Young, educated and jobless: The real unemployment challenge of India

On December 31, 2019, CMIE completed the 18th Wave of the Consumer Pyramids Household Survey. This included the 12th Wave of questions related to employment and unemployment. This survey was executed over a period of four months from September through December 2019 on a sample of 174,405 households. In the paras below, we discuss population estimates of the unemployment rate during this period.

The unemployment rate rose to 7.5 per cent during September-December 2019. This was the seventh consecutive Wave to record an increase in the unemployment rate since May-August 2017 when the unemployment rate was 3.8 per cent.

As usual, the unemployment rate in rural India was lower at 6.8 per cent than it was in urban India, which scaled up to 9 per cent.

Rural India has a large, 66 per cent share in the overall estimate of India's unemployment rate. Rural India has a low unemployment rate and this has a big impact on lowering India's overall unemployment rate. But, rural employment is of poor quality. And grown ups, those over 30 years of age, have a similarly large 66 per cent share in the total population that is over 15 years of age. After the age of 30, people take whatever job is available and so the unemployment rate among people of more than 30 years of age falls very sharply. But, these have a high share in the total unemployment estimate for the country.

What matters most is the unemployment rate in the urban youth and in particular, the urban educated youth.

The unemployment rate is very high among the youth. It is 45 per cent for those between 15 and 19 years of age. But, arguably, this is not the age at which youngsters should be looking for jobs. Ideally, they should be still studying at this age. However, if, for any reason, they do look for jobs, it is evident that they find it very difficult to find one.

Employment prospects for youngsters between 20 and 24 years of age who are looking for jobs are not much better. The unemployment rate for these has more than doubled from 17 per cent in May-August 2017 to 37 per cent in September-December 2019. Similarly, it has risen from 8 per cent in May-August 2017 to 11 per cent for youngsters between 25 and 29 years of age. It is this high and growing unemployment among the youth of the country that is very worrisome. The situation gets worse in the cities.

An urban youngster in his early twenties had a discouragingly high unemployment rate of 44 per cent during September-December 2019. It was never so difficult in the past. A wait till these urbanites reached their late twenties improved the unemployment rate they face to 14.8 per cent. But, even this is the worst experience of this age-group.

The unemployment rate drops dramatically from the age of 30. It falls to 2.5 per cent for the age group 30-34 years and then it falls to close to 1 per cent and then less than 1 per cent. The problem, evidently is severe for the youth who are looking for jobs. The sudden sharp fall in unemployment after 30 years of age implies that beyond a point in age, people settle for whatever jobs become available. A wait for a job cannot be infinite.

Matters get worse for the educated youth. The educated young report a much higher unemployment rate. This indicates that the educated are looking for better quality jobs but are unable to find them.

While youngsters in the age group of 20-24 years reported an unemployment rate of 37 per cent, graduates among them reported a much higher unemployment rate of over 60 per cent. 2019 was the worst year for these young graduates. The average unemployment rate for them during 2019 was 63.4 per cent. This is much higher than the unemployment rate they faced in any of the preceding three years. The unemployment rate they faced in 2016 was 47.1 per cent. In 2017 it was 42 per cent and in 2018 it was 55.1 per cent. 2019, therefore saw a very severe worsening of conditions for the young graduates.

Similarly, while the age group 25-29 years reported an unemployment rate of 11 per cent, graduates in this age group faced an unemployment rate of 23.4 per cent. They too found 2019 to be the worst of the past four years with an average unemployment rate of 23.7 per cent. The rate in 2016, 2017 and 2018 were 21.3 per cent, 18.3 per cent and 20.5 per cent,

respectively.

The unemployment rate for post-graduates is also similarly high but it has not deteriorated since 2016, when it was 24.6 per cent. In 2017 it rose to 25.4 per cent, then fell to 22.3 per cent and rose again to 23 per cent in 2019.

An overall unemployment rate of around 7.5 per cent does not reflect the real challenges faced by India. Graduates between 20 and 29 years of age, face a much higher unemployment rate of 42.8 per cent. This is India's real challenge. An equally important challenge is that graduates of all ages put together also have a very high unemployment rate of 18.5 per cent.