Why Are India’s Graduates Unemployed?

Why does unemployment turn into a reality for the very individuals who worked not to end up unemployed?

Unemployment has been a major macroeconomic concern for India since independence and several schemes and initiatives have been undertaken in this regard by both the centre and states.

The Intersection Between Education And Employability

While unemployment has been declining steadily for decades, it has morphed itself into an uglier version that seems to haunt the very people who have invested time and effort not to be unemployed. The threat of a narrowing intersection between education and employability looms large.

At the individual level, although education guarantees a certain degree of employment, it requires an investment of time and money. The opportunity cost of this investment at the expense and loss of productive economic activity often makes education less attractive and valuable.

For example, in a rural area where most people are engaged in agriculture, one would rather employ their children at a young age to work at the farm and generate income than send them to school, which would strain the family’s finances.

This was the case only around a decade back. However, a new report seems to suggest that around 71% of Indian parents are willing to go into debt to fund their children’s education. This highlights that the problem lies now, not with the willingness of people but the returns rather of the investment.

According to the National Sample Survey Organisation (NSSO) (2009–10), in both rural and urban areas of India, the unemployment rate among the educated (secondary and above) is not only higher than that of those with less than secondary education, but it has also increased with higher degrees of education [2].

This might be due to a variety of macroeconomic factors, such as a mismatch in demand and supply across various parts of the economy, as well as varied socioeconomic and regional characteristics of individuals and families.

While efforts to encourage people into pursuing education have borne fruit, it has been discovered that the pace of job creation has failed to keep up with the number of applicants. These graduates often end up applying for jobs they are overqualified for, resulting in underemployment.

A report by the Centre for Sustainable Employment at Azim Premji University suggests that unemployment among the well-educated is thrice the national average. As of 2019, the World Bank reports that unemployment with advanced education in India is at 15.11%.

The UNDP estimates that India will need to create around 280 million jobs by 2050 to account for its demographic dividend. All these reports and statistics point to the issue of a demand-supply mismatch and India’s failure to create enough jobs.

On a global scale, progress for developed nations entails a faster rate of industrialisation and, as a result, a bigger labour demand. However, one might argue that within India, the classification of states based on HDI (Human Development Index) does not necessarily represent employment demand; rather, it may reflect a greater supply of educated labour.

Since they are primarily self-employed workers and engaged in other jobs, the unemployment rate among illiterate people is lower. A large number of them also work as unpaid assistants in domestic businesses. The educated, on the other hand, are mainly employed in regular paying employment.

As a result, one of the causes of higher unemployment rate among educated people compared to the uneducated is that educated people are not suitable for low-wage jobs such as own-account work, domestic work, and so on, while there are insufficient regular salaried jobs to absorb the entire educated labour force.

In short, when the fraction of the population with a bachelor’s degree or higher is greater, unemployment is higher. People with higher education frequently seek white-collar professions or jobs in the organised sector, which are not always easy to come by. Nevertheless, people with lower educational qualifications have fewer job choices and, therefore, unemployment is lower.

The Importance Of Vocational Education

The root cause of lack of employment can also be attributed to the absence of adequate skills required for a job. Unfortunately, the Indian education system has failed to equip its students with skills beyond rote memorisation of the textbook.

Lack of vocational training in communication, technical know-how and analytical skills put Indian graduates at a disadvantage at companies where employers seek to hire employees with such abilities.

The former president of India, Late Sri Pranab Mukherjee, rightly emphasised the same by urging the government to educate and skill the country’s demographic dividend.

While those who have the privilege can afford to go abroad for better training and job prospects, the have-nots are often forced to settle down with whatever they have. Thus, there is a lack of advancement in their life, owing to which there is severe dissatisfaction that is created among youth. With this comes a dangerous possibility of social unrest.

While one can go on and on about the structural defects of the education sector, there is a need to examine the factors that enable the same. Particularly the political leaders and policy-makers.

Even during the course of this research, one finds that the unemployment numbers in India seem to be quite dicey. The unemployment rate was set at 6.1% in a leaked NSSO report, the highest in over four decades.

Instead of accepting the facts of the case, leaders ended up denying it or questioning its accuracy altogether. Their overview of the unemployment scenario is simple — if there was large scale unemployment, there would have been violent conflict, lack of which means the situation isn’t that bad.

What is surprising is that there needs to be some sort of a disruptive uprising for the leaders to take note of a dire issue that puts livelihoods at stake.

Not only does the rate of unemployment in India rise with greater levels of education, but when it comes to the problem of gender bias, it is clear that women experience significantly higher rates of unemployment than their male counterparts across all educational categories.

Furthermore, both descriptive and regression analyses show that having a technical education does not guarantee employment, which calls into question the government’s initiative to support technical education.

A large number of technically-educated people across all the three categories (technically educated in agriculture, engineering and technology or medicine, etc., diploma or certificate below graduate level and diploma or certificate above graduate level) are unemployed.

Thus, besides promoting technical education, the government needs to focus more on the creation of productive jobs and demand for workers since all industries, given the competitive global market environment, try to reduce the aggregate cost of production and there is no additional scope for the creation of sufficient jobs to engage all the technically-educated people.

For a fast-growing economy like India, there is a redefinition that is required with regard to the quality of living. Employment merely for the sake of basic sustenance can no longer be the basis of education.

Job security and satisfaction must be the new parameters of judgement. This will allow us to discern the actual state of educated unemployment in the country, which will then encourage policy-makers to formulate better policies concerning the same.

References

1. Gupta, M., & Pushkar. (2019). Why India Should Worry About Its Educated, but Unemployed, Youth. UNICEF Global Development Commons.
2. National Sample Survey Office, National Statistical Organisation. (2010, June). Employment and Unemployment Situation in India 2009–10 (NSS Report No. 537(66/10/1)). Ministry of Statistics & Programme Implementation Government of India.
3. Poovanna, S. (2019, February 10). In job markets, a higher education degree is often a road to nowhere. Livemint.
4. S, R. (2016, June 20). Most parents willing to get into debt to fund child’s college education: HSBC survey. The Hindu BusinessLine.
5. Sharma, I. (2021, October 25). Educated Unemployment: Will This Challenge Derail India’s Economy? Youth Ki Awaaz.
6. World Bank. (n.d.). Unemployment with advanced education (% of total labor force with advanced education) – India, United States, Mexico, Brazil, Nepal | Data. The World Bank.