Hurt by lockdown job losses, Indian youth is retreating from the labour force: SOIL report

• Many young people who have dropped out or completed education, are not actively looking for work, says a State of India's Livelihoods report.
  
• Arts graduates face the highest rate of unemployment, and a retreat from the labour force.
  
• The number of ‘surplus workers’ who are under-employed is estimated to be about 100 million.
  
• India’s GDP will need to grow at 18% a year to generate the jobs needed, the report estimates.
  

India’s unemployment rate at 8% enormously understates the problem, says a State of India's Livelihoods Report by ACCESS Development Services. Even though India has 900 million people within the working age of 15-64, only half of them are either working or actively seeking work, it says.

Of the rest, a majority are either young or are women engaged in unpaid domestic work and childcare – and thus either uninterested or unable to work for a wage.

“Among the youth, some may still be in education. But many others will have dropped out or completed education and yet still will not be actively looking for work. A third of all those aged between 16-25 are, in fact, NEETs — not in education, employment or training,” the report said.


A hole in the metric

The assessment of India’s unemployment problem has gaping holes as many who report as ‘employed’ are under-employed with too little work.

“An equally large hole in the metric is those who are unemployed but not ‘openly’. i.e., they are not (or no longer) actively seeking work,” the report says.

"Actively seeking employment refers to contacting potential employers for jobs, employment agencies, placement agencies, appearing for job interviews, or even reaching out to family members, friends, teachers to look for jobs for them,” the report says, insisting that ‘waiting for a job’ doesn’t fall under this category.

According to the report, this enormous number – neither employed nor looking for work – is striking. The pandemic has led to job losses to the tune of 27 million, leading to reverse migration and ever since, the recovery has been patchy.

The young also seem to take job losses to heart, as those under 24 years of age faced the greatest loss of employment during the pandemic, and took the longest period to recover.

“The Covid lockdown probably exacerbated the trend among youth to quit the labour force. Many young workers – having faced the trauma of being laid off and stranded without help at lockdown – started reporting as students,” it says.

The idling graduates of India

Every year, eight million Indians graduate from colleges and compete for a million jobs meant for graduates. As a result, somewhere close to 30 million graduates are idling, waiting for the right work.

“The gap between graduates of working age and jobs available is more than double what it is for the workforce in general,” the report said. A vast majority of such idling graduates have general degrees in arts, science and commerce streams with very few of them having professional degrees.

“The issue is particularly acute among Arts graduates, who are the single largest category of graduates and also face the highest rate of unemployment or retreat from the labour force,” the report said.

Education, which is often seen as ‘a passport to the future’, is currently doing very little for job seekers or their interest in job seeking. A degree is the first step in a journey towards competitive exams and applications for government jobs, which, if won, would meet aspirations multi-fold.

However, the report describes the decision to get a degree qualification from a provincial college as a "strategy of hope against extreme odds".

“One might take many gambles in life, but few that take up so much time with such slim odds. In this case, many individuals spend the best part of their youth preparing and waiting for jobs they won’t get. The statistics show us that those youths eventually get older, settle down to some activity, and align their expectations with what is on offer,” the report said.

The scale of job problem

Of the 470 million reporting in today’s labour force, around 34 million are openly unemployed. As many as 200 million are engaged in agriculture, with others employed in a range of services, manufacturing and construction.

The great majority of these jobs are low in wages, productivity and security, even outside agriculture. As many as 246 million are ‘self-employed’, most of whom do not hire anyone and survive in ‘own-account enterprises’ (OAEs). Around 118 million list themselves as casual workers.

Only 13% of those employed in India, at 60 million, are salaried workers.

To estimate how many working-aged Indians need a job, the unemployed numbers should be combined with the under-employed workers. “One estimate is that this number of ‘surplus workers’ is about 100 million. And then we should not forget the 15 million young people entering the workforce each year. This is the scale of the job challenge,” the report says.

The report says that at the current levels of employment elasticity, India’s GDP will need to grow at 18% a year to generate the jobs needed. That’s 3-4 times its pre-Covid level growth rate.

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