How India Is Failing Its Educated Youth

Summary

India, despite being the world's fastest-growing major economy, faces a severe job crisis with high unemployment rates, particularly among the young and educated. The country's labor market is predominantly informal, with a significant portion of the workforce lacking stable employment and benefits. The government's efforts to boost manufacturing and improve education have yet to yield sufficient high-quality jobs. Addressing this issue is critical for India's economic growth and global aspirations, with potential strategies including labor law reforms, foreign investment attraction, and skill development programs.

Takeaways

• 📈 India is experiencing rapid economic growth but faces a significant job creation challenge.
• 👨‍👩‍👧‍👦 The country has a large working-age population, but the labor market is weak with high unemployment rates, estimated up to 8%.
• 🎓 Despite a university-educated population, many young Indians, like Chandan Kumar, struggle to find stable employment.
• 🔄 More than half of India's population is under 30, yet a significant portion of this demographic is jobless, especially those aged 20 to 24 with unemployment over 42%.
• 🏭 The informal sector, often lacking regular salaries and benefits, employs the majority of India's workforce.
• 🏢 Formal sector jobs are scarce, with only about 10% of the 112 million jobs created in the past decade being formal.
• 💼 Private investments in India are weak, leading to a lack of high-quality job opportunities for the young workforce.
• 👩‍🎓 The education system is criticized for producing graduates with degrees but not the necessary skills for the workforce.
• 👩‍💼 Women face particularly low labor force participation rates, and addressing this could significantly boost India's GDP.
• 🏛️ Political implications are evident, with job creation failures affecting election outcomes and the government's credibility.
• 🌐 India's inability to provide sufficient jobs could hinder its ambition to become a developed economy by 2047 and exacerbate wealth inequality.

Q & A

What is the current employment situation in India despite being the world's fastest-growing major economy?

India is facing a grim reality where it is not creating enough jobs for its expanding population, with some estimates putting the jobless rate as high as 8%, even though the government claims it’s much lower.

What is the role of India's young population in its economy and what challenges do they face?

India has a significant advantage with more than half of its population under the age of 30, but many of them struggle to find jobs, with unemployment for those aged 20 to 24 rising to over 42%.

Why are many Indians ending up in the informal sector?

People like Chandan Kumar, who have university degrees but can't find stable employment, end up in the informal sector due to the lack of high-quality jobs, where they don't receive regular salaries or benefits.

What is the 'black economy' in India and how does it affect the workforce?

The 'black economy' refers to the informal sector in India, which employs nearly 90% of the workforce in roles like farming and construction, often without proper support or benefits, making it a persistent issue for the government.

How does India's labor force participation rate compare to its global rivals?

India's labor force participation rate is comparatively low, with only about 10% of the 112 million jobs generated in the past decade being in the formal sector, indicating a significant gap in job creation.

What is the impact of weak private investments on job creation in India?

Weak private investments have resulted in India's inability to create high-quality jobs for its vast young workforce, leading to a reliance on the informal sector and a lack of formal employment opportunities.

How does the quality of education in India affect the employability of its graduates?

The type and quality of education in India are confounding factors, with graduates often lacking the necessary skills to enter the workforce due to outdated curriculums and teachers with little training.

What are the specific challenges faced by women in India's labor market?

Despite equal tertiary education enrollment, India has one of the lowest female labor force participation rates globally, with women primarily seen as caregivers, which significantly impacts the country's economic potential.

What political implications does India's employment challenge have, as seen in recent elections?

The failure to deliver on job creation promises played a role in Prime Minister Narendra Modi's party losing its parliamentary majority for the first time in a decade, reflecting public dissatisfaction with the job market.

What steps is the Indian government taking to address the employment crisis?

The government has introduced measures such as incentivizing employment in the manufacturing sector, a five-year program to train 2 million people, and simplifying labor laws to attract more foreign investments and create jobs.

How could improving the labor market conditions help India achieve its goal of becoming a developed economy by 2047?

By creating more jobs, strengthening exports, expanding manufacturing incentives, and filling government job vacancies, India can boost its per capita income, reduce wealth disparity, and achieve its ambition of developed economy status by 2047.

Outlines

00:00

📉 India's Employment Crisis

India, despite being the world's fastest-growing major economy, faces a severe job crisis. With a population of 1.4 billion, the country struggles to generate sufficient employment, particularly high-quality jobs for its young workforce. The jobless rate is estimated to be as high as 8%, impacting per capita income and global growth. The labor market's composition reveals significant weaknesses, with a large portion of the workforce in the informal sector, lacking regular salaries and benefits. The government's inability to create jobs in the formal sector is a major concern, as is the low labor force participation rate. The education system is criticized for producing graduates with degrees but not the necessary skills, leading to a mismatch between education and employability. Additionally, India's gender work gap is a significant issue, with female labor force participation being one of the lowest globally, which could cost the country a substantial economic boost if addressed.

05:02

🏭 Addressing India's Job Market Challenges

The Indian government, under Prime Minister Narendra Modi, has faced political consequences for not fulfilling job creation promises, as seen in recent elections. Modi's goal to increase the manufacturing sector's GDP share to 25% has not materialized, and the country's focus has shifted from agriculture to services, bypassing manufacturing. While some multinational companies like Apple and Foxconn have established a presence, many others are deterred by India's business environment. Small and medium businesses also struggle due to bureaucratic hurdles and capital constraints. To attract foreign investment and diversify supply chains away from China, India needs to address its labor market issues. The government's latest budget includes measures to incentivize manufacturing employment and train workers, but these are seen as insufficient. Experts suggest that simplifying labor laws, strengthening exports, and filling government job vacancies could help alleviate the crisis. The private sector's involvement is crucial for job creation, and without it, the labor market will continue to face a mismatch between the aspirations of the educated youth and the available opportunities.

Keywords

💡Jobless Rate

The jobless rate, or unemployment rate, refers to the percentage of the labor force that is without jobs and actively seeking work. In the context of the video, it's highlighted as a significant issue in India, with some estimates suggesting it could be as high as 8%. This statistic is crucial as it underscores the employment challenges faced by the country, despite its economic growth.

💡Labor Market

The labor market encompasses all individuals who are employed or actively seeking employment, along with the employers who provide jobs. The video script points out weaknesses in India's labor market, indicating a mismatch between the skills of the workforce and the available jobs, leading to a high percentage of the population working in the informal sector without regular salaries or benefits.

💡Informal Sector

The informal sector consists of jobs that are not regulated by the government and often lack social security benefits and legal protections. The script mentions that nearly 90% of India's workforce is employed in this sector, which includes roles in agriculture, construction, and other unskilled labor. This highlights the precarious nature of employment for many Indians.

💡Labor Force Participation Rate

This rate measures the proportion of the total population that is either employed or actively looking for work. The video notes that India's labor force participation rate is comparatively low, suggesting that a significant portion of the population is not engaged in the labor market, which is a concern for economic development and social welfare.

💡Formal Sector

The formal sector refers to jobs that are regulated by the government, offer legal protections, and typically provide benefits such as health insurance and pensions. The script indicates that only about 10% of the 112 million jobs generated in India in the past decade were in the formal sector, indicating a scarcity of stable, secure employment opportunities.

💡Skill Set

A skill set refers to the collection of abilities and knowledge that an individual possesses, which are relevant to their employment. The video emphasizes that despite having degrees or diplomas, many Indians do not have the necessary skill set to enter the workforce, pointing to a disconnect between education and employment needs.

💡Gender Work Gap

The gender work gap refers to the disparity in labor force participation between men and women. The script notes that India has one of the lowest female labor force participation rates globally, with societal expectations often keeping women out of the workforce. This gap has significant economic implications, as closing it could potentially expand India's GDP.

💡Manufacturing Sector

The manufacturing sector is a part of the economy that involves the production of goods through labor and machinery. The video mentions Prime Minister Modi's ambition for this sector to contribute 25% of India's GDP, which has not been achieved. The sector's underperformance is linked to the broader issue of job creation and economic diversification.

💡Private Investments

Private investments are funds provided by individuals or companies to finance new or existing businesses. The script points out that private investments in India are weak, which is a key reason for the country's inability to create high-quality jobs, especially for its young and growing workforce.

💡Red Tape

Red tape refers to excessive bureaucratic procedures or regulations that can hinder business operations. The video mentions that red tape, along with a lack of capital, has made it difficult for small and medium businesses to thrive in India, which in turn affects job creation and economic growth.

💡Foreign Investments

Foreign investments involve capital inflows from investors outside the country into its financial markets or businesses. The script suggests that India needs to attract more foreign investments to diversify global supply chains and boost its economy, which is linked to the broader goal of job creation and economic development.

Highlights

India's rapid economic growth masks a severe job creation crisis.

The jobless rate is estimated to be as high as 8%, despite government claims of a lower figure.

India's young workforce is not finding sufficient high-quality employment opportunities.

The lack of jobs threatens to keep per capita income low, impacting global growth.

Chandan Kumar's 12-year struggle to find full-time employment despite a university degree.

Over 50% of India's population is under 30, yet many struggle with unemployment.

Unemployment for those aged 20 to 24 has alarmingly risen to over 42%.

The informal sector, often lacking job security and benefits, employs 90% of India's workforce.

Only 10% of the 112 million jobs created in the past decade were in the formal sector.

India's labor force participation rate is lower compared to its economic rivals.

Weak private investments are a key reason for the lack of quality job creation.

Higher education does not guarantee employability due to outdated curricula and teacher training.

India's female labor force participation rate is one of the lowest globally.

The gender work gap could increase India's GDP by nearly a third by 2050 if closed.

Job creation failures influenced recent political outcomes, including Modi's party losing majority.

Manufacturing sector growth has not met Modi's 25% GDP target.

Apple and Foxconn's presence in India is not enough; more large companies need to invest.

SMEs struggle to fill the job gap due to red tape and lack of capital.

India's ambition to become a developed economy by 2047 is at risk without sufficient job creation.

Modi's government introduces measures to incentivize manufacturing and train workers.

Experts suggest simplifying labor laws could significantly improve job creation.

Transcripts

Hundreds of applicants. Just a handful of openings.

Sights like this one have become commonplace in India.

India is the world's fastest growing major economy,

but beyond the relatively strong figures lies a grim reality:

the nation of 1.4 billion isn’t creating enough jobs for its expanding population.

India's number of working age population is very impressive.

But if you dig down to what the labor market is composed of,

it shows a lot of weakness.

Some estimates even put the jobless rate as high as 8%,

though the government claims it’s much lower.

India is not producing enough high quality jobs for its vast young workforce.

If people do not get jobs, the per capita income will continue to remain depressed

and that will have its wider ramifications on global growth as well.

So why is employment so broken in India?

And what can be done to fix it?

29-year-old Chandan Kumar has been looking for a full-time job for almost 12 years.

Despite having a university degree, he hasn’t been able to find stable employment,

and makes a living delivering food.

Kumar is not alone.

More than half of the country’s population is under the age of 30,

a key advantage it has over other major economies

such as China, Japan and Germany.

Yet, many of them are struggling to find jobs.

According to research, unemployment for those aged 20 to 24 has risen to over 42%.

Unable to find employment in the formal sector,

people like Kumar end up taking jobs in the informal sector,

where they don’t get a regular salary or benefits.

Essentially it means that you’re really dependent on

some sort of support from the government.

This so-called “black economy” employs almost 90% of India’s workforce

on farms, construction sites and other unskilled roles.

And it’s an issue the Indian government hasn’t been able to solve.

Out of the 112 million jobs generated in India in the past decade,

only about 10% were in the formal sector.

On top of that, India’s labor force participation rate, in other words,

the proportion of the total population that’s working or looking for work,

compares badly to some of its closest rivals.

Private investments continue to be weak in India.

And that's precisely the reason that we are seeing that India is unable to create the high quality jobs

or the jobs in general that it really needs for its vast young workforce.

This is an issue in a country where more young people

are seeking higher education and demanding better quality jobs.

Just look at how the likelihood of being unemployed increases for young Indians

the higher their levels of literacy and education are.

The type and quality of education Indians are receiving is a confounding factor.

You may have the degrees or diplomas, the certificates,

but you’re not getting the skill set that you need to enter the workforce.

A key problem is that young people are often drawn to colleges

that employ teachers with little training and use outdated curriculums.

Discouraged job seekers either end up taking up higher studies

or join their families in farming activities.

Things are even worse for women.

The enrollment in tertiary education between men and women are quite equal.

It’s roughly 52% men, 48% women.

Whereas when you look at the outcome in the labor market, it’s quite different.

In fact, India’s female labor force participation is one of the lowest in the world.

Women do not enter the workforce primarily because they are seen as caregivers in the family.

And that is hurting India in a big way.

According to some estimates, closing the gender work gap

could expand India’s GDP by nearly a third by 2050.

India’s employment challenge carries political implications too.

At this year’s national elections, a failure to deliver on job creation promises

played a part in Prime Minister Narendra Modi’s Bharatiya Janata Party

losing its parliamentary majority for the first time in a decade.

You can see that in states where I know Modi lost seats in Uttar Pradesh, for example,

very high ratios of tertiary enrollment in India.

And there’s a general disappointment in what the reality look like and the labor market.

Modi’s ambition was to have manufacturing take up 25% of GDP.

That hasn’t happened.

A lot of people work in the agriculture sector

and these people have moved straight from the agriculture sector to the services sector,

leaving the manufacturing sector behind.

While Apple and iPhone maker Foxconn have set up factories in India,

other big companies aren’t attracted to invest.

And small and medium businesses aren’t filling that gap either.

They’ve struggled due to red tape and lack of capital.

Bridging the labor market gap is key as India seeks to attract more foreign investments

from companies that are looking to diversify their supply chain away from China.

If India does not provide enough jobs, then it will have a very weak, depressed per capita income.

It stands to lose out on its ambition of getting the country to a developed economy status by 2047.

And that per capita income, as you can see,

is already over $ 10,000 lower than the world average.

It will also mean that India stands to see the rich and poor divide widening in the country.

India is home to some of the world’s richest people, and the country’s wealth gap is already big.

Modi’s government is aware of the importance of overcoming this challenge

and has introduced measures to address it in its latest government budget.

The measures include incentivizing employment in the manufacturing sector

and a five-year program to train 2 million people.

Yet, there’s questions about whether these policies are enough.

These policies are very limited in their scope and nature.

Yes. India needs to create more jobs.

But for that, you also need big industries to come into India,

set up shop and be able to help the government in creating those jobs.

Strengthening exports, expanding manufacturing incentives,

and even filling the tens of thousands of government job vacancies

could all help someone like Kumar.

Experts say simplifying labor laws could also make

a huge difference and create new jobs.

Unless we solve this, where the private sector feels like

they want to employ more people and that there’s a broadening of labor demand,

we will continue to have the mismatch of youth

who are now upwardly mobile to the reality of the labor market.