India’s Youth Unemployment
Source: Indian Express
GS III: Indian Economy- Economy
Overview
- India’s overall UER has declined, but it does not fully reflect the employment challenges faced by youth and discouraged workers.
- Youth and graduate unemployment remain high, highlighting a growing mismatch between education, skills and available jobs.
- Although India’s workforce has expanded, much of the new employment is concentrated in agriculture, self-employment and low-paying jobs.
- Female employment has increased mainly through self-employment and unpaid work, while around one-fourth of youth are NEET, indicating significant underutilisation of human capital.
- India needs to focus on quality jobs, industry-linked skills, apprenticeships, women’s participation and NEET integration, while using UER, LFPR, WPR and job-quality indicators together to realise the demographic dividend.
Why in the News?
The State of Working India (SWI) 2026 report, prepared by researchers at Azim Premji University (APU), highlights that India’s improving unemployment rate does not fully capture the employment crisis among its youth.
News in Brief
- India’s overall Unemployment Rate (UER) for those aged 15 years and above declined from 6.1% in 2017–18 to 3.1% in 2025.
- However, youth unemployment remains significantly higher, it remains a major concern among young people aged 15–29 years.
- Graduate unemployment has also worsened, particularly among those below 25 and those aged 25–29.
- India’s workforce increased from 43.3 crore in 2017–18 to 61.6 crore in 2025, but much of the additional employment has been concentrated in agriculture and low-paying/self-employment.
- Around 25% of India’s youth are Not in Employment, Education or Training (NEET). With a projected youth population of about 36.8 crore in 2026, this translates to approximately 9.2 crore young people outside employment, education or training.
Key Highlights
Unemployment Rate Can Be Misleading
- Unemployment Rate (UER) measures the percentage of unemployed persons within the labour force.
- The labour force include people who are working or actively seeking/available for work.
- The fundamental limitation of the standard Unemployment Rate (UER) – “discouraged worker effect” or the problem of hidden unemployment.
- The Disappearing Act– When a jobless person stops looking for work, they drop out of the labor force. Paradoxically, this causes the UER to decrease, making the economy look healthier than it is.
- Underemployment– The UER treats someone working 1 hour a week the same as someone working 40 hours. It ignores people forced into low-paying, part-time gigs who desire full-time careers.
- The “Quiet” Workforce– In many economies, millions of individuals (often women) perform vital unpaid domestic work or agricultural labor. Because they are not in the formal job search market, they are statistically invisible.
- Hence, a low UER does not necessarily mean that economy has generated sufficient or good-quality employment.
Youth Unemployment Remains A Major Concern
- Higher education no longer guarantees employment in India.
- Although overall youth unemployment has declined, it remains high among the 15–29 age group, falling from nearly 15% in 2017–18 to around 10% in 2022–23 and remaining at a similar level thereafter.
- Graduate unemployment has also worsened- among graduates below 25 years, it increased from 35% in 1983 to 39% in 2023, while for those aged 25–29, it rose sharply from 12% to 20%.
- This highlights the growing mismatch between educational qualifications and suitable job opportunities, showing that higher education alone does not ensure employment.
Quantity of Jobs vs Quality of Jobs
- India has witnessed a significant expansion in its workforce, rising from 43.3 crore in 2017–18 to 61.6 crore in 2025.
- However, the increase in the number of jobs does not necessarily indicate an improvement in job quality.
- A substantial share of new employment has been concentrated in agriculture, self-employment and relatively low-paying occupations, with earnings showing limited growth.
- Between 2021–22 and 2023–24, around 8.3 crore jobs were added, of which nearly 4 crore were in agriculture, highlighting concerns about the nature, productivity and sustainability of employment.
Female Employment
Female employment in India has grown fast in total numbers, but the quality of these jobs and low earnings remain major concerns.
The Quantitative Surge
- Rapid Growth- The female workforce rose from 9.4 crore in 2017–18 to 18.6 crore in 2023–24.
- Recent Highs- Numbers reached about 20.6 crore by 2025.
- Driven by Necessity- Much of this rise comes from rural areas and economic pressure on households.
The Qualitative Deficit
- Rise in Self-Employment- Most working women are in own-account work or unpaid family labor rather than stable careers.
- Low Salaried Jobs- Formal, regular salaried jobs have not grown at the same speed.
- Stagnant Pay- Earnings for both men and women have flatlined, offering little financial growth.
- Missing Security- These jobs often lack paid sick leave, written contracts, or health benefits.
Major Barriers for Women
- Household Work- Women spend hours on unpaid care and domestic chores, limiting time for full-time careers.
- Safety and Travel- Poor transport and safety fears stop women from taking jobs far from home.
- Social Norms- Family expectations often restrict women from working in formal or external sectors.
India’s Huge NEET Population
- India’s massive NEET (Not in Education, Employment, or Training) population translates to roughly 8.7 to 9.2 crore young individuals aged 15–29, a scale recently underscored in policy evaluations by NITI Aayog.
- A large NEET demographic creates severe national bottlenecks.
Key Factors Behind the NEET Crisis
- Skill Mismatches: Academic and university curricula often fail to match fast-evolving industry requirements. Only a small fraction of graduates secure roles suited to their formal qualifications.
- Domestic and Social Pressures: A significant portion of the NEET population, particularly young women are entirely absorbed by unpaid domestic duties and caregiving responsibilities rather than formal economic sectors.
- Transition Barriers: Young job-seekers face acute gaps when moving from education systems into active employment, worsened by limited entry-level hiring and high competition.
What is NEET?
- NEET is a measure for young people who are Not in Employment, Education or Training.
- It counts youth who are out of school, not working at a job, and not learning any job skills.
Why NEET Matters
- Broader View: It shows true youth idleness better than standard unemployment rates.
- Finds Hidden Groups: It counts people who have given up looking for work, youth outside education and employment.
- Highlights Social Gaps: It reveals young people trapped by family duties, like women doing unpaid home care.
Why UER alone is insufficient?
- It ignores non-participants (LFPR)
- UER only looks at people inside the labor force.
- If discouraged workers stop looking for jobs, they drop out of the labor force.
- The UER might go down, making the economy look better, even though fewer people are working.
- It leaves out total employment (WPR)
- The Worker Population Ratio shows the share of the entire working-age population that actually holds a job.
- UER only measures a small slice of people who are active job-seekers.
- It hides youth struggles (NEET)
- Youth who are out of school, training, and work face unique long-term risks.
- UER does not single out this vulnerable group clearly.
- It ignores job quality
- A person is counted as “employed” even if they earn very low wages, work in unsafe conditions, or are severely underemployed.
- UER treats a bad job the same as a great job.
Way Forward and Conclusion
India needs to focus on quality employment by promoting manufacturing, MSMEs and modern services, while aligning education and skills with industry needs.Expanding apprenticeships, improving women’s participation and connecting NEET youth with jobs and training are also important.
Employment should be assessed through LFPR, UER, WPR, NEET and job quality indicators to ensure that India can fully realise its demographic dividend.
UPSC Prelims and Mains Practice Question
Consider the following statements regarding NEET:
- NEET stands for Not in Employment, Education or Training.
- NEET captures only those who are actively seeking employment.
- NEET can include people who are outside the labour force and are neither studying nor employed.
Which of the statements given above is/are correct?
A) 1 ans 3 only
B) 2 and 3 only
C) 1 and 2 only
D) 1.2 and 3
Answer: 1 and 3 only
Mains Practice Question
Q. India’s declining unemployment rate does not necessarily indicate adequate employment generation. Examine the limitations of the unemployment rate and discuss how the NEET indicator provides a broader understanding of India’s youth employment challenge. (250 Words)
Daily Current Affairs: Click Here