India Economy is Growing, But Data Gives a Reality Check on Youth Employment

India waits for the transition to a $30 trillion economy by 2047. Yet, there are too many young ‘unemployed’ people - reportedly called ‘cockroaches’.  In a month when the Government reiterates 7% plus growth, we witnessed glimpses of a seething young people’s protests around the country resulting in the resignation of the Education Minister. Now, it may not be easy to dismiss the movement as rhetoric or myopic. An understanding of the underlying concerns is perhaps necessary.

Who are these unemployed youth? Have we created enough jobs for them? Or are they plain lazy and unwilling to work? Every year as board exams bring in new changes, and there are instances of leaked papers and cancelled competitive exams, one wonders how will these adolescents transition into the labour force. If growth is indeed robust, where are the jobs for the Indian youth?

India’s demographic dividend is the stuff of legends. For years, we believed the demographic dividend will create an educated (indeed, mostly over-qualified for available jobs), English-speaking (from clerks of the British, we are now back-office ‘engineers’ for the world) and hardworking (since opportunities are limited and stakes high) labour force that can take the service-dominant Indian economy to its $30 trillion dreams.

Traditionally, we did not have enough factories to create jobs, and then again, most young people lacked the skills for the limited jobs available. The Economic Survey 2024-25 lamented this lack of skills, iterating that most of the workforce (88.2%) was involved in low-competency occupations, with elementary and semi-skilled occupational skills (p.398). Economic Survey 2025-26 iterates the same problem: only 4.9% of the youth in the 15-29 age group has received formal vocational or technical training, while another 21.2% has received training through informal sources (p.493). There are a host of initiatives for skilling (NSDC, PMKVY, SANKALP) and entrepreneurship development and financing (Startup India, Stand-up India, MUDRA). And while, we have the celebrated success stories, there are still scores of dissatisfied and unemployable young people.

Using PLFS data from 2017 onwards, and focusing on the Labour Force Participation (LFP) and Unemployment Rate (UR) for youth aged 15–29, and working population in general aged 15–59, at first glance, we see the LFP figure showing a positive and consistent rise in labour force participation for both the youth and adult female cohorts. However, unemployment rate trends show that while labour force participation may have increased, the unemployment rate (people seeking jobs, but could not get employment) has not fallen at a sustained pace (Figure 1a and 1b). The unemployment rate for young women stagnated post-COVID, while that for men fell sharply. The UR for male youth stands at 10.5, and for female youth at 14.8. While the overall UR is broadly comparable internationally, there is a sharp gender gap of about 4 percentage points between female and male youth in India. 

#Notes (all figures): Estimates are based on unit-level PLFS data from 2017–18 to 2023–24 (agricultural year: July–June) and the 2025 calendar-year PLFS (January–December 2025). Labour force participation, and unemployment follows the official MoSPI Usual Principal and Subsidiary Status (UPSS) definition. All estimates are nationally representative and use the official PLFS person-level survey weights. Youth cover ages 15-29, and Adult 15-59. Unpaid family worker is included in employed. Data source: PLFS, MOSPI

A more granular look at the division by education shows that all three educational brackets have largely seen stagnating UR, with a fall in 2025. Graduates continue to have the highest unemployment rate (Figure 2). UR for female graduates has almost stagnated, or even witnessed a slight increase, and for male graduates the decline has been limited. The sharpest fall is for the low-education male cohort, while among women with low education, unemployment has largely stagnated. In simple terms, on average, every third person with a graduate degree is unemployed in India.

When we look at earnings, a more worrying picture emerges (Figures 3a, 3b and 3c). Median daily wages have largely stagnated in recent years for women, and increased ever so slightly for men in the low education (below secondary school) bracket. For the lowest percentile, this stagnation in the post-COVID-19 period is particularly notable. This is probably the most vulnerable section of young India: those with low levels of education, limited skills, and consequently concentrated in the lowest earnings percentile. For the highest percentile in this group, incomes have risen for men but not for women, and there is a strong gender gap such that women in the highest percentile earn around the median income of men.

The below-graduate (Secondary-HS-Diploma) category shows a similar pattern, with median and top percentile daily incomes increasing for men and stagnating for women. Here, however, the lowest percentile for men shows some increase in earnings. For graduates and above, the widening gap across percentiles is striking. As with the below-graduate category, wage growth appears stagnant for the lower percentiles, while gains are concentrated at the top. These figures highlight the growing inequality within educational groups. It should be noted that these wage figures are not adjusted for inflation.

A gendered view reiterates this divide in the distribution. Note that, especially that for young women, there has been a near stagnation in earnings (median, bottom, and top percentiles). The gender gap is evident in the median and bottom percentiles, and only the topmost percentile of graduate males seems to show a robust increase in earnings. This gender gap needs to be seen in the context of lower labour force participation for women as well. Young women, most of whom are investing in education, remain out of the workforce; a gendered income gap can further demotivate entry into the labour force, in addition to prevailing social and familial norms. 

Notes for Fig 3a, 3b and 3c: Estimates are based on unit-level PLFS data from 2017–18 to 2023–24 (agricultural year: July–June) and the 2025 calendar-year PLFS (January–December 2025).

 

The picture emerging, therefore, tells us that the employment scenario is not robust enough to have led to better earnings for a vast majority of the young. With the gig economy hiring a lot of such young people, the income they are earning, their productivity, and overall contribution to the economy comes into question. The Economic Survey reports that the gig economy, covering “delivery, ridesharing, and freelancing”, increased by 55% to 12 million workers in FY25 (2% of the total workforce in India), and the growth of gig workers outpaces overall employment. According to NITI Aayog, low-skilled gig workers will constitute 33.8% of the gig workforce by 2030, in contrast to 27.5% for high-skilled workers. The skill formation, employability and hence earnings continue to dominate discussion yet make little dent of the ground realities. 

Policies are many, and are often discussed by educators ad nauseam; we skip them here. What we need to do, is look beyond numbers to understand employment and what ails the youth. Do they get better jobs, the ones that pay well enough to sustain their families? Are the returns on education high for all?

*The opinions of the authors are personal, informed by professional expertise.