Image source, Hindustan Times
Following repeated exam paper leaks in entrance examinations, enraged Gen Z youth took to the streets last year, forcing India’s Education Minister Dharmendra Pradhan to resign.
His resignation helped Prime Minister Narendra Modi avert an immediate political crisis at the time, but managing the dissatisfaction of the youth remains a long-term challenge for his government.
The Modi administration announced the establishment of fast-track courts to swiftly deliver justice in cases involving exam paper leaks. In addition, a government reform initiative led by tech entrepreneur Nandan Nilekani was launched to improve the examination system. However, experts argue that broader and more effective measures are needed to address the growing concerns of young people.
Causes
There is widespread youth dissatisfaction because the current education system fails to generate quality employment opportunities and does not equip students with skills necessary for productive jobs.
“The labor market has been brutal over the past decade. Jobs outside agriculture have not increased significantly and wages have remained stagnant,” said seasoned economist and author Santosh Mehrotra, who wrote ‘India Out of Work: Rethinking India’s Growth Story.’
“India faces two serious simultaneous problems. First, the economy is structurally weak, preventing growth in labor demand. Second, the education system is so poor that it does not produce employable human capital.”
Until now, the government has countered critiques about unequal economic development by pointing to rapid growth rates and substantial public investment in infrastructure.
Experts suggest that recent upheavals may compel the government to take a more serious approach to the crisis in education and youth unemployment.
Mehrotra notes that India’s “unprecedented expansion of the welfare state,” including cash transfers, at least signals a serious governmental recognition of the problem. Yet resolving it remains an immense challenge.
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India has the world’s largest youth population, with approximately 360 million people aged 15 to 29 years.
There have been significant improvements in enrollment rates. Over the past two decades, the number of private colleges and technical and vocational training institutions has grown rapidly.
However, according to the State of Working Report by Azim Premji University, “obtaining employment after education remains a major challenge, especially for college graduates, where the problem has intensified.”
Unemployment rates among youth are nearly four times higher than in other groups and far above the global average.
This issue is not new. In the last 25 years, unemployment among graduates has hovered around 35 to 40 percent.
But in recent years, demographic growth and increased education levels in India, which have brought more young people into the labor market, have accelerated the unemployment problem.
In 1983, about 4% of people aged 20 to 29 had completed a college degree, and only 13% of those were unemployed. By 2023, 28% had graduated, but 67% of them were unemployed.
The quality of education remains a critical challenge for employability. Even as the number of graduates has grown, job opportunities have not expanded proportionally.
“Between 2004-05 and 2023, around 5 million graduates have been added annually, yet only 2.8 million found employment, and among those, very few secured salaried jobs. This has also raised the rate of graduates who remain unemployed,” the report notes.
Similarly, the evidence shows graduates are not receiving adequate benefits. According to the report, only 3.7% of graduates or postgraduates work in office jobs, and fewer than 7% have permanent salaried employment.
Potential Solutions
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These challenges are not solvable in the short term.
Mehrotra emphasizes that India must focus on strengthening the manufacturing sector through new industrial policies.
“The share of productive sectors in India’s GDP has dropped from 17% in 2015 to 14% today. Employment in productive sectors declined for five years following 2015 before seeing a slight rise.”
Meanwhile, after 2020, total employment in agriculture rose by 80 million, which Mehrotra says signals hidden unemployment. Normally, in a rapidly industrializing economy, workers transition from agriculture to service or productive sectors; this trend underscores deeper labor market issues.
The Additional Challenge of AI
These challenges are further complicated because one of the main employment-generating sectors, the software industry, is facing business model disruption due to Artificial Intelligence (AI). The software sector has been a cornerstone of India’s middle-class aspirations for three decades.
A recent report from Wall Street bank Goldman Sachs indicates that AI threatens to displace between 8 to 12 percent of non-agricultural jobs in India. The impact is already being felt.
According to Niti Sharma, CEO of TeamLease Digital, a leading human resources company, in recent months the hiring rate in IT sectors has slowed to single digits, temporary contract workers have increased, salaries remain stagnant after years, and STEM graduates find fewer entry-level jobs than two decades ago.
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One of India’s largest software companies, HCL Technologies, saw a recent employee protest break out during a Chennai event when hundreds chanted “We want pay raises” in unison, illustrating growing industry dissatisfaction and frustration.
“Graduates need to adjust their mindset to this new reality where office jobs are decreasing. Educational institutions must pivot from knowledge-centric learning toward skill-based training, as employers increasingly prioritize skills over degrees,” Sharma says.
In other words, young graduates may need to face the prospect that careers in air-conditioned offices could give way to trades such as plumbing, electrician work, and mechanics.
Prominent investment strategist Devina Mehra says the upcoming generation cannot realistically expect a better lifestyle than their parents.
She warns that a stall in income growth early in India’s development trajectory could become a “disaster,” and the Modi government must work hard to prevent it.
