According to the latest data in September 2024, from the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India is around 7.8 percent. Although this represents a decrease compared to previous years, it still indicates that a significant portion of the Indian population remains unemployed. In the recent ‘India Employment Report 2024’ published by the Institute for Human Development (IHD) and International Labour Organisation (ILO), India's youth account for almost 83% of the unemployed workforce. A few of the main reasons for this issue are stated below.

Overpopulation:

One of the few main reasons behind this is due to the supply rate being higher than demand. India is the most populated country in the world, with a working population percentage of more than 63% between the ages of 15 to 59. This creates a large demand for jobs. However, the job market is unable to provide for such a large labor force. 

Socioeconomic Factors

A huge portion of the Indian population lives below the poverty line, limiting access to education and better job opportunities. Additionally, high illiteracy rates, particularly among women and marginalized communities, also play a role in unemployment. Discrimination based on caste and gender can also limit job opportunities.

High demand for government jobs:

Government jobs are highly sought after in India and are known as the “path to a secure and easy life”. More than 20 million Indians apply for government jobs every year and only 10% of them get selected. This gives rise to educated unemployment which further creates skill mismatch in market needs.

Skill mismatch:

Many job seekers lack the specific skills required by the job market. Specifically, the youth possess only theoretical knowledge without practical experience, which widens the gap between the workforce and market needs. Additionally, the increase in technological shifts has further reduced the demand for unskilled and semi-skilled labor.

Underemployment:

In many cases, people are working in jobs that don’t fully use their talents or pay them what they deserve. For instance, highly skilled individuals often end up in low-skill low-skill jobs while fewer qualified individuals struggle to find employment opportunities that match their potential. This results in a situation where some are overqualified for their positions, while others remain unemployed because there aren’t enough opportunities that fit their skills.