22.7.24

Only 51% Indian graduates job-ready in employability crisis: Economic Survey

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India was supposed to be harnessing its demographic dividend over a long time now, but while we have a young demographic, "with a median age of 28" as the Economic Survey 2023-24 notes, there is not much dividend to harness. Why? One in two Indian graduates are unemployable because of a lack of skills.

The Economic Survey 2023-24, presented in Parliament on July 22, reveals that only 51.25% of India's graduates are deemed employable, highlighting a significant skills gap despite the fact that this is a definite improvement over last decade's 34%.

“With one of the youngest populations, a median age of 28, India can harness its demographic dividend by nurturing a workforce that is equipped with employable skills and prepared for the needs of the industry. Elevated levels and superior standards of skills help countries adeptly navigate the challenges and opportunities present in both domestic and international job markets,” the Survey said.

India has a fast-growing population and 65% of it is under the age of 35. But they simply do not have the skills to support the $5-trillion-economy-by-2025 dream of the Modi government. There's a critical mismatch between education and skills that the market needs.

YOUTH DO NOT OPT FOR SKILL DEVELOPMENT TRAINING

The skill development ministry's 2022-23 report noted the very few numbers of Indians in the employable age (15 to 59 years) receiving formal training as per NSSO's 2011-12 survey. Data showed that around 2.2% received formal vocational training and 8.6% received non-formal vocational training.

While the perception over skill development has become more positive over recent years, the skill development ministry's report also pointed out a sort of bias in the public perception regarding skill building.

People often seem to assume that skill development is the last resort for those who have been unable to go far in the formal education system and/or have dropped out.

Additionally, the lack of a robust coordination and monitoring mechanism across more than 20 ministries and departments hampers the effectiveness of skill development programmes.

YOUTH UNEMPLOYMENT DECLINING

Despite the fact that half of India's graduates are still unemployable, youth unemployment (15 to 29 years) rate has declined from 17.8 per cent in 2017-18 to 10 per cent in 2022-23 as per the Periodic Labour Force Survey or PLFS.

As per the Employees’ Provident Fund Organisation (EPFO) data, youth employment has increased. It has risen at part with the rise in youth population as can be evidenced by the fact that almost two-thirds of the new EFPO payroll subscribers have been from the 18-28 year band.

Nevertheless, we cannot ignore the fact that according to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate for youth aged 20-24 soared to an alarming 44.49% in early 2024, while nearly 16% of urban youth aged 15-29 were jobless in 2022-23 due to inadequate skills and a lack of quality job opportunities.

This situation is exacerbated by the fact that higher education does not guarantee employment; graduates experience an unemployment rate of 29.1%, significantly higher than the 3.4% for those without formal education, as per a recent report published jointly by the International Labor Organization and the Institute for Human Development (IHD).

RISING FEMALE PARTICIPATION

One of the most significant boosts in employment is that for the past six years, the female labour force participation rate (FLFPR) has been on the rise, both in urban and rural areas.

Between 2017-18 and 2022-23, rural female labour force rose by 16.9 per cent. This increase indicates a growing contribution of women to rural production and a notable shift towards self-employment.

INDIA STRUGGLING TO CREATE A SKILLED WORKFORCE

The educational system in India often fails to equip students with the necessary skills for the job market. Many university students lack access to practical training opportunities, which hampers their employability.

Furthermore, societal norms and stereotypes can deter youth from pursuing certain professions, limiting their career options and contributing to a lack of interest in available jobs.

Government initiatives, such as the National Skill Development Corporation and the Pradhan Mantri Kaushal Vikas Yojana, aim to address these issues by promoting skill development.

However, the effectiveness of these programs remains to be seen, as the country continues to struggle with a backlog of approximately 280 million jobs needed to absorb the annual influx of 24 million new entrants into the workforce.

As Lohit Bhatia, President of Workforce Management of Quess Corp, says,"While skill development addresses talent shortages, the true metric of success is the actual realisation of formal job opportunities post-skilling."

The Economic Survey 2023-24 highlights the critical need for improved skill development to enhance employability among graduates.

While there are positive trends in employment and female participation, significant challenges still remain in creating a robust and coordinated skilling ecosystem.

Source: www.indiatoday.in
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