2015

Gaurav Subudhi

Educated Youth Unemployment

Roll number – 269 B. Com (honors) Semester 4th Section A Under the Supervision of Dr. Dhani Ram, Assistant Professor, Department of Commerce, Ramjas College,

University Of Delhi

Declaration

I hereby declare that this piece of work is an original creation of

mine. It is not copied in prime form from any other article,

research paper, journal, or book. Due care has been taken to

cite all the resources used. However, if in case I have missed to

give credit for any particular information used, please do let me

know.

Gaurav Subudhi

Abstract

Unemployment in itself is a serious and deep issue. However, in

that, the issue of youth unemployment and specifically

educated youth unemployment is an alarming phenomenon.

Isn’t education’s primary purpose to provide employment?

Then how and why is 1 out of every 3 graduates in India

unemployed? What are the reasons? Why is this happening?

What can we do to solve this issue? These are some of the

questions that I try to deal with in my paper.

Objectives

There are only 2 objectives of this paper:

1. To find out the reasons for youth educated

unemployment in India

2. To look at possible solutions for the reasons thereof

Methodology

The methodology of writing the paper was fairly simple. First, available

information in any form was searched for using the internet. Then all

the available resources in the form of book excerpts, news articles,

research papers & journals were thoroughly studied. After studying the

material, I created a framework and then wrote down the

interpretations in the form of this paper.

Limitation of Study

Research work may take years of in depth study and analysis. A notable

feature of any piece of research is that no research is ever fully

complete at any point of time. There always exists a scope of

improvement. In that light, this paper has been prepared in a very short

period of time for the fulfillment of a semester project requirement.

The sole purpose of embarking on the journey was to get a taste of

preliminary research. Hence, the intellectual level of my ‘paper’ would

obviously be not able to even show candle to the level that hard core

research articles are of. However a sincere effort has been made on my

part and I am grateful that you, as a reader, have taken the time to go

through it so far.

Moreover, you may find my paper to be more of a qualitative nature

rather than quantitative nature. Not many numbers have been used. In

case you believe you can help me improve on any aspect in the said

paper, your valuable input is always solicited.

Index

1. DECLARATION

2. ABSTRACT

3. OBJECTIVES

4. METHODOLOGY

5. INDEX

6. DETAILED ANALYSIS

a. THE PROBLEM

b. THE CAUSES

7. SUMMARY

8. MY VIEW

9. BIBLIOGRAPHY

The Problem

When I started writing this paper, I was perturbed. There was so much to say, yet the question “how?” -

remained as daunting as ever.

To state that I’d be able to write about a topic as deep as this, as a neutral party, would be a gross mis-

statement. Certainly, to someone who is part of the problem, to simply believe that it is just another sub

topic of the curriculum on which I have to write a paper, would be a white lie.

India, my nation, is the youngest nation in the whole world today. We are a nation with a 66% youth

share (people below the age of 35). 1 in 5 youth in the whole world is an Indian. Our dependency ratio is

continually declining, and will continue to do so for at least 25 years to come. We are today undergoing

what the fast growing Asian nations were witnessing in

the latter half of 20th century.

All of this information should be very exciting, right? It

should be, but it is not the complete picture. India is

enjoying what many rightly call the ‘demographic

dividend’. However, the inability to exploit this

dividend can lead to what might become a

‘demographic disaster’.

What I am trying to state today is not just about

Unemployment. It is more specifically about the

unemployment in the youth. As we can see in the news

report by Business Standard, as per the census data

released in 2014, 47 million young Indians out there

are left without work. That’s an alarming 20% of the

whole youth population in India, or 1 in 5 youth.

And I am not someone who exists outside of this problem. As a young student of India, I look forward to

the same grim situation, as any other young person in India does. I am, in fact, a part of the problem. I

might be, in a couple of years, part of the 47 million.

To state the problem more concretely, we will not just look at simple figures of unemployment, but also

at the quality of employment the youth in India pursues and the challenges we face as a nation in the

path of eradicating this problem. Why are so many of our youth not with a job? What kind of education

does this stratum of unemployed youth have? What kind of jobs are the youth doing? What kind of jobs

are they looking for? What reasons are behind this? – are some of the questions we will try to look at.

The dependency ratio in India was 55 as of 2010 (the ratio of individuals aged 0-14 and 65+ to those aged 15-

64); however, as young people enter the labour market over the coming years, this ratio will continue to fall

until it reaches 46 in 2040 (United Nations Population Division projections). ; Mitra & Verick, Youth Employment &

Unemployment: An Indian Perspective – 2013, ILO Asia Pacific Working Paper Series

The Causes

As the problem of youth unemployment is a very composite concern, the reasons behind the problem

are an assortment of a range of demographic, financial, sociological and policy issues. We will try to look

at the various issues and establish linkages among them.

Population Explosion v/s Inadequate Growth

The population of our nation has

quadrupled in the time period since

independence. In the face of such

humongous growth of our population,

whatever economic growth has been

achieved by us has been plainly

inadequate. Agreed that arguments

put forth about lack of skills in the

workforce are valid, we still cannot

ignore the simple fact that the task of

job creation at such a large scale is

indeed very difficult. Though our

policymakers have tried to formulate

policies, this demographic feature is predominantly the first reason of the large scale unemployment,

especially youth and educated unemployment in India.

Because of this cause and effect relationship establishment, we do find that the very primary reasons of

unplanned and unprecedented population growth have led to this situation of burgeoning

unemployment in India. Given our slow growth, the demographic youth bulge that is being seen in our

population today is unable to be absorbed in the mainstream. Obviously, the accountability of turning

our large population into a boon or curse has to rest on our policymakers.

Faulty Policy making

The high economic growth in the recent years has not been able to generate high employment growth.

In fact, the growth in employment has witnessed a slowdown in the recent years. This has led many

economists to conclude that India has been witnessing a “jobless growth”, and this fact has been dully

highlighted by Professor T.S.Papola in his research paper “Employment Trends”.

The inability of the employment multiplier to work due to the policy decisions taken in the post

Nehruvian era 5 year plans has been evident. The policy to focus on growth and wait for the

employment multiplier to kick in has not burnt fruit. Particularly, the population explosion in the recent

decades has lead to a ‘higher education revolution’. This higher educational revolution gave birth to

millions of graduates. This output, however, has been solely due to supply side factors and not demand

side factors. 1 in 3 graduates in India is unemployed, going by the data provided by the Labor Ministry

report in November 2013. And even this number may be an understatement.

In his article for The Guardian, UK (Young, Educated & Unemployed in India, 29 Nov 2009), Professor

Craig Jeffrey, Oxford, talks about his research on the unemployed in India. Jeffrey, carrying on his

research in Meerut, talks about a trend in the rural hinterlands of India where it is not uncommon to

find MA and PhD holders working in the farm fields due to the inability to find suitable employment. The

state sector in India used to be the largest employer of the formally educated. However, due to the

change in state strategy of cutting down on the government sector along with the demographics of

today make it a common scene where each government job has at least 10,000 competitors. “In the

past, India was seen as the country of the bus conductor with a B.A. Today it is the country of the M.A.

manual labor. It has got so much worse” to quote the same professor’s lines in another news report

(‘What do you do with millions of graduates?’ By Yojana Sharma, July 1, 2014, BBC). This clearly indicates

that unemployment rates are under reported as a huge proportion of the educated youth are either

under-employed or using the garb of higher education to amass higher degrees in the hope of getting

employed. This has been the unique feature of our unemployed youth. Unlike the youth of the Arab

world who were involved in the “Arab Spring”, Indian youth have largely been complacent. We don’t

tend to revolt but wait patiently in the wings. This has largely been attributed as the ‘time pass youth’

mentality. Successive researches on the impacts of unemployment in the educated youth in India have

concluded time and again that this has not lead to problems of social unrest. However, how long can the

peace be maintained, remains a matter of speculation.

So what has been the real issue? If we are

generating graduates to the tune of

millions, then why are they still

unemployed? Doesn’t graduation imply a

level of applicable knowledge? Why is this

huge wastage of valuable human resource

happening? The answer: lack of skills. We

can try to dissect the education system to

establish the real problems at a systemic

level.

Firstly, the universities and colleges in India, however tattered their education structure might be, are

grossly understaffed. As we can see in the report by Times of India, there is a huge vacancy of teachers

in our universities. If the top universities fare this badly, estimating the conditions of the second and

third tier educational institutions doesn’t take a person of genius. And this is being done on a deliberate

basis. Though there remain vacancies in huge percentages, the government decides to hire contractual

or ad hoc faculty to make do. The deliberate attempt to get the job done within a fraction of the original

salary costs that need to be spent seems too obvious. Secondly, the already established institutions lack

any control systems. Concepts like attendance and adherence to expected systems of evaluation are

made a joke of. It is not uncommon to find that pupils rarely attend the classes in their colleges across

the nation. Moreover, project based learning is for namesake and the thriving ‘college project making

enterprises’ are a proof of that. In this environment of inadequate infrastructure and control systems,

the implementation of already framed curriculum becomes a nightmare in itself. But the biggest

roadblock in employability of graduates and above is the curriculum itself. There are no linkages

between the curriculum and the labor industry. The curriculum in the various courses in pure science,

arts and commerce is not constantly evolved to match the demand of the industry. Hence the mismatch

in skills required and the skill set available. As a result, the private industry is forced to be picky. On top

of that, the industry also has to spend a substantial sum on the further training of recruits who are

apparently the ‘lucky ones’, to make them industry ready. The joke that runs is: “Why teach them if we

need to retrain them?” That certainly explains the millions of unemployed youth. The college educated

youth in India is predominantly the one who doesn’t have language and communication skills, doesn’t

have polished analytical skills and doesn’t know the applicability of what he has learned in college. He or

She is not dumb or not un-intelligent, but inadvertently spoiled “after he/she goes through college”.

It is a well known fact that the number of think tanks in our country is a very small fraction of what the

other leading countries have. The need is not to start afresh but to strengthen the already established

multitude of universities we have. Each of them has the capacity to be a research grade think tank,

provided adequate measures are taken. As a result, we have the majority of youth loitering on the

streets. Moreover, in the face of the lack of adequate think tanks and the policy measures of the

government, that part of the youth which is both intelligent and research capable, where does it go?

Excessive Use of Foreign Technology

A very good case to understand how the technology policy of our government since independence has

shaped the labor market is the comparison of our economy with China’s economy. At the time of

independence, both Indian and Chinese economies were more or less at par. However, the decision to

import technology from outside rather than develop it here has led to a big gap between the outputs of

the two nations across the spectrum. Today, China’s export based manufacturing sector is booming and

it has led to job creation at a huge scale. However, the mismatch in their skill set due to which there is

an over-supply of graduates there as well, in contrast to the huge shortfall of labor in manufacturing,

which in turn has resulted in excessive rise in manufacturing wages, is a different macro-economic

concern all together. On the other hand, India’s unemployed labor not only exists due to a mismatch of

skill level, but also due to systemic flaws of non creation of jobs across the sectors, with a small

exception of the IT boom largely led by outsourcing due to the cheap wages of India’s IT workers.

Ironically, the point to be noted here is that there is a lack of research led job creation even in the IT

sector. Simply because of low wages, a whole Industry is thriving. This is true even for the BPO, KPO, and

the LPO sectors. But reliance on price factors alone never guarantees sustainability of any industry.

Without the development of research led innovation, we can never create the desired indigenous

technology. And without indigenous technology, we cannot create jobs on a large scale. In an interview

with Genpact CEO N.V. “Tiger” Tyagharajan, host Pankaj Pachauri discussed the fact based upon industry

figures that the top companies of India together spent a meager 0.03% of their aggregate budget on

Research & Development ( Show: Money Mantra, NDTV Profit, Year 2011. Shri Pankaj Pachauri later on

went on to become the Advisor of the then PM, Dr. Manmohan Singh)

Another instance of our lacuna in research

can be traced back to an interesting event

which happened in DRDO, back then under

the leadership of Dr. APJ Abdul Kalam. The

story goes that back then, DRDO was

working on a prototype and it urgently

needed beryllium diaphragm for it. Today we

can find these diaphragms in almost every

high quality speaker. However, back then it

was really precious and we happened to specifically request it from a US company. As beryllium

diaphragm is extensively used in ballistic missiles, the United States imposed a ban on the sale of it to

India. Dr. Kalam was shocked. Ironically, on investigation, it was found that India was one of the largest

producers of Beryllium ore which was then exported to Japan. The Japanese then made beryllium rods

out of the ore and then shipped them to the USA, which manufactured the beryllium diaphragms. Long

story short, the US was denying us a product which had originally been sourced from our own country!

On learning this fact, swift action was taken and a team formed. Within 60 days, we achieved the

production of Beryllium diaphragms and DRDO successfully created the prototype. (Ignited Minds –

Dr.APJ Abdul Kalam)

What we learn of in this example is the untapped potential of research in India. 7 out of 10 researchers

in NASA are Indians. 1 out of every 10 scientists in the USA is an Indian. The major part of our cream –

scientists, researchers, academicians, economists head out of the country every single year. That is loss

of valuable human resource. Nations like the USA have an open door policy for this intelligentsia and

readily accept them as their citizens. A leading case is of Dr. Hargobind Khorana, the Nobel Prize winner

for medicine in 1968. Dr. Khorana was an Alma mater of the University of Punjab and later on went on

to pursue higher studies in the University of Liverpool. He extensively searched for a post of

professorship at any one of our universities with research facilities. We however, failed to provide him

with his modest requests. As a result, Dr. Khorana was forced to migrate to the United States which

readily accepted and funded his research. Finally, when he was awarded the Nobel Prize, it was for his

work in the USA patented under the US. Therefore, technically, any use of his research is still use of

foreign research and that is the great fallacy of our system.

In all, the major problem in using foreign technology as base and substitute to indigenous technology is

the adaptability to our situation, the cost of use and the long term royalty payments we have to make.

Further, lack of indigenous technology means non existence of a strong manufacturing sector, which

The Aim of Education should be to

create job creators rather than job

seekers

-Dr. APJ Abdul Kalam

Plan Expenditur

e 33%

Non Plan Expenditur

e 67%

Total Expenditure

was described by our first Prime Minister Pandit Jawahar Lal Nehru as the backbone of our economy. It

is essential for us to develop our own home grown technologies to create an export based economy

which in turn would foster innovation and job creation.

Emphasis on Capital Intensive techniques

Research and innovation is not alien to the requirements of a country. It is carried on with a view to

maximize the utilization of easily available resources and minimize that of the scarce ones. Obviously, a

country with scarce water resources will not promote water intensive innovations but rather focus its

energies on innovations that solve this problem of water scarcity or use as little water as possible.

Why this fact holds significance for us is that India sources its technology from abroad. We, as a country

source our technology from countries which are abundant in capital but have scarcity of labor. As a

result, their technology cannot be expected to solve our problems. They are inherently designed to solve

solutions with minimum use of labor and a negotiable larger use of capital. Nations like India and China

alone, with the requirement to absorb this large surplus of labor, can develop techniques and

technology based on the principles of frugality and maximum employment, while at the same time

ensuring that the cost of production and functioning remains the least. This is one of the prime reasons

of our youth not being employed.

Finance – Its lack thereof

India is a nation with limited resources. Further, there

are priorities that need to be sorted out before

expending anything on other economic issues.

If we look at the budget expenditure for the year

2013-14, The Government of India spent 33% on plan

expenditure and 67% on non plan expenditure. It is an

obvious fact that the lack of finance has been an

impediment to our objective of job creation.

However, where we spend our money is definitely

under our control. Certain areas create jobs whereas

certain areas don’t.

Looking deeper into the way our money is being

spent, however, we do realize that there are certain

areas about which we cannot do anything.

Interest & Debt Payment 33%

Defence Services 22%

Petroleum Subsidy 6%

Grant to State govts

7%

Pensions 6%

Food Subsidy 8%

Police 4%

Other Non Plan 14%

Non Plan Expenditure 2013-14

Energy 23%

Communications 2%

Energy (Industry&Minerals)

7%

Transport 20%

General Services 1%

Rural Development

6%

Agriculture & Allied Activities

3%

Social Services 30%

General Economic Services

5%

Science,Technology & Environment

3%

Plan Expenditure 2013-14

We spent 22% of our non plan expenditure on defense and 33% on Interest and debt payment. But we

are obligated to do so. The geographical position of India makes it vulnerable to China and Pakistan.

Moreover, the parallel skirmishes with terrorists and Naxalites all over the country add to defense

needs. Obviously, the expenditure on defense is imperative. The quality of expenditure on defense,

however, is a debatable issue. Further, being a developing nation since independence, we had to take

loans from international bodies to finance necessary developmental expenditure. Today, we have a

huge national debt. Paying back is an obligation we have to fulfill. Then we come across energy needs,

for which we have to import oil, amounting to 23% of our plan expenditure. Overall, there are lots of

areas we are obligated to spend on. However, we spend as much as 14% of our non plan expenditure on

populist subsidies, which is a leading example of bad policy decision. It’s akin to feeding a person rather

than teaching him to fish. Electoral politics has its own whims and fancies.

That being said, the credit policy of our nation hasn’t been too encouraging. Due to the lack of a good

credit system, entrepreneurship hasn’t got the right thrust that it should. And the lack of an

entrepreneur spirit has been one of the major factors of non creation of employment.

Legal framework, Red Tape & Corruption

According to the World Bank “Ease of doing business Index”, India is ranked 142. We can see how we

rank, though we are the fastest growing large economy in the world today

Corruption eats into our economy and is essentially the biggest factor of our system failing miserably.

The system formulated by our policymakers is not necessarily bad, but the inefficiency and

malfunctioning of it is essentially a result of the large manifestation of corruption. Today,

Lakshminarayan Mittal is the largest producer of steel in the world, without producing a single kilo of

steel in India.(Quote Dr. Manmohan Singh, Ex PM, India) There is a famous anecdote about Ratan Tata,

when he wanted to start his airline again in the early 2000s. A minister in the then government was

demanding 15 crore to approve his file. Tata denied. Today the TATAs have 2 joint ventures in India,

Vistara and Air-Asia. What is to be emphasized here is that there is no dearth of entrepreneur spirit in

Indians itself. But majority of of our entrepreneurs who are excelling in their fields are located outside of

India. How do we ensure employment in the face of these challenges?

The factor of corruption is too deep to be dealt with in this paper alone. A joke that runs in the Indian

Railways is that if the employees of Indian Railways simply do their work correctly and without

corruption, all the railway tracks across the nation can be converted into pure gold. The Indian Railways

is the largest employer in the world. This is one of the reflections of the magnitude of corruption in

India.

Land

Capital

Labour

Entreprenuership

Summary

1 out of 3 graduates in India is unemployed. The problem of unemployment is growing by the day and

we are on the verge of a demographic disaster rather than demographic dividend. The youth of our

country is largely directionless and unskilled. Land and capital are stuck in regulation. And

entrepreneurial spirit is largely unharnessed. Issues like policy, finance, research and technology need

urgent attention. We are not yet on the borderline of political instability. But, if we don’t take care of

this issue of unemployment, and educated youth unemployment in particular, we might not be too far

from a political crisis like the Arab spring as well as exponential growth of terrorism and naxalism.

Because we do know, that India is a nation with large disparities. And disparities lead to conflict.

Stuck in

Regulation

Flying out of

Country

Unskilled,

Directionless

Unused,

Forced to go

out

My View

Studying in detail about the problem of unemployment in India, we came to know about the various

causes behind this issue. There are certain practical steps that can be taken to tackle the problem of

educated youth unemployment in India.

Enable the proper functioning of the already established educational institutions in India

Provide adequate infrastructure to the institutions

Fill vacancies of faculty positions with deserving candidates

Establish proper control systems, ensure that the students in the institution attend classes

Ensure that the education system is properly implemented, i.e., Classes are taken religiously by

the teachers, Research based work is not just for namesake and is honestly carried out. Etc

Promote these already established institutions as think tanks

Create linkages between the industry and the Academic world. Prepare curriculum as per the

industry requirements to ensure employability of graduates.

Stipulate a minimum number of years as work experience before allowing the pursuit of Masters

to the students, specifically to bridge the socio-economic gap among the youth

Provide adequate opportunities to youth interested in research, in order to multiply the growth

potential of the Indian economy

Promote the development of indigenous research and development

Implement indigenous technology instead of foreign technology

Introduce easy credit policy to foster entrepreneur spirit, provide state support in expertise.

Avoid brain drain to the largest extent possible. Till the achievement of the said goal, introduce

policies and measures so that NRIs & PIOs plough back maximum capital and expertise back to

home nation.

Introduce policies which welcome back Job creating individuals back to our country

Thrust on developing a strong manufacturing sector

Make India business friendly. Make provisions and regulatory environment seamless and

efficient.

Eradicate Red Tape and bring provisions to end corruption

These are few of the measures that we can definitely take. Further, several of these can be implemented

easily and instantaneously.

Bibliography

1. Arup Mitra and Sher Verick. ILO Asia - Pacific Working Paper Series,March 2013. “Youth Employment and Unemployment: An Indian Perspective”

2. Pravin Visaria, Institute of Economic Growth, University of Delhi.ISBN 92-2-111417-1

“Unemployment among youth in India: Level, nature and policy implications”

3. Professor T S Papola, Director, Institute for Studies in Industrial Development, New Delhi , “EMPLOYMENT TRENDS IN INDIA”

4. Times Of India, January 26, 2014. “Unemployment Levels rising among youth”

5. Yojana Sharma, BBC News, 1 July 2014, “What do you do with millions of extra graduates?”

6. Business Standard, Editorial, New Delhi July 02 2014, “The 47 million”

7. Anil Sashi & Subhomoy Bhatacharjee, The Indian Express, New Delhi April 01 2014, “Job report gloomy, prospects worst for graduates, shows all India govt. data”

8. Economy Watch, 13 October 2010, “Indian Unemployment”

9. One Mint, 5th March 2013 – “Where does the government spend your money?”

10. The Economist, Editorial, September 29 2014, New York, “I give you Narendra Modi”

11. Raghu Kumar, RKSV, NDTV Profit, Nov 23 2013, “The ‘Brain Drain’ : How India’s education system is failing its economy”

12. Times of India, May 6 2010, “Top Central universities have 34% teaching posts vacant”

13. Rashil Aditi Ghosh, DNA, 18 September 2012, “Unemployment rate is higher among highly educated rural Indians”

14. Business Standard, January 30 2015, “Why has Obama stoked India’s brain drain”

15. Dr. Manmohan Singh, The Outlook India, December 24 2006, “No more ‘Chalta hai’ ”

16. Professor Craig Jeffrey, University of Oxford, The Guardian ,UK, 29th November 2009, “Young, Educated and Jobless In India”