Graduate Unemployment Among Youth At 20 pc: Study

Chennai: As the country is nearing the peak of its demographic dividend, graduate unemployment among 25 to 29-year-olds remains high at nearly 20 per cent. Of the five million graduates added each year, only around 2.8 million find employment. As higher education remains expensive, students from poorest households account for just 15 per cent of tertiary education, according to a report.

The transition from education to employment remains a major challenge for graduates. Graduate unemployment among the 25- to 29-year-olds remains high at 20 per cent. Moreover, only a small share secure stable salaried jobs within a year of graduation, finds a report by Azim Premji University.

The rapid expansion in the number of graduates has not been matched by commensurate growth in graduate employment. Between 2004-05 and 2023, while approximately 5 million graduates were added each year, only around 2.8 million found employment, and an even smaller share entered salaried employment, contributing to rising graduate unemployment and slowing earnings growth.

Meanwhile, financial barriers continue to restrict access to higher education. Between 2007 and 2017, the share of students in tertiary education who belong to the poorest households increased from 8 per cent to 15 per cent.

“Financial barriers continue to restrict access to higher education, particularly in professional fields such as engineering and medicine. Youth from richer households are far more likely to be enrolled in professional courses like engineering and medicine. The cost of pursuing these degrees often exceeds the annual per capita expenditure for poorer households, resulting in their underrepresentation in these fields and reinforcing inequalities in access to high-paying occupations,” finds the report.

According to the report, India has 367 million youth – those aged between 15 and 29 year - accounting for nearly a third of the working age population. This working-age population share will begin to decline after 2030, making pace of job creation crucial for the country.

Underscoring the importance of higher education, the study found that graduate salaries are twice that of non-graduates at the time of entering the labour market. These differences widen over their lifetime. Young workers are exiting agriculture faster than older cohorts and increasingly entering manufacturing and services: Young women, in particular, have seen rising employment in manufacturing and modern services, including information technology, automobile manufacturing and business support services, indicating changing sectoral pathways into the labour market.

Caste- and gender-based occupational segregation has also weakened over time. Industries traditionally associated with SC/STs have a fewer share of young SC/STs, indicating that newer generations are not adopting traditional employment.

“For instance, in 1983, young SC/STs accounted for 40 percent of SC/STs employed in leather and footwear industry. By 2023, their share had fallen to 24 percent,” it said.

Migration has emerged as an important mechanism through which youth respond to uneven regional development and labour market opportunities: Younger, poorer states continue to be major sources of migrant workers, while more economically advanced and ageing states increasingly rely on migrant youth to meet labour demand.