Youth unemployment is a growing concern that affects millions of young people around the world. In simple terms, it refers to the situation where young individuals, typically between the ages of 15 and 24, are unable to find jobs despite actively seeking work. This issue is particularly troubling because it not only impacts the economic stability of these young people but also affects their confidence, mental health, and future prospects. With fewer job opportunities available, many young people are left struggling to start their careers, leading to a cycle of frustration and hopelessness. The crisis of youth unemployment is a pressing challenge that requires urgent attention and innovative solutions to ensure that the next generation has the opportunity to thrive.
Tags: GS – 3, Economy– Employment – Growth & Development– Skill Development – Human Resource
Context:
- Recent data from the Periodic Labour Force Survey shows that youth face severe employment challenges, with a worker-population rate 40% lower and unemployment nearly three times higher than older age groups.
- This issue is compounded by a mismatch between educational qualifications and job opportunities, with highly educated individuals, especially women, facing the highest unemployment rates.
What is Unemployment?
- About:
- Unemployment occurs when individuals capable of working are actively seeking employment but cannot secure suitable jobs.
- Measurement: Unemployment is calculated using the formula:
- Unemployment Rate = (Number of Unemployed Workers / Total Labour Force) × 100
- here, the ‘total labour force’ includes both employed and unemployed individuals.
- Those neither employed nor actively seeking work, such as students, are not counted in the labour force.
- Types of Unemployment:
- Structural Unemployment: Arises from mismatches between workers’ skills and job requirements, reflecting systemic issues in the labour market.
- Cyclical Unemployment: Fluctuates with economic cycles, increasing during downturns and decreasing during expansions, illustrating the impact of macroeconomic conditions on job availability.
- Frictional Unemployment/Transitional Unemployment: Occurs as individuals transition between jobs, representing the temporary period spent searching for new employment.
- Underemployment: Involves individuals working in jobs that underutilize their skills or provide insufficient hours, reflecting economic inefficiency.
- Hidden Unemployment: Includes those not actively seeking work due to discouragement or other factors but who could enter the job market if conditions improve.
- Disguised Unemployment: Occurs when more workers are employed than needed, resulting in lower productivity per unit of labour.
- Causes of Unemployment:
- Population Size: High population increases competition in the job market, requiring effective economic and job creation strategies.
- Skills Mismatch: Discrepancies between workers’ skills and job market needs highlight the need for improved education and vocational training.
- Informal Sector Dynamics: A large informal sector complicates unemployment tracking; formalising this sector can improve data accuracy.
- Policy Implementation Challenges: Even well-designed policies may face execution difficulties; alignment with real-world conditions is essential.
- Global Economic Factors: Global trade and geopolitical issues impact employment; policies should enhance economic resilience against external factors.
Current Trends of Youth Employment in India:
Youth Unemployment Crisis:
- High Youth Unemployment Rates:
- Unemployment among youth (ages 15-29) remains substantially higher than the general population.
- In 2022, the unemployment rate for urban youth was 17.2%, compared to 10.6% in rural areas.
- Young women are particularly affected, with an unemployment rate of 21.6% compared to 15.8% for young men.
- Education Impact:
- Paradoxically, higher educational attainment among youth correlates with higher unemployment rates.
- For instance, in 2022, the unemployment rate was 18.4% for those with secondary education or higher, and 29.1% for graduates, while it was only 3.4% for illiterate individuals.
- NEET (Not in Employment, Education, or Training) Rates:
- A significant proportion of young people are neither employed, in education, nor in training.
- As of 2022, one in three youngsters fell into the NEET category. Women in the NEET category are nearly five times more than their male counterparts.
Gender Disparity:
- Work Participation Rates:
- Urban male youth have work participation rates more than three times higher than their female counterparts.
- Unemployment Rates for Women:
- Young women consistently face higher unemployment rates than young men, averaging around 50% higher.
- For example, 34.5% of female graduates were unemployed in 2022, compared to 26.4% of male graduates.
- Educated young women experience the highest unemployment rates, with 34.5% of female graduates unemployed.
Regional Variations:
- Disparities Across States:
- High unemployment rates and low work participation are especially prevalent in states like Bihar, Uttar Pradesh, Jammu and Kashmir, Uttarakhand, Rajasthan, Odisha, Kerala, Himachal Pradesh, and Assam.
- Urbanisation Effect:
- Urbanised states like Goa and Kerala experience higher unemployment, while states with less urbanisation like Uttar Pradesh, Jharkhand, and Madhya Pradesh have lower unemployment rates.
- Urbanised states typically have smaller agrarian sectors and fewer informal job opportunities.
Potential of India’s Demographic Dividend:
- Youth Population:
- India boasts a significant demographic advantage, with over 50% of its population under the age of 25 and more than 65% below 35 years old.
- Workforce Growth:
- The working-age population in India is projected to grow by about 200 million people by 2030, enhancing the country’s economic potential.
- Innovation and Entrepreneurship:
- According to the Global Entrepreneurship Monitor (GEM) 2023, India has a thriving startup ecosystem with over 70,000 startups, many led by young entrepreneurs.
- Startup Growth:
- Government initiatives such as Startup India have supported the establishment of over 80,000 startups since 2016, promoting a culture of innovation among the youth.
- Digital Economy:
- The IT and digital services sector contribute approximately 8% to India’s GDP and employs over 4.5 million people.
- The expansion of digital platforms has created numerous job opportunities in IT, e-commerce, and digital content creation.
- Internet Penetration:
- As of 2024, India has over 800 million internet users, representing a vast digital market and significant job opportunities for tech-savvy youth.
- Global Competitiveness:
- India ranks 43rd out of 63 countries in the World Economic Forum’s Global Competitiveness Index 2023, highlighting the growing skills and potential of its workforce to enhance global competitiveness.
- IT Outsourcing:
- India continues to be a leading global hub for IT outsourcing, holding around 55% of the global market share in IT services, largely due to its skilled and youthful workforce.
Government Initiatives Related to Employment:
- National Youth Policy-2014: Aims to empower the youth by focusing on education, employment, skill development, and entrepreneurship, targeting young individuals aged 15-29 years.
- Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Launched in 2015, this scheme has trained over 12 million youth in various skills to enhance their employability.
- National Skill Development Corporation (NSDC): Established in 2008, NSDC has facilitated the skilling of over 13 million people through various partnerships and initiatives.
- YUVA: Prime Minister’s Scheme for Mentoring Young Authors: Introduced in 2021, this program supports budding authors under the age of 30, providing mentorship and training to foster literary talent.
- Rashtriya Yuva Sashaktikaran Karyakram Scheme: This comprehensive scheme consolidates various youth development programs, aiming to enhance leadership, employability, and awareness among the youth.
- Support for Marginalised Individuals for Livelihood and Enterprise (SMILE): Launched in 2021, this initiative focuses on the economic empowerment of marginalised groups, including transgenders and beggars, through skill development and entrepreneurship opportunities.
- PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi): Aims to provide skill development training to over 2.7 lakh SC, ST, OBC, and economically weaker section beneficiaries from 2020 to 2025.
- Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): Since its inception in 2006, MGNREGA has provided over 2.5 billion person-days of work annually, ensuring livelihood security through guaranteed wage employment.
- Start-Up India Scheme: Launched in 2016, this initiative has recognized over 90,000 startups, fostering innovation and entrepreneurship across the country.
- Rozgar Mela: A nationwide employment drive aimed at creating 10 lakh jobs by 2024, focusing on enhancing job opportunities in various sectors.
- Indira Gandhi Urban Employment Guarantee Scheme (Rajasthan): Launched in 2022, this scheme guarantees 100 days of employment to urban households, providing social security to the urban poor.
- Direct Benefit Transfer (DBT) Scheme: DBT has streamlined the disbursement of subsidies and welfare benefits directly to beneficiaries’ bank accounts, reducing leakage and improving efficiency.
- Pradhan Mantri Mudra Yojana (PMMY): Since its launch in 2015, PMMY has provided over 35 crore loans, amounting to more than ₹18 lakh crore, to micro and small enterprises, promoting entrepreneurship and self-employment.
Conclusion:
With over 65% of its population under 35, India holds the world’s largest youth demographic, which is set to grow in the coming decade. Harnessing this demographic dividend is crucial for nation-building. To achieve this, the economy must support the expanding labour force, and the youth must be equipped with the necessary education, skills, health awareness, and other enablers to contribute productively to the nation’s growth.
UPSC Civil Services Examination Previous Year Question (PYQ)
Prelims
Q:1 Pradhan Mantri MUDRA Yojana is aimed at (2016)
- bringing the small entrepreneurs into formal financial system
- providing loans to poor farmers for cultivating particular crops
- providing pensions to old and destitute persons
- funding the voluntary organisations involved in the promotion of skill development and employment generation
Ans: (a)
Q:2 Disguised unemployment generally means (2013)
- large number of people remain unemployed
- alternative employment is not available
- marginal productivity of labour is zero
- productivity of workers is low
Ans: (c)
Mains
Q:1 Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (2023)
Q:2 The nature of economic growth in India in recent times is often described as jobless growth. Do you agree with this view? Give arguments in favour of your answer. (2015)
Source: BS
FAQs
Q: What is youth unemployment?
- Answer: Youth unemployment refers to the situation where young people, typically aged between 15 and 24, are actively seeking jobs but are unable to find work. This is a significant issue that affects both individuals and the economy.
Q: Why is youth unemployment a crisis?
- Answer: Youth unemployment is a crisis because it leaves young people without income, skills development, or career prospects, leading to frustration and economic dependency. High youth unemployment can also lead to social instability and slow down a country’s economic growth.
Q: What are the main causes of youth unemployment?
- Answer: The main causes include a mismatch between education and job market needs, lack of work experience, slow economic growth, and insufficient job opportunities. Sometimes, young people may also face discrimination or lack the networks needed to find jobs.
Q: How does youth unemployment affect the economy?
- Answer: Youth unemployment can slow down economic progress as it means that a large section of the population is not contributing to the economy. It can lead to increased poverty, lower consumer spending, and higher costs for government support programs.
Q: What can be done to reduce youth unemployment?
- Answer: To reduce youth unemployment, governments and organizations can invest in job training programs, promote entrepreneurship, improve education systems to align with market demands, and create more job opportunities through economic growth initiatives. Encouraging internships and apprenticeships can also help young people gain the experience they need to enter the workforce.
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