Education challenges of employment

Source: The post is based on an article “Education challenges of employment” published in Business Standard on 31^st January 2023.

Syllabus: GS 3 – Employment

Relevance: India’s labour force participation rate and unemployment

News: The article discusses how education is associated with employment and labour participation rate in India.

What are highlights of the data?

India suffers from a poorly educated workforce that is confined to poor quality jobs. Most employment is informal and in the unorganized sector.

For example, 48 percent of the workforce had not cleared their 10th exams, 28 percent had cleared between the 6th and 9th standards and 20 percent had cleared only the 5th standard.

Only 12 percent of the workforce was a graduate or postgraduate whereas this ratio in the US is about 44 per cent for persons of 25 years or more.

During September-December 2022, the overall unemployment rate in India was 7.5 percent but the unemployment rate for graduates was at 17.2 percent.

And in the same period, nearly 40 percent of the workforce had only high school degrees, i.e., between the 10th and 12th standards.

This shows the dismal picture of India’s labour force because labour participation rate decreases with less education.

How does the Labour Participation Rate (LPR) change with education?

The labor participation rate and the unemployment rate increase with education and vice versa.

For example, for those with an education between 10th and 12th standards, the LPR rose to 40 percent with the unemployment rising to 10.9 percent compared to those who are less educated.

Moreover, in the US, the unemployment rate drops as the education levels rise. However, it is the opposite in India.

Furthermore, the LPR among graduates is rising in India which is a positive indication for lowering unemployment rate.

What are other problems with the employment in India?

Even though the LPR has improved for graduates, the jobs for them are not growing enough to make a difference to the composition of the workforce. They have still not reclaimed their pre-Covid share in the workforce.

Moreover, other problem with the Indian workforce is that many graduates leave India for better job opportunities abroad.

India has been unsuccessful in offering adequate jobs and enough good quality jobs to its graduates.