Summary - India Employment Report 2024: Youth Employment, Education and Skills

India remains poised to take advantage of its demographic dividend with strong improvements in education levels, which are a key determinant of accessing better quality jobs. At the same time, youth’s aspirations are evolving, which needs to be matched with the type of employment available in the labour market. These are among the key findings of the “India Employment Report 2024: Youth education, employment and skills” by the Institute for Human Development (IHD) and International Labour Organization (ILO), which examines the challenge of youth employment in the context of the emerging economic, labour market, educational, and skills scenarios in India and changes over the past two decades and is primarily based on analysis of data from the National Sample Surveys and the Periodic Labour Force Surveys.

With a large proportion of working age population, India is expected to be in the potential demographic dividend zone for at least another decade. Youth participation in the labour market is on a long-term declining trend, mainly due to greater participation in education. Education levels have improved considerably among the youth, which is indeed a welcome development as education is a key determinant of accessing better jobs.

With higher levels of education, youths are much more likely to be employed in formal and regular salaried jobs and tend to more actively engage in high-productivity sectors, primarily the tertiary sector, such as business, telecom, finance and information technology, compared to the less educated. Youth with technical degrees and graduate diplomas are involved more in the tertiary sector. While the access to education had increased significantly between 2000 and 2023, differences persist across socio-economic classes, with implication for access to better quality jobs.

Technological change and digitalization are having a profound impact on the demand for skills and for certain types of employment. Young people are also better represented in the gig and platform economy, although this has led to new challenges in terms of job quality and security.

Overall, the youth unemployment rate declined after 2017-18 dropping to 12.4 per cent in 2021-22 and 10.0 per cent in 2022-23. The rates of unemployment rose with levels of education and since more and more youth were accessing education, the percentage of unemployed youth with secondary and above education among the total unemployed has increased from 35.2 per cent in 1999-00 to 65.7 per cent in 2021-22. It should be noted that this is a longer-term trend evident for some decades, reflecting the rising level of education amongst youth.

Beyond a narrow view of the unemployed, there is a large proportion of youth, particularly young women, not in employment, education or training (NEET), which has also fallen since 2018-19 but remains considerably higher for young women (48.4 per cent versus 9.8 per cent for young men).

While focusing on the challenges of youth employment, the report also highlights broader trends in the Indian labour market, which indicate improvements in outcomes along with persisting and new challenges, including those generated by the COVID-19 pandemic. The labour force participation rate, especially for women, and the unemployment rate experienced improvement post-2019. The share of agriculture in employment increased from 42.4 per cent in 2019 to 46.4 per cent in 2021 as agriculture and self-employment emerged as the employer of last reserve during the pandemic. However, this reversal of structural transformation appears to have stalled in in recent times. In 2022, the share of employment in agriculture declined to 45.4 per cent. Concomitantly, employment in the manufacturing sector is now increasing. Growth of employment in the manufacturing sector stood at 3 per cent between 2019 and 2022, higher than in the previous period between 2000 and 2019. The significance of the manufacturing sector becomes evident when considering that most of the additional employment generated in this sector was regular and self-employment types, with much higher earnings and productivity compared to construction, agriculture and some services, like trade.

To realize the demographic dividend that India stands ready to seize, the report highlights five key policy areas for future action, which apply more generally and specifically for youth in India:

1. Promoting job creation/making production and growth more employment-intensive
2. Improving employment quality
3. Addressing labour market inequalities
4. Strengthening skills and active labour market policies
5. Bridging the knowledge deficits on labour market patterns and youth employment