India is currently experiencing a significant issue with youth unemployment, particularly in the wake of a decline in white-collar job opportunities within the information technology sector. Data from the Centre for Monitoring Indian Economy shows that unemployment among youth aged 20 to 24 rose to 44.49% in the October to December period last year, while the rate for 25- to 29-year-olds increased to 14.33%. With India having the largest youth population in the world, the situation is particularly concerning, given that the country had 43.3 million university enrollments in the recent fiscal year. The CEO of recruitment firm Foundit, Chandra Garisa, pointed out that while India has seen strong economic growth, job opportunities, especially in the IT sector, have not kept pace. The rise in automation and artificial intelligence adoption has led to many roles in IT becoming redundant, impacting the availability of white-collar jobs.
The decline in hiring within the IT sector is evident in the data presented by Foundit, which showed an 18% drop in online hiring for both hardware and software roles last year. Overall, there was a 5% decrease in job postings across 14 sectors in 2023 compared to the previous year, with IT experiencing the most significant decline in hiring activity. Suyash Rai, a deputy director at Carnegie India, highlighted the issue of a mismatch between the demand and supply of jobs in the Indian job market, emphasizing that it is becoming a larger social problem. The Ministry of Electronics and IT estimated that the IT sector employed 5.4 million people in the fiscal year ending March 2023, further underscoring the magnitude of the issue.
One of the key factors contributing to youth unemployment in India is the “transitory mismatch of skills,” as many students are equipped with skills for the IT sector, even though job creation is more prominent in the manufacturing industry. Garisa mentioned that there are two significant contributors to this skills mismatch: a shift in demand across sectors leading to more opportunities and technological advancements making basic skills obsolete. For example, there was a 6% increase in job postings in the manufacturing sector in February, while IT postings saw a 9% decline. This shift in job demand has led to a change in the skills required by fresh graduates, with the manufacturing sector now seeking candidates with AI skills, data analytics expertise, and technical software engineering capabilities.
The perception among Indian youth that careers in the manufacturing sector are inferior to those in IT is another challenge exacerbating the skills mismatch and contributing to youth unemployment. Despite the rising demand for AI and technical skills in the manufacturing industry, there is still a prevailing belief that IT jobs are superior. Garisa emphasized the need for a shift in this mindset to ensure that outgoing college graduates view opportunities in the manufacturing sector as quality career options. He noted that the sectors that were traditionally the primary hirers in the past are not necessarily the ones experiencing growth and hiring currently, reinforcing the importance of adapting to evolving job market dynamics.
In conclusion, India’s youth unemployment problem is multifaceted, with factors such as the decline in white-collar job opportunities in the IT sector, skills mismatch, and perceptions about certain industries impacting the ability of young people to secure employment. As the demand for skills shifts across sectors and technology continues to reshape job requirements, it is essential for both educational institutions and job seekers to adapt to these changes. Addressing the root causes of youth unemployment in India will require a coordinated effort from policymakers, educational institutions, and industry stakeholders to bridge the skills gap, promote awareness of emerging job opportunities, and empower youth to make informed career choices.
