India’s unusual jobs math: More education equals a higher chance of unemployment

India has seen some urban job growth in recent years, but most of it is in low-wage services and construction. (File Photo: Hindustan Times)
India has seen some urban job growth in recent years, but most of it is in low-wage services and construction. (File Photo: Hindustan Times)

Summary

India is one of the fastest-growing major economies in the world, but it is struggling to find enough well-paid jobs for millions of its highly educated graduates.

GHASO KHURD, India—A lawmaker from eastern India had just begun to appeal for an airport in his rural district when cries broke out and yellow smoke began wafting through India’s parliament.

A man had set off a smoke canister in the chamber and was leaping from bench to bench shouting antigovernment slogans. Another protester made it to the chamber’s visitor’s gallery. Outside, two protesters chanted “end dictatorship."

The protest in December brought a rare and brief disruption to India’s parliament but it highlighted a long-running problem in India’s economy: Young, highly educated people often struggle to find jobs. The protesters were well-educated by India’s standards—two of them have college degrees and one has graduated high school—but were having a hard time getting well-paying jobs. A fourth protester, also a high school graduate, was in a similar situation, Indian media reported.

The four people arrested at the parliament that day are being investigated on terrorism charges. They are still in detention and couldn’t be reached for comment.

As they were being led away on the day of the protest, one of the college graduates, Neelam Verma, in her late 30s, shouted, “I am a regular person, a student and an unemployed person."

India is one of the fastest-growing major economies in the world. The government said gross domestic product likely grew at a rate of 7.6% in the fiscal year that ended on March 31. But the economy isn’t creating enough jobs for the millions of young people joining the labor force each year in the country of 1.4 billion.

India has seen some urban job growth in recent years, but most of it is in low-wage services and construction. Economists say the country isn’t creating enough white-collar jobs that appeal to educated young people, and government efforts to bring in more investment in factories have yet to lead to large-scale increases in blue-collar employment. India has only about 60 million manufacturing jobs, while more than four times that many people work in farming.

Globally, unemployment among young people tends to run higher than for the labor force as a whole. But higher levels of education tend to lead to better chances of employment. In the U.S., for example, a young person with a college degree is more likely to have a job than a high-school dropout.

In India, the math is flipped. More than 40% of college graduates under the age of 25 are unemployed, compared with 11% of those of the same age group who are literate but haven’t completed primary school, according to a 2023 report from Azim Premji University in Bengaluru that is based on official data.

In China, even though growth has been slowing, the unemployment rate for college graduates under the age of 25 hovers around 7.5%, according to an Asian Development Bank report from last year, based on official data from 2018 and 2020. Young people in China are far more likely to have a college degree than those in India.

Economists say India’s stark share of unemployment among its most educated is because young people who have managed to get through grueling school and college entry exams know they are in a select group in the country and want to hold out for better jobs—and can often count on financial support from their families. Young people with less education know they have to make do with whatever they can get.

Compounding the problem, recruiters also find that many of those who have college degrees aren’t equipped for the jobs they aspire to. Many young people are getting general degrees from for-profit colleges that don’t prepare them for highly competitive sectors such as tech and finance, which offer jobs to a tiny percentage of India’s college graduates each year, said Amit Basole, a professor of economics at Azim Premji University and a co-author of its report on employment.

“What we have on the supply side of the labor market is a lot of young men and women with a lot of degrees," said Basole. “But it isn’t clear what they have been trained to do."

Verma, one of the protesters at India’s parliament, aspired to be a teacher, her family said. She has degrees in art and philosophy but was earning about $3.60 a day as a farm laborer, helping to grow rice and wheat in her village, Ghaso Khurd, in the northern state of Haryana. “We knew she was capable of doing much more than that," her cousin Mahaveer said.

When local politicians came to the village, she would hand them her résumé and a note asking for help finding a job.

As she became more frustrated over her situation, she became more politically active, organizing small-scale protests over unemployment in the region and joining in farmers’ demonstrations in 2020 and 2021 that pushed successfully for the repeal of laws Prime Minister Narendra Modi introduced to overhaul the agricultural sector.

The family had scraped together thousands of dollars for Verma’s education, along with that of her two brothers. But despite graduating with master’s degrees, her brothers didn’t find jobs either. Now they run a business supplying milk to the village.

“We worked so hard to educate them," her mother said. The fact that she struggled so much to find a job “makes us feel hopeless."

Sagar Sharma, one of the other protesters, had graduated from high school in the northern Indian city of Lucknow, his father said. That in theory opens the door to the first rung of white-collar and retail jobs. Sharma, in his late 20s, first worked as an office assistant and then at a flour mill earning about $60 a month.

“He kept switching jobs in the hope of making more money," said the elder Sharma.

Eventually, he bought an electric rickshaw and earned $110 a month ferrying passengers, with much of that going to pay the loan that funded the purchase. A third protester had a degree in computer engineering but never managed to find a job either, said his mother.

India’s government has sought to increase employment primarily by offering incentives to companies to set up factories and training programs for young workers. But many economists say the incentives haven’t focused on the types of industries that would generate significant employment.

India’s Labor Ministry didn’t respond to requests for comment.

Unemployment remains high even for graduates aged 25 to 29, at nearly 23%, indicating a persistent problem. While unemployment eventually declines for people in their 30s, that could suggest they eventually settle for work they are overqualified for, the report by Azim Premji University said.

Varun Goel, a 23-year-old with a degree in software engineering, said the protesters’ frustrations resonated with him, though he disagreed with what they did. Goel said he first tried working at an information technology consulting firm in Bareilly, a city in India’s northern state of Uttar Pradesh, but he only earned $145 a month. He quit, unsatisfied with the pay, but he didn’t find another suitable job. So he decided to enroll in business school.

Goel said many of his friends who graduated with degrees in business and technology were struggling like him.

“After studying so much, we can’t start driving rickshaws or selling ice cream," said the student, who is getting by with the help of savings and family support. “The government has to create the right kind of jobs for those with graduate degrees."

Amid the absence of good private jobs, many are entering the highly competitive fray for government jobs, which pay less but come with job security, good benefits—and respect.

“I can’t work just anywhere," said Siddharth Sharma, an unemployed 24-year-old from the central Indian city of Gwalior who has several college degrees, including one in philosophy. “I want a particular kind of work that offers good pay and stability."

Sharma is currently preparing for the country’s grueling civil services entrance examinations. But he’s aware he may not get lucky there either.

“I have only one demand from the government," he said. “Where is my job?"

Tripti Lahiri contributed to this article.

Write to Vibhuti Agarwal at vibhuti.agarwal@wsj.com and Shan Li at shan.li@wsj.com

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