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Addressing the issue of chronic unemployment & underemployment among youths in India.

India, a nation with an average age of 29 years, one of the youngest populations in the world, holds an edge to use its demographic dividend in favor of the national developmental goals, but it’s only possible when the youth workforce of India is equipped with the right skills across sectors.

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The Periodic Labour Force Survey (PLFS) highlights the youth unemployment in India to be around 10.2% in 2023-24 which is on paper lower than the global average which stands at around 13%, but the data itself doesn’t show the entire picture of the issue as the youth unemployment rate for graduates under age 25 remains at staggering 42.5% (State of Working India Report, 2023), and it isn’t the lack of jobs that is solely responsible.

According to the India Skills Report, 2025, just 54.81% of Indian graduates are employable, which leaves a huge chunk of the young workforce either unemployed or involved in low-skilled informal jobs. At the same time, another report by the ILO marks the percentage rise of unemployed youths in India from 35.2% in the year 2000 to 65.7% in 2022. And about 83% of the jobless in India are youths, despite being one of the fastest-growing economies of the world, the crisis persists and is only getting worse with time. The demographic dividend of India is slowly becoming its demographic liability.




A report by ILO highlights that close to 29 million jobs in India will go unfilled due to unavailability of adequately qualified candidates, even the tech giant Tata Consultancy Services (TCS) reported to have around 80,000 unfilled vacancies due to lack of qualified and skilled candidates in 2024, while on the other hand there are cases like 24.47 million highly qualified youths comprising of PHDs, MBAs and law graduates applying for 53,749 peon positions in Rajasthan and such scenarios are very common across other states too.

The above dilemma of the job market highlights the present state of our nation where on one hand there are unfilled vacancies due to lack of suitable candidates while on the other hand there are overqualified candidates applying for low skill-low pay jobs and the gap is only widening and so is the dependence on the informal sectors to absorb these unemployed youths.

Approximately 85% of the labor force is currently employed in the informal sectors, among which 92.4% have no written contract, and neither do they receive other employment benefits, and are forced to overwork while being underpaid.

The skill gap, underemployment, and unregulated informal sector aren’t just causing economic loss for the country but are also taking a mental toll on our young population, and the NCRB’s data for suicides due to unemployment, which was at 3,541 suicide cases in 2021 and 3,170 in 20,22, highlights the crisis.

Although, in recent years there has been emphasis on certain skill development programs to bridge the skill gap like establishing Rural Self Employment Training Institutes (RSETI) but another report by Ministry of Labour and Employment, 2023 shows that only a small number of youths has been trained and even among them only half of the trained youths were placed into jobs. For example, in Kerala, among 6151 trained youths, only 3758 could secure job roles, in Karnataka, only 8698 of 15636, and in Lakshadweep, being the state with the highest unemployment rates in India, among 184 individuals, only 75 could secure jobs. The data highlights the root cause of the issue of the employability crisis in India, i.e. the skill gap. Although the industrial & other sectors are growing at a rapid scale in India, the educational curricula are struggling to keep pace, leaving a huge chunk of graduates ill-equipped for the job market.

 

Priority:

The crisis of youth underemployment cannot be ignored, with over half of the graduates either unemployed or underemployed across sectors, leading to the underutilized demographic dividend in India and compromising its position among other players in the global economy, along with the risks of social unrest and economic stagnation.

The vision of Vikhsit Bharat or Developed India by 2047 can never be achieved without a well-trained and skilled workforce fueling the rapid economic growth of the nation. There is an immediate need to revamp the education system, align it with industry standards and ensure that the graduates are well equipped to contribute effectively to the economy.

 

Best Case:

Regarding the issue of tackling unemployment & underemployment particularly among youths, our Asian counterpart Vietnam is a promising example of a nation that is successfully addressing the problem, the overall youth unemployment rate in Vietnam was 6.8% in 2024 according to the World Bank’s data in comparison to 16.0% in India and it’s informal workforce has steadily gone down from 85.5% in 2007 to 64.9% in 2023 through initiatives such as National Strategy on Vocational Education and Training (VET), National Start-up Initiative (2016), Supporting Students in Startups until 2025 and National Innovation Center initiatives to tackle the problems of skill-mismatch among youths, strengthening collaboration between the educational institutions and the labor market, promoting entrepreneurship among youths and specifically tailored programs to tackle the issue of unemployment rural areas by targeting ethnic minorities and rural youth population, Vietnam has been able to achieve some good results in the recent years, although there still is a long way to go but the current action and positive results are quite encouraging.


On the other hand, the share of the workforce engaged in skilled jobs has fallen from 18% in 2018-19 to 14% in 2022-23 in India (NSS Report No. 563). India can also adapt such models into its framework and reverse the growing trend of unemployment & underemployment among its workforces.

 

Recommendation:

The first step India needs to take is launching a National Upskilling and Employment Mission, prioritizing the underperforming states first and later expanding the program to other states. The Periodic Labour Force Survey (PLFS) data by NSSO states a clear positive relationship between highly educated labor force and high unemployment rates, e.g. Kerala with 30% graduates and an unemployment rate of 7.0% which is among the highest in the country highlighting the crisis of skill gaps among youths with higher education in India.

Focus on key initiatives like Curriculum modernization, skill integration, employability audits and incentivizing work-integrated learning modules and apprenticeship programs can bring in widespread positive results.

India can learn from its counterparts like Vietnam and Singapore and integrate their successful models into its programs and counter the mismatch between the economy and the labor market. This transformation will not only improve its employability metrics but also help restore the trust of people in higher education for their economic mobility.

 




References:

●      Ministry of Labour and Employment. (2023). Increasing unemployment in the country: Rajya Sabha unstarred question no. 2160. Government of India. Retrieved from https://dge.gov.in/dge/sites/default/files/2024-01/2160.pdf

●      Ministry of Statistics and Programme Implementation. (2024). Annual report, PLFS, 2023-24. Government of India. Retrieved from https://dge.gov.in/dge/sites/default/files/2024-10/Annual_Report_Periodic_Labour_Force_Survey

●      National Sample Survey Office. (2015). Employment and unemployment situation among social groups in India (NSS Report No. 563). Ministry of Statistics & Programme Implementation, Government of India. Retrieved from https://mospi.gov.in/sites/default/files/publication_

●      Wheebox, Confederation of Indian Industry, & All India Council for Technical Education. (2025). India skills report 2025: Global talent mobility—India’s decade. Wheebox. Retrieved from https://wheebox.com/assets/pdf/ISR_Report_2025

●      National Statistical Office. (2022). Youth in India 2022. Ministry of Statistics and Programme Implementation, Government of India. Retrieved from https://mospi.gov.in/sites/default/files/publication_reports/Youth_in_India_2022.pdf

●      International Labour Organisation. (2024). India employment report 2024: Youth employment, education, and skills. Geneva, Switzerland: International Labour Office.  Retrieved from: India Employment - web_8 April.pdf

●      State of Working India. (2023). Social identities and labour market outcomes. Centre for Sustainable Employment, Azim Premji University. Retrieved from State_of_Working_India_2023_ebook_revised.pdf

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