India faces growing job crisis: Just 42.6% of graduates are employable

India's job crisis deepens as only 42.6 per cent of graduates are employable, sparking concerns over the growing skill gap in an AI-driven workforce

India’s job market is at a crossroads. As industries evolve with artificial intelligence (AI) and automation, fresh graduates are struggling to keep up. A new report, India’s Graduate Skill Index 2025 by Mercer-Mettl, reveals that only 42.6 per cent of Indian graduates are employable — marking a decline from 44.3 per cent in 2023.

 

The biggest challenge: A widening gap between what employers need and the skills graduates have. While technical skills like AI and data analytics are in high demand, non-technical abilities such as communication, problem-solving, and creativity are lagging behind. This has made it harder for many fresh graduates to secure jobs.

 

 

Tier-I colleges lead, but skill gaps persist 

Graduates from Tier-I colleges have the highest employability at 48.4 per cent, followed by Tier-II (46.1 per cent) and Tier-III (43.4 per cent) institutions, said the report. 

 

Among states, Delhi (53.4 per cent), Himachal Pradesh (51.1 per cent), and Punjab (51.1 per cent) produce the most employable graduates. The strong performance of these states is linked to quality education, industry collaborations, and favourable economic conditions.

 

AI & data science jobs on the rise 

The report further highlighted that 46 per cent of Indian graduates are now employable in AI & ML roles, marking a significant increase since 2023. The demand for AI, data analytics, and digital skills is growing, with gender parity observed in these roles.

 

Soft skills, which machines cannot replace, are also in demand. Key abilities such as communication (55.1 per cent), critical thinking (54.6 per cent), and leadership (54.2 per cent) are now essential for workplace success. However, creativity remains a weak point, with an employability score of just 44.3 per cent.

 

Employers struggle to find non-technical talent 

Despite the rise in AI and data science jobs, non-technical roles continue to suffer. Only 43.5 per cent of graduates are employable in fields like sales, marketing, HR, and business development, a steep drop from 48.3 per cent in 2023, the report highlighted.

 

Companies are now looking for graduates who can learn, unlearn, and adapt quickly to new-age work environments, emphasising adaptability alongside technical skills.

 

Why are graduates struggling?

 

Several factors contribute to this crisis: 

- Education system gaps: Indian colleges focus more on theory than practical skills, leaving students unprepared for jobs.

 

- AI disrupting jobs: Automation is changing job roles, requiring continuous upskilling.

 

- Limited non-technical training: Soft skills training remains unstructured and less accessible.

 

- Hiring slowdown in IT sector: Global economic uncertainties have also led to reduced hiring in 2023-24, affecting fresh graduates.

 

Future of India’s workforce: What needs to change? 

Experts believe India’s job market will recover, with hiring expected to rise in 2025. However, students, universities, and policymakers must act now to close the skill gap.

 

- For students: Focus on AI, coding, data science, and digital marketing, while improving communication, teamwork, and leadership skills.

 

- For colleges: Adopt more practical and industry-focused learning to improve real-world readiness.

 

- For employers: Invest in on-the-job training and internship programs to help fresh graduates transition smoothly into the workforce.