What does the data say about India’s unemployed, unemployable and unskilled young labour force?

The demographic dividend that India enjoys today is incomparable. About 54% of our population is below the age of 25. The Union government’s policy documents and pronouncements from 2014-15 reveal that it is aware of the promise this holds for the country. The policy documents also tell us that the government is aware of the challenges the nation faces in harnessing this dividend. However, that awareness doesn’t seem to prevent the ruling party from pursuing a politics that can potentially obliterate this demographic dividend. This politics also runs counter to the government’s declared policy of bridging the skill gap.

On the one hand, the government in its public documents, affidavits submitted to the Supreme Court and policy pronouncements says that India doesn’t need a policy to limit the family size. It told the apex court that it is against any coercive policy in this regard, because the country’s total fertility rate (TFR) is on the verge of “replacement rate” – below which the population begins to contract, and that can have very damaging consequences for a country.

And yet, on the other hand, the Prime Minister says from the ramparts of the Red Fort that population growth is a cause for concern. The state governments run by the BJP begin to implement population stabilisation policies, which aren’t needed at all. Their real aim is to signal to the Hindu majority that the high birth rate of the Muslim minority is a danger and this danger will be dealt with.

This high Muslim fertility rate is of course a myth. Data that I have examined elsewhere in this book clearly shows that the ruling party’s claims about higher growth rate of the Muslim populations in Assam and Uttar Pradesh are false. Year after year, data has shown that throughout the country, fertility rates across regions and religious communities are rapidly declining. But the BJP bashes on regardless.

Documents and policy pronouncements of the Union government that proudly announce our massive demographic dividend also talk about the challenges this can pose if skills are not imparted to our large young population. But, since 2015, the government has hardly shown any seriousness about skill development. The “Skill India” slogan has remained just that – a slogan, without any meaningful action.

Let us begin by looking at the structure of India’s demography. More than 62% of our population is in the 15 to 59 years age group. That is, in the working age group. About 54% are below 25 years of age. The population pyramid is expected to bulge at the 15-59 years slab in the coming decade. This puts us in a unique position in the world.

There’s another important thing that is in our favour. In the next 15 to 20 years, the labour force in the industrialised world is expected to decline by about 4%. But in India, it will increase phenomenally, by about 32%. Not only do we enjoy a huge demographic dividend today, it is also going to last until at least 2040, maybe even 2050.

Our median age will be 31 years in 2025 and 38 years in 2050. The US median age will be 40 and 42 for those years. China’s will be 39 and 44 years; Japan’s 50 and 53; Europe’s 45 and 49. This means India is going to remain much younger even up to 2050 compared to the other major economies in the world. We have the potential to outperform every economy and emerge as the biggest wealth producer in the world.

However, 32% increase in the country’s labour force means nothing if the labour force is not skilled. They will not only be unemployed, but unemployable. At best, they will be underemployed or deployed in the least productive way.

The world of work has been rapidly changing for the last decade or so. The Covid-19 pandemic has further accelerated the pace of change. This rapidly changing world of work demands completely different skill sets. The days of joining a job after college and retiring after 30 odd years without any learning are over. In the emerging scenario of work, on an average a person would be required to undergo training and upgrade her or his skills at least seven times before she or he retires. Just as there’s Research & Development for industry, there’s now Learning & Development for individuals.

Although we enjoy a massive demographic advantage compared to the rest of the world, our labour force hopelessly lags behind in skills and training. Only about 5% of our labour force has undergone any formal skill training. Compare that with 68% in the UK, 75% in Germany, 52% in the US, 80% in Japan, and 96% in South Korea. A 32% increase in our work force will yield little advantage to us if our skilling remains at this abysmally low level as it is today.

Now, let us look at the government’s own estimates and projections of the skill gap. By 2022, there’s going to be a shortage of about 150 million skilled workers in the infrastructure sector; 35 million in the auto and auto components sector; 33 million in building and construction; 26 million in clothing and textiles. There’ll be a shortage of about 18 million skilled workers in transport and logistics. Another 17 million in organised retail. Nearly 14 million in real estate services. Around 13 million in healthcare, about 10 million in food processing and 6 million in education. If the skill gap continues, people will be available but they will be unskilled and unsuitable, and therefore, unemployable. If employed, they will be less productive and bring down our global competitiveness in those sectors.

In October 2018, the Government of India in partnership with the World Economic Forum and Infosys constituted a Closing the Skills Gap Task Force. It was to involve 50 to 100 corporates and other groups in civil society to develop an action plan to address the current and emerging skills gap. The progress achieved by this Task Force is as yet unknown. The annual reports of the Ministry of Skill Development do not talk about this Task Force. Its announcement was perhaps just for a couple of days’ headlines.

The National Policy on Skill Development and Entrepreneurship 2015 declared as its objective that 25% of the country’s schools would integrate skilling with formal education by 2020. But the government hardly has any progress to report on this score. After the declaration of intent made a splash in the media, its utility seems to have been over. The policy document was buried no sooner than the gala event announcing it had concluded. The latest [2021] Annual Report of the Ministry of Skill Development and Entrepreneurship doesn’t even see it fit to mention this policy.

The India Skills Report 2021 came up with disappointing findings. Among the formally educated, employability is less than 50% across the board. About 47% of B Tech, 47% of MBA, 43% of BA, 40% of B Com and 30% of BSc graduates had employable skills. Only 22% of MCA degree holders could be considered employable. About 75% of ITI graduates did not possess employable skills. Unemployability among our B Pharma graduates was at 67%. Adding other sectors too, it was estimated that 65% to 75% of the 15 million young people who enter the labour market every year are unemployable.

The Report also found that 53% of Indian businesses could not recruit in 2019 owing to the applicants’ lack of skills. This was even before the pandemic. The International Labour Organization (ILO) forecasts that India is staring at a prospect of a massive skill gap by 2030. Accenture, a global IT services and consulting company, estimates that we are likely to lose about US $ 1.6 trillion in terms of GDP because of the skill gap.

Now let us turn our attention to the current employment and unemployment scenario. CMIE’s 2021 data shows that by end of July 2021 the unemployment rate had risen to 6.95% with 8.3% unemployment in urban areas and 6.4% in rural India. The Labour Force Participation Rate showed a rise of just 0.6% – 39.5 to 40.1 – from June to July. A large portion of even that tiny increase was actually in unskilled, low paying, low productivity jobs in the agriculture sector. And July is the season when agriculture temporarily absorbs a huge labour force. Once the season is over, however, these jobs disappear.

Another distressing signal comes from the core sectors. There is a significant shedding of jobs in manufacturing and mining. Both are sectors where some skills are required. Service sector absorption remains unchanged. A bulk of the labour force is either unemployed, or employed in less productive tasks, or is unemployable due to absence of skills.

It is bad enough that the Government of India ignores its own data on population and its policy declarations about the skill gap. What is worse is that the ruling party at the centre and in various states where it is in power is busy creating a phobia among the Hindu majority about minority “population explosion”.

Instead of celebrating and harnessing the demographic dividend across religions and regions, its agenda seems to be to create and deepen communal divides and unleash base political animal spirits in order to win elections. This short-sighted agenda will only spawn armies of vigilantes roaming the streets that are ready to respond to dog whistles of obscurantist religious and political persuasions, which thrive on hate and violence.

If this continues – and there is every sign that it will we can forget about becoming a five-trillion-dollar economy. With less than 5% of our labour force trained, a grand intent like Atmanirbharta – self-reliance – is a pipe dream. Without a sincere attempt to skill our younger population, slogans like Make in India, Stand Up India, Startup India, Digital India sound farcical. They were useful for headline management for a while. But the cruel insincerity behind those catch phrases has now begun to show. Governance is increasingly showing us that election promises were merely a comical snake oil sales pitch.

Why would a government sincerely committed to Shrestha Bharat – a “Most Superior India” – need a communal divide to win a popular mandate? Why would it need to subvert institutions? Why would it need an insidious software to snoop on its citizens, opposition political leaders, journalists, its own ministers and ruling party leaders?

A Shrestha Bharat and an Atmanirbhar Bharat is a skilled Bharat, with skilled people of all religions, regions and languages. Not just people of a preferred religion, of regions where a Hindutva electorate can be built, of a favoured and dominant language. A government genuinely invested in the Indian Republic would have woken up at least now to the urgent need to skill India. It would have started working sincerely for a common, bright future for all the daughters and sons of India.

Excerpted with permission from The Crooked Timber of New India: Essays on a Republic in Crisis, Parakala Prabhakar, Speaking Tiger Books.