Is higher education linked to higher unemployment rates in India?

Unemployment in India: A recent report by the International Labour Organization (ILO) has shed light on a concerning trend in India's employment landscape. Contrary to conventional wisdom, the report reveals that higher-educated young individuals in India face a higher likelihood of unemployment compared to those without any formal schooling.

Graduates Facing High Unemployment Rates

According to the data provided in the report, graduates in India experience a staggering unemployment rate of 29.1 percent. This figure starkly contrasts with the mere 3.4 percent unemployment rate among individuals who lack basic literacy skills. The disparity underscores a paradoxical scenario where higher education does not necessarily translate to better employment prospects.

Trends in Youth Unemployment

While there has been a slight decline in the percentage of young unemployed Indians aged between 15 to 29 years from 88.6 percent in 2000 to 82.9 percent in 2022, the report highlights persistent challenges. Despite an increase in the percentage of educated youths from 54.2 % in 2000 to 65.7%, the unemployment rates remain significantly high.

Gender Disparities and Urban-Rural Divide

The report also illuminates gender disparities in unemployment, with women constituting a substantial majority (76.7 percent) of educated unemployed youths compared to men (62.2 percent). Additionally, urban areas exhibit higher unemployment rates compared to rural regions, indicating a complex interplay of factors influencing job opportunities across different locales.

Skills-Jobs Mismatch

One of the key findings of the ILO report is the pronounced mismatch between the skills possessed by the labor force and the demands of the job market. This dissonance underscores a systemic challenge hindering effective employment generation in India, as articulated by economists like former central bank Governor Raghuram Rajan.

Alarming Economic Implications

The persistently high youth unemployment rates in India, surpassing global levels, raise concerns about the country's long-term economic prospects. The inability of the Indian economy to generate sufficient remunerative jobs in non-farm sectors for educated youth entrants signals a troubling trend with far-reaching implications.

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Improvements Amid Challenges

Despite these challenges, the report highlights a slight improvement in female labor force participation rates, albeit from a dismal standpoint. India's female labor force participation rate, the lowest globally at 25 percent, saw a modest uptick during the pandemic due to an increase in subsistence employment opportunities.

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