By M Vijayabaskar
The recent youth protests that spread out from Jantar Mantar to other parts of India are more than an expression of frustration over unemployment or underemployment. The promise that rapid growth would naturally generate secure employment is less certain for India’s educated youth than ever before.
India’s employment challenge is not new. For decades, workers at the lower end of the social and economic spectrum have struggled to find productive, stable work despite sustained economic expansion. As Santosh Mehrotra and Jajati Keshari Parida argue in their timely book ‘India out of Work’, India’s growth has not translated into poverty reduction or employment generation to the extent seen in many other developing economies.
What has changed today is that the crisis has spread beyond the poor and lower caste households. Educated youth from middle-class households who have been a key constituency that sustained India’s current economic and political regime are now confronting shrinking opportunities, making school-to-work transitions a politically visible issue.
Explanations for the employment challenge that circulate among industry and business representatives tend to revolve around a mismatch between the skill sets that the industry seeks and what the educational system generates, poor standards of training and rigidity of labour regulations. Labour laws prevent firms from hiring and firing workers in line with changing demand requirements, leading to inefficient utilization and less incentive to hire new workers.
Mehrotra and Parida argue instead that the employment crisis is structural. It is rooted more in the quantum and structure of economic demand (among other factors), and in turn, shaped by the pattern of India’s growth.
Their argument begins with inequality. Rising inequality does not simply reduce purchasing power, but reshapes the composition of demand. Instead of generating mass demand for affordable manufactured goods that can create large-scale non-farm employment, growing concentration of incomes and wealth encourage consumption of services and high-end products.
This pattern reinforces a services-led growth model while limiting the expansion of manufacturing employment for the less and medium-skilled.
This structural weakness is reinforced by declining aggregate demand. Falling real wages and stagnant household incomes reduce consumption, while weaker investment has lowered gross fixed capital formation, constraining both export competitiveness and the government & #39;s fiscal capacity.
India’s employment crisis cannot therefore be solved simply through skill development programmes, which have become the dominant policy response. Training workers is valuable only if the economy generates sufficient demand for their labour. Without addressing the structural conditions that discourage employment-intensive growth, skilling initiatives alone risk producing more qualified job seekers than available jobs.
Importantly, there is sufficient evidence to suggest that skilling initiatives rarely contribute to enhanced employment when they are not backed by robust foundational education.
Recent research by Nitin Kumar Bharti and Li Yang (The Making of China and India in the 21st Century: Long-Run Human Capital Accumulation from 1900 to 2020) establishes that China’s industrial success rested not merely on factory investments but on the sequencing of educational expansion. China first achieved widespread primary education, then expanded secondary schooling, and only later invested heavily in universities as industrial upgrading required advanced skills.
India largely followed the reverse path. While higher education produced globally recognised engineers and professionals, investment in universal foundational education lagged behind. The consequences accumulated over decades. Starting from broadly similar literacy levels in the mid-twentieth century, China had established a substantial literacy advantage by 1990. Its technical education system also expanded in line with industrial demand.
India’s emphasis on elite higher education created islands of excellence but left millions without the basic educational foundation necessary to transition from agriculture into labour-intensive manufacturing.
Regressive social norms further complicate the picture. Caste-coded occupational division of labour marks manual labour as inferior and polluting. Plumbers and electricians, for example, may even earn decent incomes, but their jobs lack the status of say, a clerk. Gender norms also continue to restrict women’s educational opportunities and labour force participation.
Manufacturing jobs themselves have become less attractive. Employment increasingly consists of short-term, insecure work with little opportunity for advancement.
Earlier generations of workers in manufacturing could often expect stable factory careers, social security benefits and upward mobility through investments in their children’s education. Today, opportunities for advancement within firms are limited, making manufacturing far less appealing to educated workers seeking long-term careers. Technological changes do matter in this regard, but the weakening of labour market institutions that ensured such vertical mobility pathways in the past have a bigger role.
The message emerging from India’s youth protests is therefore larger than a demand for fool proof examinations or more jobs. It is a demand to rethink a development strategy that has generated growth without sufficient economic mobility. The need is to address inequality, rebuild mass demand, invest in foundational education, confront social barriers to work, and foster an economy where productive employment becomes the central measure of development.
(The author is a Professor of Madras Institute of Development Studies)
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.