Wages of the young

On the one hand a large number of youth are not finding the jobs that they would like — and employers are complaining everywhere about a dearth of adequately trained manpower.

The problem, of course, is a mismatch in the quality of the human capital. A large number of India’s youth are under-educated, under-trained and under-prepared for the skills required in today’s economy. They look for jobs, but do not have the human capital or the skills required for the jobs that are available. As a consequence, the few who have the required skill set are being offered stratospheric salaries.

There are a few other dimensions to the problem. The first is geographic. In many areas this increase in the labour force is being compensated by out-migration. In some others it is being accelerated due to in-migration. It is well-known that the larger cities and larger economic concentrations have been growing far more rapidly than those more in the interiors in the last few years. As a consequence cities such as Delhi have been attracting large number of young migrants, many of whom are unable to get jobs. Other cities such as Kolkata are only now seeing rapid economic growth and therefore the fall in unemployment rates is quite significant.

The second aspect of unemployment is its concentration in the 15-25 age group. Depending upon the estimate, between 70 to 90 per cent of the unemployment is in this age group. The youth can afford to wait if they do not find a job to their liking. The responsibilities are lesser and the ‘cost’ of waiting not that high. And the bulk of the unemployment is a result of this ongoing search for the right job rather than taking up any job that is available. As a consequence we find that a far greater proportion of the better educated are employed. This is an important aspect of unemployment in India. A large part of the unemployment is actually a result of the mismatch between expectations of the employee and the employer.

There are various ways by which this mismatch can be corrected. The first is related to better quality of ‘matching’ services. The current employment exchange system is quite defunct and needs to be shut down or completely overhauled. Skill and training mechanisms need to be strengthened by bringing in employers in overseeing such institutions if not running them altogether. There are many models currently being debated, but as is often the case in India, few have been taken up even on a pilot basis.

But such skill and vocational courses are not the only solution. The core issue has to do with a school and higher educational system that is low on quality and content and has little relationship with the requirements of the employment market. Indian youths are getting educated in large numbers but what many are learning has little value.

Some have argued that reforms have led to ‘job-less’ growth. The argument goes that rapid economic growth in India has been unable to generate opportunities for the poor and underprivileged. And as a consequence unemployment has been rising as well.

Consider some of the most rapidly rising professions of the 1990s. As per analysis conducted on NSSO 1993-94 and 1999-2000 data, among the major occupations the most rapidly growing ones were wholesale and retail trade, agents, bricklayers and construction workers, nursing and health technicians, hotels and restaurant keepers, transport equipment operators, cooks and waiters, dhobis, drycleaners, caretakers, sweepers, etc. Most of these professions are not those normally associated with the more privileged section of the population. And most of the reforms in the 1990s would not have directly impacted their sectors. But the impact of greater incomes generated opportunities for all across the economy. In other words, the problem is not so much that opportunities are not being generated — had that been the case unemployment would have been far higher than the 7.4 per cent. Neither is it an issue of opportunities for the privileged versus those for the underprivileged. The critical issue is that of the so-called demographic dividend.

The majority of the country’s population is currently classified as youth, adolescent or child. A very large group enters the working age group every year. The numbers are staggering. As of 2001 there were 354 million in the 5-19 year age group. That means that somewhere in the region of 170 to 200 million will want a job over the next 15 years; or in the region of 12 to 15 million every year.

In the net analysis, therefore, we need to aim for greater growth that needs to be sustained. And we need to match that with a comprehensive approach towards universal education and training.

The writer is director, Indicus Analytics