 2016-17 to 51 per cent in 2019-20.

All these figures indicate a glaring fact of India’s labour market and that is even if the proportion of youth within the population is high and also student to population ratio increased in recent times, the recruitments seem to disfavor the young job seekers as well as the educated youth.