Although India is the world’s fastest growing large economy—with the GDP likely to expand by 7.6% in 2023-24—it faces a serious challenge of dealing with joblessness among the youth. In urban India, the unemployment rate for those between 15-29 years of age is 2.5 times higher at 17% than the overall rate of 6.7%, according to NSSO’s latest quarterly periodic labour force survey for January-March 2024. This is a current weekly status estimate that captures those who sought or were available for work during the reference period of a week preceding the survey. Generating more employment opportunities must definitely be the priority of the new government when it assumes office in June.
The concern is that these double-digit rates of unemployment have not budged from the levels registered in January-March 2023 despite a pick-up in the pace of overall economic activity. This ‘stickiness’ of youth unemployment rates lends credence to apprehensions of GDP growth not being employment-intensive enough. Although a reserve army of unemployed youth portends serious strains on the social fabric, joblessness rarely figures in public discourse as some employment is being generated, especially in the urban informal sector, which is outside the purview of institutional protection. Much has been made of a steady rise in female labour participation—share of those between 15-29 years of age who had a job or sought one. To be sure, there has been an uptick in participation between January-March 2023 and January-March 2024 but this was matched by an equivalent rise in employment, leaving the rate of unemployment for young females stable at 22.7%. More importantly, these jobs have been largely in self-employment, including as helpers in household enterprises, which are bound to raise serious questions regarding the quality of employment being generated in urban India despite robust economic growth.
High rates of joblessness are bound to trigger frustration among the youth over waiting endlessly for suitable openings especially in the government which offer the prospect of greater security. But this cannot be an indefinite wait which can force them to accept even lowly positions of peons and police constables for which they are over-qualified. Or seek opportunities abroad, even in war-torn zones like Israel and Russia. The rising incidence of young Indians leaving the country for better-paying blue collar jobs in diverse countries like Finland, Uzbekistan, Japan and Europe has been documented. Several state governments like Haryana and Kerala are actively facilitating this process as well. This is also taking place illegally to the US. While it is possible to interpret this drive as Indian nationals exploring opportunities in the global workplace due to labour shortages, the desperation to get out stems from unemployment.
The upshot is that faster economic growth must translate into more opportunities to absorb the millions of young job seekers who enter the labour market every year. Employment-intensive growth is bound to lower double-digit rates of youth unemployment. Towards this end, the implementation of much-needed labour reforms should be a major policy focus of the incoming government. India Inc must be incentivised to invest in skilling programmes and internships to generate more employment opportunities. Flexible labour markets help in enabling millions of young people to shift from agriculture to manufacturing and services jobs in urban India rather than desperately accept whatever is available or seek temporary work opportunities abroad.