Unemployment of the Educated in India

Syllabus: Economy (UPSC GS III)
Source: The New Indian Express

Context

India is witnessing a sharp rise in educated unemployment, as thousands of graduates and postgraduates compete for low-skill jobs such as peon and sanitation roles. This trend reveals a deep structural imbalance in the labour market, where education no longer guarantees employability.

Current Trends and Data

• Severe Job Mismatch:
  In 2024, over 46,000 graduates and postgraduates applied for sanitation jobs in Haryana, while 12,000 applicants competed for 18 peon posts in Rajasthan — exposing the crisis of overqualification.
• Collapse in Campus Placements:
  Nearly 2 out of every 5 IIT graduates in 2024 went unplaced, highlighting falling absorption in high-skill sectors across IITs, NITs, and IIITs.
• Educated Youth Form Majority of the Unemployed:
  Although the official unemployment rate hovers around 4–6%, nearly 66% of the unemployed are graduates or postgraduates — a sign of structural inefficiency.
• Corporate Job Cuts and Wage Stagnation:
  Leading IT firms cut around 64,000 jobs in FY24. Average graduate salaries remain stuck at ₹3–4 lakh per annum, showing a decade-long stagnation.

Major Causes

• Skill Mismatch:
  Around 33% of graduates lack industry-aligned skills.
  Example: Engineering colleges focus on coding theory but lack hands-on digital project exposure.
• Jobless Growth:
  Despite economic expansion, formal job creation remains weak.
  Example: The services sector contributes 54% to GDP but less than 30% to employment.
• Institutional Disconnect:
  Weak industry-academia linkages, poor campus placements, and overly theoretical curricula lower employability.
• Gender Disparity:
  Educated women face mobility, safety, and cultural barriers, resulting in over 30% unemployment among graduates.
• Regional and Sectoral Imbalance:
  Urban areas attract most job seekers, while rural regions lack skilled opportunities.
  Example: Educated unemployment exceeds 35% in Bihar and Jharkhand.

Economic and Social Consequences

• Productivity Loss:
  Idle educated youth lower overall innovation and labour efficiency.
• Fiscal Pressure:
  Rising dependence on schemes like MGNREGA and subsidies strains government finances.
• Brain Drain:
  Skilled professionals migrate abroad, weakening India’s human capital base.
• Social Discontent:
  Joblessness fuels frustration, crime, and mental distress.
  Example: NCRB (2023) recorded 14,000 suicides among unemployed youth.
• Wage Stagnation:
  Oversupply of graduates keeps wages flat; average entry-level salaries remain unchanged for years.

Government Initiatives to Boost Employment

• Atmanirbhar Bharat Rozgar Yojana (2020):
  Incentivises MSMEs by reimbursing EPF contributions for new hires.
• Employment Linked Incentive (ELI) Scheme:
  Rewards companies creating net jobs in labour-intensive sectors; aims to generate 3.5 crore jobs.
• Start-Up & Stand-Up India (2016):
  Promotes entrepreneurship; 1.3 lakh+ start-ups created, with 40% women/SC-ST leadership.
• Pradhan Mantri Kaushal Vikas Yojana (2015):
  Provides short-term skill training; 1.4 crore youth trained for emerging fields like AI and green jobs.
• PM Garib Kalyan Rojgar Abhiyaan (2020):
  A 125-day rural employment drive post-COVID, generating jobs in 116 districts.
• Aajeevika – NRLM (2011):
  Empowers 8 crore rural women through self-help groups and microenterprises.
• PM SVANidhi Scheme (2020):
  Offers collateral-free loans to 60 lakh street vendors, supporting urban informal livelihoods.

Way Forward

• Align Education with Industry Needs:
  Integrate practical skill modules, internships, and apprenticeships under NEP 2020.
• Promote Labour-Intensive Sectors:
  Focus on manufacturing, healthcare, renewable energy, and rural industries for large-scale job creation.
• Enhance Women’s Employment:
  Ensure safety, flexible work options, and transport facilities to increase female labour participation.
• Regional Diversification:
  Develop industrial corridors in Tier-2 and Tier-3 cities to reduce urban pressure.
• Labour Market Reforms and Data Transparency:
  Modernize PLFS surveys, track employment outcomes, and strengthen Atmanirbhar Rozgar Yojana with clear targets.

Conclusion

Educated unemployment in India is not merely an economic challenge — it is a national developmental crisis. The growing disconnect between academic qualifications and job market needs threatens India’s demographic dividend. Unless the country realigns its education, industry, and employment policies, the youth advantage could turn into a demographic liability.