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Home / UPSC Editorials / Youth Unemployment in India

Youth Unemployment in India : Issues, Challenges, Solutions and More

Last Updated on Aug 23, 2024
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Youth unemployment is a cause of major concern that has affected millions of young people around the world. Simply put, it refers to the situation where young people aged between 15 to 24, are unable to find suitable and quality jobs despite actively seeking work. This unemployment crisis has not only impacted the economic stability of these youths but also affects their morale,confidence, mental health, and career prospects. 

With only few jobs available, many young people are left struggling to start their careers, leading to a cycle of mental trauma and hopelessness. An urgent attention is required to be paid into this pressing issue of unemployment among youths. Also, more innovative solutions are required to ensure that the next generation gets ample amount of job opportunities.

Analysis Based On

Article published in The Hindu on crisis related to youth unemployment

Topics for Prelims

Human Capital, Economic Growth, Labour Force, Economic Development, 

Topics for Mains

Economic Growth and Development, Migration Issues, Indian Economic Development, Skill Development, Human Resource

Context

The Periodic Labour Force Survey shows that youth face severe challenges in getting job opportunities. This issue is compounded by a mismatch between educational qualifications and job opportunities, with highly educated individuals, especially women, facing the highest unemployment rates.

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What is Unemployment? 

Unemployment refers to the situation where individuals who are capable of working and are actively seeking work are unable to find employment. It is a key indicator of the economic health of a country. Unemployment can result from various factors, including economic downturns, changes in industry demands, technological advancements, and mismatches between the skills of the workforce and the needs of employers. The unemployment rate, which measures the percentage of the labor force that is unemployed, is commonly used to assess the level of unemployment in a country.

Types of Unemployment

On the basis of causes and characteristics, unemployment can be classified into following types:

  • Structural Unemployment:This type arises when there is a mismatch between the skills of the workforce and the demands of the job market. It can occur due to technological advancements, changes in consumer preferences, or shifts in the economy that render certain skills obsolete.
  • Cyclical Unemployment: This kind of unemployment is caused by economic downturns, cyclical unemployment occurs when there is a lack of demand for goods and services, leading to reduced production and, consequently, layoffs. It is closely tied to the business cycle, with unemployment rising during recessions and falling during periods of economic growth.
  • Transitional Unemployment: This kind of unemployment is said to occur when individuals transition between jobs, representing the temporary period spent searching for new employment. It is also known as Frictional unemployment.
  • Underemployment: It occurs when an individual is employed but not to their full potential.

Causes of Unemployment
  • Population Size: Due to high population competition usually increases in the job market, requiring effective economic and job creation strategies. 
  • Lack of Adequate Skills:With Industry Revolution 4.0, the market is rapidly changing which requires updating of new and innovative skills, but there is a significant mismatch between skill and job requirements that ultimately leads to youth unemployment.
  • Informal Sector Dynamics: A large informal sector complicates unemployment tracking. The Indian economy comprises more than 88% of the informal sector, data collection and management is a complex task. Formalisation of the Indian economy is the need of the hour. 
  • Policy Implementation Challenges: No matter how good a policy is, if it is not implemented in a better way then the whole purpose of the scheme fails.
  • Global Factors: Global trade and geopolitical issues impact employment such as U.S subprime crisis of 2008, Russia- Ukraine War, Sino-US trade rivalry etc. There is a need to build resilience against such catastrophe

Current Trends of Youth Employment in India 

Youth Unemployment Crisis is a growing concern in India as it has a sizable population under the age of 35 which can be an asset for it if it is utilized in a proper way, but it can be a disaster as well if not done so. There are numerous agencies be it Ministry of Labour, NSSO, CMIE etc that collects data related to employment in India and following trends have been observed based on their data:

  • High Youth Unemployment Rates: The unemployment rate for youth aged between 15-29 remains substantially higher than the general population. What is more worrying is the fact that the unemployment rate in 2022 for urban youth was 17.2%, compared to 10.6% in rural areas. Young women are more affected with this crisis as they have an unemployment rate of 21.6% compared to 15.8% for young men. 
  • Impact of Education: Paradoxically, higher educational attainment among youth correlates with higher unemployment rates. According to Periodic Labour Force Survey (PLFS) data, the unemployment rate was 18.4% for those with secondary education or higher, and 29.1% for graduates, while it was only 3.4% for illiterate individuals. 
  • Gender Disparity:  Urban male youth have much higher work participation rates than their female counterparts. The former has three times higher work participation rate than the latter. Young women generally face higher unemployment rates than young men. According to CMIE, in 2022, 34.5% of female graduates were unemployed compared to 26.4% of male graduates. It is more worrying to know that educated young women experience the highest unemployment rates, with 34.5% of female graduates unemployed. 
  • Regional Disparities:  States like Bihar, Uttar Pradesh, Jammu and Kashmir, Uttarakhand, Rajasthan, Odisha, Kerala, Himachal Pradesh, and Assam are faring poorly in providing better job opportunities for youth.
  • Effects of Urbanisation: States with more urban percentage like Goa and Kerala experience higher unemployment while those states with less urbanization like Jharkhand, Uttar Pradesh, Madhya Pradesh have lower unemployment rates.

Demographic Dividend of India and its Potential

India boasts a significant demographic advantage, with more than 65% of its population below the age of 35 and around 50% below the age of 25. According to the World Bank Report, the working-age population in India is projected to grow by about 200 million people by 2030, which can tremendously enhance economic prospects for India. There are certain other trends as well which are as follows:

  • Innovation: According to the IMF, India has a thriving startup ecosystem with over 70,000 startups out of which most of them are led by young entrepreneurs. 
  • Exponential Rise in Startups: Government initiatives such as Startup India and Stand Up India have led to establishment of more than 80,000 startups since 2016, promoting a culture of innovation among the youth. 
  • Digitalisation of Economy: The Information & Communication Technology (ICT) and digital services sector contribute approximately 8% to India’s GDP and generate employment for over 4.5 million people. The expansion of digital platforms has created numerous job opportunities in IT, e-commerce, and digital content creation. 
  • Internet Penetration: As of 2024, India has over 800 million internet users making it a vast digital open market and significant job opportunities for skilled, educated and tech-savvy youth. 

Government Initiatives Related to Employment

The Government of India as well as States Government has tried to provide job opportunities for youth. With active participation of the private sector, it has tried to provide vocational training, skill development and upgradation so that people can get access to better job opportunities. These are some of the initiatives taken by government:

  • National Youth Policy-2014: This Policy by the Government of India aims to empower the youth by focusing on education, employment, skill development, and entrepreneurship targeting young individuals aged 15-29 years. 
  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY): This was launched in 2015, this scheme has trained more than 12 million youth so that their employability can be enhanced. 
  • National Skill Development Corporation (NSDC): It was established in 2008, NSDC has facilitated the skill development for more than 13 million people through various partnerships and initiatives. 
  • Rashtriya Yuva Sashaktikaran Karyakram Scheme: This umbrella scheme consolidates various youth development programs and aims for enhancing leadership, employability, and awareness among the youth. 
  • Support for Marginalized Individuals for Livelihood and Enterprise (SMILE): This programme was launched in 2021 and it mainly focuses on the economic empowerment of marginalized groups, including transgenders and beggars, by developing skills, providing vocational training and entrepreneurship skills.
  • PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi): This scheme aims to provide skill development training to more than 2.7 lakh Scheduled Caste, Scheduled Tribe, Other Backward Castes and economically weaker section beneficiaries from 2020 to 2025. 
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): This landmark scheme since its inception in 2006, has provided over 2.5 billion person-days of work annually, ensuring livelihood security of people living in rural areas and that too of the most vulnerable ones. 
  • Start-Up India Scheme: This scheme was launched in 2016 has recognized over 90,000 startups, fostering innovation and has created a productive ecosystem for entrepreneurship across the country.
  • Rozgar Mela: It is a nationwide employment drive which aims for creation of 10 lakh jobs by 2024. It aims for enhancing career opportunities for youth.
  • Indira Gandhi Urban Employment Guarantee Scheme (Rajasthan): This scheme was launched in 2022 by the state government of Rajasthan that guarantees 100 days of employment to urban households. It has provided social security to the urban youth.\
  • Direct Benefit Transfer (DBT) Scheme: DBT has streamlined the disbursement of subsidies and saved huge cost for the exchequer making many schemes foolproof and ensure that the welfare benefits are given directly to beneficiaries’ bank accounts making the whole welfare system robust and efficient.
  • Pradhan Mantri Mudra Yojana (PMMY): It was launched in 2015 and till now it has provided over 35 crore loans especially to the most disadvantaged section of the society amounting to more than ₹18 lakh crore, to micro and small enterprises, promoting entrepreneurship and self-employment. 

Conclusion

With over 65% of its population under the age of 35 and around 50% below the age of 25, India holds the world’s largest youth demographic, which is set to grow in the coming decade. Harnessing this demographic dividend is sine qua non for nation-building. To harness this advantage, India must cater to the needs and requirements of the expanding labor force, and the youth must be equipped with the necessary education, skills, proper health facilities etc to make India truly self-reliant and the manufacturing hub of the world.

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2018

The implementation of labor laws is critical for ensuring workers' rights. Discuss the challenges in enforcing labor laws in India and suggest measures for improvement."

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Q1. Discuss the issues related to the informal sector in India, particularly in terms of labor laws and social security measures.

Q2. Critically examine the impact of globalization on labor in developing countries, with special reference to India.

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