India's 7% GDP growth leads to less than 1% job growth: 14-16% educated youth unemployed

By Rajiv Shah
A just-released study “State of Working India 2018”, prepared by the Centre for Sustainable Employment of the Azim Premji University, has said that if in 1970s and 1980s, when GDP growth was around 3-4%, employment growth was around 2%, but “since the 1990s, and particularly in the 2000s, GDP growth has accelerated to 7% but employment growth has slowed to 1% or even less.”

Pointing out that today the situation has reached a point where a 10% increase in GDP would lead to “less than 1% increase in employment”, the study says, it calculates unemployment rate as “the share of the labour force that is not part of the workforce” – the reason being that “those above the age of 15 may be looking for work but are unable to find it for at least six months of employment.”
Calculated thus, the study says, in 2015 the unemployment rate was 5%, and stood at 5.7% in June 2018.
However, according to this study, “The unemployed are disproportionately young”, adding, “More than 60% of them are in the 15-25 year age group. In contrast, this group constitutes only 30% of the total working age population.”
“In fact”, according to the study, “If we look at the unemployment rate in just the 15-25 year group, it is much higher at 16.5%, similar to the rate among the college-educated.” Against this, the data released in the study show, the unemployment rate is 4.7% in the age 26-35, falling to 1.4% in the age group 36-45, and 0.8% in the age group 46-55.

Further, the study shows that among the higher educated sections, unemployment rate is very high – it is 16.3% among the graduates, 14.2% among the post-graduates and above, 11.1% among the diploma-level undergraduates, 11.3% among those with the certified course at undergraduate level, 4.2% among those who are only secondary educated, 3% among middle-educated, 2.4% among the primary educated, and 1.8-2% among the illiterate or semi-illiterate.
The study states, “Highly educated unemployed people overwhelmingly report that the reason for unemployment is that they did not find a job that matched their skills”, adding, “This obviously points to the issue being not only one of job creation, but of the creation of decent and desirable jobs.”

According to the study, “This phenomenon of mass unemployment among educated, young men is manifested in various ways. Consider the fact that almost every public sector recruitment drive is massively over-subscribed.”

“For example”, it says, “In early 2017, the West Bengal government held an examination for 6,000 jobs in the Class IV or Group D category, the lowest category of permanent employment in government service. 2.5 million appeared for the exam, many of them holders of graduate and postgraduate degrees.”

Similarly, the study says, “In 2015, 2.3 million applied for around 400 Class IV jobs in Uttar Pradesh, of them 150,000 graduates”, adding, “Such examples may be multiplied.”
The study further says, “Another way the clamour for jobs has manifested is in mass youth rallies across the country demanding reservations in government jobs. Strikingly, these have been mostly led by youth from traditionally dominant agricultural castes such as Patels, Marathas, Jats, and so on.”
It adds, “Even a relatively better performing state such as Karnataka saw a major political campaign on the jobs issue in the lead up to its 2018 assembly elections.”
Thus, the study reveals that workers receiving a regular salary account were less than 20% of all workers. “A household earning over Rs 1 lakh per month is in the top 0.2% of income earners in the country, while 67% of households report monthly earnings of Rs 10,000 or less” – at a time when “the lowest government salary under the Seventh Central Pay Commission is much higher at Rs 18,000.”