Graduate Unemployment

Graduate Unemployment

GS-3: Indian Economy

(UPSC/ State PSCs)

 

Context:

In 1932, the famous engineer and statesman M. Visvesvaraya pointed to the high prevalence of unemployment amongst the educated, pointing out that “…the educated men of this country…is suffering most from lack of employment.”

  • What historical patterns or socio-economic changes might have contributed to the consistently higher unemployment rates among highly educated individuals in India since the 1990s?
  • How does the rise in the percentage of graduates in the labour force impact the unemployment rates and the job market?

About Unemployment:

Unemployment refers to a situation where a person actively seeking employment is unable to obtain a job.

  • It is often used as an indicator of overall economic welfare.
  • The National Statistical Office (NSO) defines employment and unemployment based on specific activities:
  • Employed: Persons who are currently engaged in economic activities.
  • Unemployed: Individuals who are looking for work but are not currently employed.
  • Not looking for work or not available: Individuals who are neither actively seeking employment nor available for employment. The combination of employed and unemployed individuals is called the labor force, and the unemployment rate is calculated as the percentage of the labor force that is out of work.
  • The calculation formula is as follows:
  • Unemployment rate = (number of unemployed workers/total labor force) × 100

 

 

 

Official data (Periodic Labour Force Survey-PLFS) shows a decline in the national unemployment rate from 6.1% in 2017-18 to 3.2% in 2022-23.

  • Despite a decline in overall unemployment rates, highly educated youth face disproportionate challenges in securing employment, remaining a consistent structural issue in India's economy.
  • The analysis spanning from 1993-94 to 2022-23 demonstrates that individuals with higher education face consistently higher unemployment rates, notably reaching 13% in 2022-23 for graduates.
  • Young graduates aged 18 to 29 encountered particularly high unemployment rates, with around 36% facing long spells of unemployment in 2017-18, declining to 27% by 2022-23 but still higher than previous periods.

Causes of Unemployment in India

Failure of farm sector & labour market:

  • One of the key reasons behind rising unemployment last month was the failure of the farm sector to absorb the influx of additional labour.
  • Besides the farm sector letting go of workers, the deterioration in labour market conditions across urban and rural regions also led to higher unemployment.

Job opportunity & qualification mismatch:

  • India presents a paradox of skill shortages while being labour surplus.
  • Trucks are idle because of the shortage of drivers. The steel industry needs more metallurgists.
  • The healthcare sector is short of nurses and technicians.
  • The construction sector needs civil engineers, hi-tech welders, bricklayers, and so on.

Sector-specific mismatch:

  • India’s economic growth has been largely services led, with a small pool of skills at the upper end, given a glaring failure in mass education, while capital intensity has increased in manufacturing overall in spite of our labour abundance.

Low participation of women:

  • One reason is essentially about the working conditions — such as law and order, efficient public transportation, violence against women, societal norms etc. — being far from conducive for women to seek work.
  • A lot of women in India are exclusively involved within their own homes (caring for their family) of their own volition.
  • Lastly, it is also a question of adequate job opportunities for women.

Employment Generation Programmes of the Government:

Atma Nirbhar Bharat Rojgar Yojana (ABRY):

  • It was launched in 2020 as part of Atma Nirbhar Bharat package 3.0 to incentivize employers for creation of new employment along with social security benefits and restoration of loss of employment during Covid-19 pandemic.

Pradhan Mantri Rojgar Protsahan Yojana (PMRPY):

  • It was launched in 2016 to incentivise employers for creation of new employment.

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):

  • MGNREGA is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.

Aajeevika – National Rural Livelihoods Mission (NRLM):

  • It was launched by the Ministry of Rural Development (MoRD) in 2011.
  • Aided in part through investment support by the World Bank, the Mission aims at creating efficient and effective institutional platforms for the rural poor, enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services.

Pt. DeenDayal Upadhyaya Grameen Kaushlya Yojana (DDU-GKY):

  • DDU-GKY is a part of the National Rural Livelihood Mission (NRLM), tasked with the dual objectives of adding diversity to the incomes of rural poor families and cater to the career aspirations of rural youth.

PM- SVANidhi Scheme:

  • Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme aims to provide collateral free working capital loan to Street Vendors, vending in urban areas, to resume their businesses which were adversely affected due to COVID-1 induced lock-down.

Pradhan Mantri Kaushal Vikas Yojana (PMKVY):

  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE) implemented by National Skill Development Corporation.

Way Forward:

  • There is a need for structural reforms in the Indian economy to address employment in the country.
  • Issues affecting employment, such as lack of good working conditions, exploitation of employees, lack of good remuneration etc. need to be addressed.
  • Quality of education should be the cornerstone for both the government and the people.
  • The skill development initiatives launched by the government should be implemented effectively.

Conclusion:

The problem of youth unemployment is a serious issue. Much more work is required to outline the exact factors causing unemployment amongst the highly educated - be it the inability of the education system to impart the requisite skills, or the inability of the growing economy to generate enough jobs for the increasing numbers of educated job-seekers entering the labour force each year.

In the present era, there is a need to properly utilize the potential of the demographic dividend so that the aspirations of the youth can be fulfilled.

Source: The Hindu

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Mains Question

How does the rise in the percentage of graduates in the labour force impact the unemployment rates and the job market? Discuss.