Unemployment on the Rise: India's Youth Hit Hardest

Unemployment Crisis Escalates: India Faces Rising Joblessness

In June 2024, data from the Centre for Monitoring Indian Economy (CMIE), an independent economic think-tank known for its assessments of India's economic indicators, painted a concerning picture for the country's employment landscape. The CMIE figures indicated a sharp rise in the unemployment rate, climbing to an alarming 9.2 percent, marking an eight-month high. This increase sent shockwaves through economic and political circles, as just a month prior, the unemployment rate stood at a comparatively lower 7 percent.

Rosa Abraham, a noted economist and assistant professor at Azim Premji University, challenges the conventional reliance on unemployment figures as the sole indicator of labour market health. According to her, these statistics do not adequately capture the complexities of India's employment landscape. "The unemployment figures are not the right measure when you want to look at the health of the labour market," she asserts.

In a country like India, where poverty is widespread, many people cannot afford the luxury of unemployment, she explains. "In India, where a lot of people are poor, they don't have a choice—they can't afford not to work," says Abraham. The reality is that a significant portion of the workforce is engaged

Unemployment Crisis Escalates: India Faces Rising Joblessness

In June 2024, data from the Centre for Monitoring Indian Economy (CMIE), an independent economic think-tank known for its assessments of India's economic indicators, painted a concerning picture for the country's employment landscape. The CMIE figures indicated a sharp rise in the unemployment rate, climbing to an alarming 9.2 percent, marking an eight-month high. This increase sent shockwaves through economic and political circles, as just a month prior, the unemployment rate stood at a comparatively lower 7 percent.

Rosa Abraham, a noted economist and assistant professor at Azim Premji University, challenges the conventional reliance on unemployment figures as the sole indicator of labour market health. According to her, these statistics do not adequately capture the complexities of India's employment landscape. "The unemployment figures are not the right measure when you want to look at the health of the labour market," she asserts.

In a country like India, where poverty is widespread, many people cannot afford the luxury of unemployment, she explains. "In India, where a lot of people are poor, they don't have a choice—they can't afford not to work," says Abraham. The reality is that a significant portion of the workforce is engaged in the informal sector, which often goes unaccounted for in traditional unemployment metrics.

"The unemployment figures we see primarily reflect the educated unemployed, those who come from higher-level households," Abraham continues. This focus on the educated class overlooks the vast numbers working in informal, often unstable jobs, where workers do not have the security or benefits typically associated with formal employment. 

Azim Premji University's Centre for Sustainable Employment report titled "State of Working India 2023," which provides an in-depth analysis of the current state of the Indian workforce, revealed striking details. It highlights that an alarming 42.3% of graduates under the age of 25 are unemployed. The report reveals the severe challenges faced by India's educated youth in finding suitable employment opportunities, despite their qualifications and degrees.

The report's findings raise serious concerns about India's ability to harness its demographic dividend, as a significant portion of its educated youth remains unemployed. This situation poses a substantial challenge to the country's economic growth and development, as the potential of a highly educated workforce remains untapped.

Abraham emphasises the gravity of the situation, stating, "We have this highly educated potential workforce who are not getting the kind of work they want because job creation has slowed down in the country." The slowdown in job creation has led to a mismatch between the aspirations of young graduates and the opportunities available to them.

"As a result, they are not willing to take up temporary jobs and are waiting for that 'good job,' which may or may not be coming," Abraham notes. This reluctance to accept temporary or lower-paying jobs indicates a growing sense of disillusionment among young job seekers, who hold out hope for positions that align with their qualifications and expectations.

The government, in its recent budget, has announced an ambitious initiative to tackle unemployment by earmarking ₹2 lakh crore over five years, aiming to create 41 million new jobs through contributions to internships in 500 top companies. On paper, this initiative seems like a step in the right direction. However, there are significant concerns about whether internships can genuinely address the country's unemployment crisis. Internships, by their very nature, are temporary positions that offer short-term exposure rather than long-term career solutions. While they are designed to provide young people with practical training and industry insights, they often do not translate into permanent employment.

Many young people find themselves in a frustrating cycle where they complete internships, only to face the same competitive job market with little improvement in job prospects. The promise of internships can sometimes feel like a mirage, offering hope but not delivering substantial or lasting career opportunities. 

Abraham offers a critical analysis of the government's proposed internship scheme, highlighting significant flaws in its execution. "Look at the scheme and let's break down the numbers," she begins, pointing out the ambitious target of offering internship opportunities to one crore (10 million) youth in the top 500 companies over five years. While this might sound promising, Abraham emphasises that the numbers reveal inherent challenges.

"What has been proposed is that one crore youth will be given internship opportunities in the top 500 companies over five years. This essentially breaks down to each firm potentially hiring 20,000 interns," she explains. This staggering figure raises concerns about the practical implementation of the scheme, especially given the size of the average Indian firm.

"If you think about it, each intern would ideally get a year-long placement, which means each company would be managing 4,000 interns annually," Abraham elaborates. "Managing 4,000 interns in a year is a massive number, considering that the average firm size in India is not very large." This overwhelming number could strain the resources and management capabilities of many companies, potentially leading to an unstructured and ineffective internship experience.

Furthermore, Abraham questions the incentive for private firms to participate in such a large-scale internship program. "Why should a private firm take up something like this, and what do they get out of it?" she asks. 

Professor Rahul Menon, an Associate Professor at the Jindal School of Government and Public Policy, sheds light on the multifaceted nature of unemployment in India. He highlights a critical aspect often overlooked in mainstream discussions: the prevalence of informal work where people do not have employment every single day. "In India, we have a lot of informal work where people do not have employment every single day," Menon explains, emphasising the instability faced by a large portion of the workforce.

Menon acknowledges the debates surrounding the accuracy of the CMIE figures, noting, "There has been a lot of controversy over how CMIE calculates the figures." However, he concedes that the data does reflect a genuine rise in unemployment across the country. "It is true that unemployment has been rising in the country," he asserts.

A significant part of the problem, Menon points out, is that the youth are struggling to secure jobs. "The problem is that the youth are unable to get jobs," he states. This issue is compounded by a general slowdown in hiring across the economy, affecting various sectors. Moreover, Menon brings attention to the pervasive discrimination faced by women in the job market. "There is a huge level of unemployment amongst graduates," he notes, adding that the problem is exacerbated for women. "Women never get as many callbacks from job interviews, even if they are as qualified or even better qualified than men," he explain. 

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