India’s jobs crisis: How dreams of rural youth outpace the labour market

India’s rural labour market is still dominated by agriculture, and regular wage or salaried jobs are uncommon, according to the government’s Periodic Labour Force Surveys. However, rural youth overwhelmingly hope for a salaried job, according to the survey jointly conducted, with 5,169 respondents, by Development Intelligence Unit (DIU), Global Development Incubator (GDI) and Transforming Rural India (TRI).

Among the previously-employed rural youth (18-35 years) looking to re-enter the paid workforce, 73% of men and 77% of women prefer salaried jobs, the survey found. Running a small manufacturing or retail trading firm is a distant second, with 17% of men and 13% of women showing inclination. The trend is somewhat similar for those who have never worked but are seeking a job, with the exception of a higher share (one in four) of such women also showing an inclination towards self-employment.

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Since the youth prefer the stability of salaried employment, and also show a desire to find such opportunities in or around their village, it’s important to bring the economy to the people and create opportunities for aspirational migration, the report said.

India’s rural labour market is still dominated by agriculture, employing 49% of male workers and 76% of the female workers, according to the government’s 2022-23 Periodic Labour Force Survey. Moreover, the opportunities for regular wage or salaried jobs are minuscule, as only 14% of men and 8% of women in the workforce have such employment.

The survey interviewed 5,169 youth who were unemployed, unemployed, underemployed, or not taking any form of education or skilling programmes.

Among the previously-employed rural youth (18-35 years) looking to re-enter the paid workforce, 73% of men and 77% of women prefer salaried jobs, the survey found. Running a small manufacturing or retail trading firm is a distant second, with 17% of men and 13% of women showing inclination.

Also Read: Why low unemployment rate hides the full picture

Farm alarm

For any developing economy, a shift from agricultural jobs to manufacturing and services is crucial. Over the years, the structural shift has happened, with the share of the non-farm sector between 1983 and 2019 rising by 20 percentage points, the ‘State of Working India 2023’ report by Azim Premji University noted. However, the shift may not have yielded the desired results: the exit from agriculture led to an increased share in construction for men, while it meant an exit from the workforce altogether for women. 

Furthermore, the rural youth engaged in farming do not find it aspirational because of low productivity, low profits, lack of sizeable land, and adverse weather events seen as key challenges. Two in three young farmers want to opt out of farming due to low productivity and low profit, according to the new survey. Limited access to markets, high input costs, and debt traps for small farmers are some other factors that have made agriculture unrewarding.

Women’s woes

While the rural youth clearly show an inclination towards salaried jobs, one in four women first-time job-seekers in the older age bracket (26-35 years) also showed preference for self-employment and running a small business. This is in contrast with younger women (18-25 years), who aspire for salaried jobs, with a high inclination specifically towards government salaried jobs. 

In general, rural youth in the 18-25 age group showed greater preference for government salaried jobs than the older ones. However, the shift in women’s preference with age is more related to gender barriers. “This could be indicative of women preferring self-employment due to increasing social and domestic duties as they grow older, manifesting as an increasing preference for self-employment with flexible working hours and the ability to work from home," the report noted. In general, self-employment and agriculture are often considered fallback options for those who cannot find desirable jobs but also cannot afford to remain unemployed.

Skill drill

While there is no doubt that economic growth has not kept pace with the youth’s aspirations, several critics also cite the lack of adequate skilling to meet the requirements of the labour market. Several policymakers have suggested filling the skill gap to make people more employable or creating opportunities that suit the needs of potential candidates. Over the years, the government has launched several schemes such as Pradhan Mantri Kaushal Vikas Yojana, free short-duration skill training, and Pradhan Mantri Mudra Yojana, a scheme to facilitate loans for small businesses and self-employment opportunities, among others, to bridge the gap. The efforts have resulted in a higher percentage of the population receiving formal vocational or technical training in 2022-23 compared to five years ago.

However, the level of such training among rural youth remains far lower than that for urban youth, signalling that more effective policies are needed to offer rural youth increased chances of becoming a part of a fast-changing India.

Also Read: Govt jobs lure younger rural workers, older generations prefer salaried roles