With high unemployment, is India losing its demographic advantage?

One of the significant aspects of the current campaigning for the 2024 Lok Sabha polls in India is the bitter and acrimonious nature of the slander between those who rule and those in the Opposition.

In the heat of all this very bitter and, sad to say, downright disgusting campaign, the principal focus is on slandering, while key issues are overlooked or lost. One is the current state of unemployment in India, principally for the youth. What is demographic dividend? When the share of the working age population of a country exceeds that of the very young and old, the country lands in what is known as the “demographic dividend zone”.

According to a recent report of the International Labour Organisation (ILO) on the employment situation in India, the country is already in this zone, and will remain in this zone for, hopefully, for one more decade. That is about all. And, if New Delhi and other state governments do not focus on this key issue, India would be missing the bus.

According to ILO, the youth population of India will dip to 23% by 2036, from 27% in 2021. The Economic Survey 2018-19 says that the demographic dividend would peak around 2041, when the working age group will be 59% of India’s total population. What does this mean?

The above is both good and bad news for India. For the nation, this demographic dividend means millions more youth to work and fuel the economy. But to cash in on this demographic dividend, the nation has to generate a similar level of employment opportunities.

Simply put, for the country to benefit from the demographic dividend, it needs to generate productive employment for 7-8 million youth who will join the labour force every year. 

Tragically, India seems to be losing this demographic advantage. India’s youth unemployment is unacceptably high.

Indian youth account for nearly 83% of the total country’s unemployed population. Every third young Indian is neither pursuing education nor employed; worse, they have no skill-based training.

Over two-fifths of the country’s youth are educated below the secondary level and just 4% have access to vocational training. This young population has been expanding since 2000, coinciding with the rise in unemployment. Youth unemployment was 5.7% in 2000 and jumped to 17.5% in 2019, that is over 307%, which is more than 16% annually. This is a phenomenal increase.

The ILO report says “In India, the youth unemployment rate (usual status) was an estimated 12.4% in 2022, which was more than 12 times higher than the adult rate”.  

Some misguided myths in India

The assumption that education and training can naturally make one eligible for a job is simply untrue in India. Unemployment is higher among educated youth, who account for 66% of the country’s unemployed people. The more educated one is, the higher the chances of remaining unemployed. In 2022, the unemployment among graduates in India was 29% while those who cannot read or write, it was just 3.4%.

According to the World Bank’s latest report “Jobs for Resilience” on South Asia, the job scarcity in the region, where India is the dominant economy, is driving people to other countries.

This report says South Asia has the highest outflow of migrants among emerging markets and developing economies.

From 2010 to 2023, the exodus amounted to 2% of the region’s working age group population. The World Bank also flagged the concern that for the demographic dividend to be realised, the region needs to create more jobs.

This clearly implies that India needs to create more jobs for its growing youth population. The country has clearly failed on this count. Going by the timeline of the next decade as the demographic dividend zone, the task is going to be a very daunting one. 

Developed countries have long crossed this zone, which ensured their economic growth. In fact, they are now in the “population ageing” zone and increasingly depend on migrants to meet their labour needs. But these countries have their own economic difficulties now, as the current global economic scenario demonstrates. 

The developing and poor countries, including India, account for more than 90% of the global youth population. But if these countries cannot generate sufficient employment opportunities to meet the growing aspirations of the youth, this will inevitably lead to economic stagnancy of these countries.

Besides, such a huge population of youths without productive vocations or engagements will doubtless lead to social unrest, as is evidently seen in states like Kerala, where population density is huge compared to the land area.

It is, indeed, a sad commentary that the current electoral campaign has not focused on this key and urgent issue.  

(The writer is former Professor, National Science Foundation, The Royal Society, Belgium)