Lata Moni Das
(latadas2020@gmail.com)
The past few years have been challenging, with a global wave of layoffs that has not spared India. The global economy hasn’t faced such a slowdown in decades. Joblessness has been steadily declining in Southeast Asian countries over the years, after picking up in 2005 at 26.4%, the World Bank showed. The technology sector has been severely affected, with around 400,000 employees losing their jobs worldwide since January 2022. Analysts at Morgan Stanley predict that by 2027, India will surpass Japan and Germany to become the third-largest economy, yet it still struggles to create enough jobs for its growing young population. Youth unemployment rates in India are now higher than the global average. The Centre for Monitoring the Indian Economy reported that youth unemployment stood at a concerning 9.2% in early July, highlighting the severe failure to provide jobs in the world’s most populous country, where millions graduate every year. In the past three years, the government has increased spending on roads, bridges, and other infrastructure to boost the economy and create jobs. According to a report by ILO/IHD, the unemployment rate for graduates is 29.1%, which is almost nine times higher than the 3.4% for people who cannot read or write. Young people with secondary education or higher face an unemployment rate six times higher at 18.4%. Every year, about 24 million young people enter the job market. In 2023–24, unemployment rose to a worrying 8%, with about 37 million people actively looking for jobs, a level not seen since the height of the pandemic. The shortage of well-paying jobs presents a significant challenge for the nation’s leaders as millions of young people seek employment opportunities each year.
Geopolitical stability has transformed into conflicts in Europe and the Middle East, while concerns over climate change and the advent of artificial intelligence have raised uncertainties about their impact on workers across all skill levels—whether low, semi-skilled, or high. The Economic Survey indicates that these challenges could impede India’s sustained high growth in the forthcoming years and decades. Overcoming these obstacles will necessitate robust collaboration among the union and state governments and the private sector.
The drop in global foreign direct investment has reduced the amount of foreign money coming into India. Net FDI inflows to India fell from USD 42.0 billion in FY23 to USD 26.5 billion in FY24. This decline has affected the creation of jobs in factories and related industries.
Micro, small, and medium enterprises (MSMEs) in India struggle with issues such as inadequate financial support, a shortage of business knowledge, and outdated technology. Additionally, Indian SMEs face intense competition, which impacts the job market.
Less than 20% of India’s women are employed in paid jobs, and female workforce participation has been declining. Therefore, India must prioritize the education and skill development of its women. Creating an inclusive environment that empowers women is essential for India’s growth trajectory. To boost women’s roles in economic development, the budget includes over Rs 3 lakh crore for schemes benefiting women and girls. According to the India Employment Report 2024 by the International Labour Organisation (ILO) and the Institute of Human Development (IHD), 83% of unemployed people in India are under 34 years old. This is worrying because India’s young population is considered a national asset. The report also highlights that the percentage of educated young people (with at least secondary education) among the unemployed has almost doubled, from 35.2% in 2000 to 65.7% in 2022, indicating much higher levels of joblessness among educated youth during this period. The two most populous countries in the world, both China and India, face a critical challenge with youth unemployment, exacerbating existing socio-economic issues. China’s decision to halt the release of youth unemployment figures after hitting a record high. This year, approximately 13 million young people are expected to enter the job market in India. Despite India’s booming economy, projected to grow at 8 percent this year, possibly the fastest in the world, the job crisis remains unresolved, with mass unemployment posing a more severe problem than in China.
The urgency of the situation cannot be overstated, as it is now impacting international dynamics. Desperate for employment, Indian youths are migrating to conflict and war zones, risking their lives for better pay. Securing that first job has become an increasingly uncertain and stressful ordeal, often leaving young people with trauma and deep psychological scars. Addressing this crisis requires more than economic growth; it demands a radical overhaul of labour policies and cultural attitudes towards work. Without significant changes, the unemployment crisis will continue to devastate the youth, both domestically and abroad.
While there is much debate about AI taking away jobs, it is crucial to recognise that AI will also create new opportunities. However, India has failed to effectively pivot towards this emerging trend. What is desperately needed is innovative, out-of-the-box thinking, an aggressive harnessing of technology, and a strategic focus on building on existing strengths. This failure extends not only to policymakers but also to the job seekers themselves, particularly the youth. The education system is equally culpable, as what is taught in classrooms today quickly becomes obsolete in the rapidly evolving job market. Without significant reforms and a proactive approach to integrating new technologies and skills, youth will continue to be ill-prepared and left behind in an increasingly competitive global workforce. Job seekers can boost their chances by exploring diverse roles, industries, and locations and by considering self-employment to create jobs for themselves and others.
In this budget, the Finance Minister places a strong emphasis on employment, skilling, and supporting small businesses. The Finance Minister announced an exciting new scheme to provide internship opportunities to 10 million youth in 500 top companies over the next five years. This initiative is expected to yield substantial incentives for companies to choose India, leveraging the cost benefits and access to a large, young workforce, as well as preferential access to Indian markets. Long-term internships will offer invaluable hands-on experience and real-world exposure, helping interns develop practical skills and a deep understanding of industry dynamics, effectively bridging the gap between theoretical knowledge and practical application. The budget proposes a significant investment of Rs 2 lakh crore over five years to create jobs for youth and enhance their skills, benefiting an estimated 41 million individuals. Additionally, the focus of the government on micro, small, and medium enterprises (MSMEs) is poised to boost employment, given the labour-intensive nature of this sector. These measures collectively aim to foster a dynamic and skilled workforce, driving economic growth and development. We must also remember that public contributions are vital for tackling this urgent issue.