Themes > Current Issues
8.12.2006
The Jobless Young
Jayati
Ghosh
There
is a lot of talk nowadays about the economic benefits that a demographic
bulge - in the form of a relatively large proportion of young people in
the total population - can provide. It is argued that when there are more
people who can work, and less dependents, economies can produce more,
at a faster rate.
What this argument misses, of course, is that those of working age should actually be working, so it is not enough to look at the numbers in a certain age group, but also to see whether they are gainfully employed. Indeed, if there is a population bulge without enough employment generation at the same time, what is seen as a demographic nightmare can actually become a social and economic nightmare.
This is why the most recent NSS data on employment and unemployment, based on a large survey conducted in 2004-05, creates such concern. While overall labour force participation and employment have increased since the previous large survey conducted in 1999-2000, the same is unfortunately not true for the young.
In fact, labour force participation rates fell quite substantially for male rural youth, and did not increase for young women in rural areas either. In urban areas, there was a slight recovery of labour force participation rates from the low levels of 1999-2000, but only for young women in the age group 20-24 years was there evidence of any real increase.
It is certainly possible that falls in labour force participation among the youth result from their delayed entry into the work force, partly because they are extending their years of education. If this is so, it would be a positive sign, indicating a greater degree of skill formation in the young labour force of the future. However, this was not the dominant reason. Except for rural females, where the ratio was very low to start with, there has been very little increase in the proportion of those reporting themselves as usually engaged in education. For young urban females, there was actually a decline in such a proportion.
What is even more disturbing is that, despite the fact that labour force participation rates among the young population have decreased or not increased much (except for urban women in the age group 20-24 years), open unemployment rates have increased. Youth unemployment was substantially higher than unemployment across all the working age population, and what is more, it also increased across all categories of young people - men or women, rural or urban. So the youth are far more prone to be actively seeking work and not finding it.
Given that open unemployment by ''usual status category'' has generally been low in India because of the absence of any sort of social protection for the unemployed, it is disturbing to note that as many as 6-8 per cent of young rural males and 12-14 per cent of urban male youth describe themselves as available for work and seeking it but not finding it. The proportions of young women describing themselves as usually unemployed are even larger.
The current daily status criterion describes the nature of activity on a typical day of the reference week, and therefore can be thought of as a ''flow'' measure of work possibilities. By this indicator, open unemployment levels for the young are truly alarming, accounting for nearly 20 per cent of urban young men in the age group 15-19 years and 30 per cent of urban women in the age group 20-24 years. These numbers translate into an estimated 36 million young people of between 15 and 29 years who were ''usually unemployed'' at the start of 2005, and as many as 58 million young people who were unemployed on any particular day.
Even those who have been educated find it hard to get jobs, whether these jobs are appropriate to their skills or otherwise. Educated employment declined slightly for men between 2000 and 2005, but was still around 6 per cent for those with secondary school degrees and 7 per cent for graduates. Unemployment among educated women was much higher and also got worse, reaching rates of 34 per cent for rural female graduates, and 20 per cent for urban women with high school and above.
Vocational training appears to be doing little to resolve this problem. To begin with, even in 2004-05 only a very small proportion of youth, less than 4 per cent, had received any sort of vocational training. But also most such training apparently does not increase employability. The NSSO shows that the proportion that has received some sort of vocational training is significantly higher among the unemployed than the employed youth, by all categories.
If this is a true description of labour markets in India at present, it has significant implications. One concern relates to the possibility of missing the window of opportunity provided by a large young population, because the economic growth process simply does not generate enough jobs to employ them productively. Another important concern follows from this, in terms of the obviously negative social impact of growing numbers of young unemployed. This is not simply a general statement - it reflects a social concern of some urgency, because otherwise the potential advantages of a demographic dividend will be outweighed by social instability.
What this argument misses, of course, is that those of working age should actually be working, so it is not enough to look at the numbers in a certain age group, but also to see whether they are gainfully employed. Indeed, if there is a population bulge without enough employment generation at the same time, what is seen as a demographic nightmare can actually become a social and economic nightmare.
This is why the most recent NSS data on employment and unemployment, based on a large survey conducted in 2004-05, creates such concern. While overall labour force participation and employment have increased since the previous large survey conducted in 1999-2000, the same is unfortunately not true for the young.
In fact, labour force participation rates fell quite substantially for male rural youth, and did not increase for young women in rural areas either. In urban areas, there was a slight recovery of labour force participation rates from the low levels of 1999-2000, but only for young women in the age group 20-24 years was there evidence of any real increase.
It is certainly possible that falls in labour force participation among the youth result from their delayed entry into the work force, partly because they are extending their years of education. If this is so, it would be a positive sign, indicating a greater degree of skill formation in the young labour force of the future. However, this was not the dominant reason. Except for rural females, where the ratio was very low to start with, there has been very little increase in the proportion of those reporting themselves as usually engaged in education. For young urban females, there was actually a decline in such a proportion.
What is even more disturbing is that, despite the fact that labour force participation rates among the young population have decreased or not increased much (except for urban women in the age group 20-24 years), open unemployment rates have increased. Youth unemployment was substantially higher than unemployment across all the working age population, and what is more, it also increased across all categories of young people - men or women, rural or urban. So the youth are far more prone to be actively seeking work and not finding it.
Given that open unemployment by ''usual status category'' has generally been low in India because of the absence of any sort of social protection for the unemployed, it is disturbing to note that as many as 6-8 per cent of young rural males and 12-14 per cent of urban male youth describe themselves as available for work and seeking it but not finding it. The proportions of young women describing themselves as usually unemployed are even larger.
The current daily status criterion describes the nature of activity on a typical day of the reference week, and therefore can be thought of as a ''flow'' measure of work possibilities. By this indicator, open unemployment levels for the young are truly alarming, accounting for nearly 20 per cent of urban young men in the age group 15-19 years and 30 per cent of urban women in the age group 20-24 years. These numbers translate into an estimated 36 million young people of between 15 and 29 years who were ''usually unemployed'' at the start of 2005, and as many as 58 million young people who were unemployed on any particular day.
Even those who have been educated find it hard to get jobs, whether these jobs are appropriate to their skills or otherwise. Educated employment declined slightly for men between 2000 and 2005, but was still around 6 per cent for those with secondary school degrees and 7 per cent for graduates. Unemployment among educated women was much higher and also got worse, reaching rates of 34 per cent for rural female graduates, and 20 per cent for urban women with high school and above.
Vocational training appears to be doing little to resolve this problem. To begin with, even in 2004-05 only a very small proportion of youth, less than 4 per cent, had received any sort of vocational training. But also most such training apparently does not increase employability. The NSSO shows that the proportion that has received some sort of vocational training is significantly higher among the unemployed than the employed youth, by all categories.
If this is a true description of labour markets in India at present, it has significant implications. One concern relates to the possibility of missing the window of opportunity provided by a large young population, because the economic growth process simply does not generate enough jobs to employ them productively. Another important concern follows from this, in terms of the obviously negative social impact of growing numbers of young unemployed. This is not simply a general statement - it reflects a social concern of some urgency, because otherwise the potential advantages of a demographic dividend will be outweighed by social instability.
© MACROSCAN 2006