India must resolve its paradox of jobless graduates amid a scarcity of skills

At present, roughly 11 million young people are graduating annually with a degree or diploma of some kind. The problem of getting more youth enrolled is not merely constrained by the lack of seats in colleges. 

For instance, in the recent July frenzy for admissions to junior colleges across the state of Maharashtra, it was revealed that there were 300 colleges, fully funded by the state, that received zero applicants. These colleges receive grants for staff and faculty salaries but have no students. There is suspicion that this state of affairs has been going on for quite some time. It was shocking enough for the Bombay High Court to take suo moto cognizance and initiate legal proceedings. 

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The lack of applicants to certain colleges is an example of the youth ‘voting with their feet.’ There is no perceived benefit either from the courses on offer or the quality of teaching. 

Contrast this with the huge demand for coaching classes. It is an industry worth an  estimated $10 billion, with millions enrolled in coaching centres from Kota to Kanpur and Patna to Pune. College graduates enrol in these to prepare for fiercely competitive examinations, such as those for the Union Public Service Commission (UPSC), banking and railways.  We thus have colleges where seats go unfilled while there is a stampede for admission to other colleges or unregulated coaching centres. 

Ironically, the government itself encourages preparation for competitive exams by funding the creation of free digital resources for such preparation. Or through subsidized programmes offered as cheaper substitutes to unaffordable private coaching centres. 

The government’s efforts are adding to the mindless mania of the youth pursuing already-scarce government jobs and point to a lack of imagination on what can be done to address the situation.  

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The goal of increasing the GER to 50% is meant to enhance the quality of India’s human capital and prepare the youth for the jobs of tomorrow. India is in the midst of a demographic revolution that is also throwing up a paradox. The youth, or those between the ages of 15 and 29 years, make up 27% of the total population, thus representing a vast potential workforce. Yet, this is the very segment facing an acute crisis of high unemployment, low employability and widespread under-utilization. 

Large numbers of young Indians remain jobless or underemployed, or are engaged for years in unproductive exam preparation. The last of these is reflected in a low youth labour force participation rate. According to Periodic Labour Force Survey data for May, only 42.1%  of the youth were employed or looking for work. There is also a stark gender  divide, with the participation ratio being 61.6% for males and only 22.4% for females. Note, however, that female enrolment in colleges is now nearly at par with men, and women often outperform men academically.

According to the India Employment Report 2024, the youth make up 83% of the total unemployed. Two-thirds of them have a secondary or higher education. The unemployment rate among those with a college degree is close to 30%, nearly nine times the rate among illiterate youth. The high joblessness rate of educated youth is in addition to those who are exam aspirants, spending precious years of their youth preparing for competitive exams, where getting selected for their dream job is simply like winning a lottery. Very few bag it. 

This group is identified by the  acronym ‘Neet’: for ‘not in employment, education or any training.’ The coexistence of high unemployment among educated job seekers and an acute shortage of skilled candidates expressed by industry is a severe indictment of the country’s higher education system. Less than 5% of our youth receive formal vocational training. Most college graduates lack digital literacy, communication skills and job readiness. 

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At the same time, our largest private sector recruiters, IT services firms, have announced hiring freezes, weighed as they are by reduced global demand and a shift towards automation (especially Generative AI). A computer science graduate is likely to be paid better as a healthcare worker for geriatric care, for which there is huge demand. Demand-supply mismatches between the skills sought and offered are growing. Gig work and platform-based jobs may be expanding, but they too require digital skills that many graduates lack. 

We need a radical shift in education-to-employment pathways. This calls for an overhaul of higher education and its curriculum, more industry-academia partnerships that blend earning and learning potential and more apprenticeships. 

We must also promote entrepreneurship rather than job seeking. Importantly, our labour markets need efficiency. Digital exchanges and career platforms could help. 

The author is senior fellow with Pune International Centre.