Rising Youth Unemployment in India Due to Decline in White-Collar IT Jobs

India's youth face rising unemployment due to declining white-collar jobs, particularly in IT. Automation and skill mismatches exacerbate the issue.

India is currently grappling with a significant rise in youth unemployment, particularly among individuals aged 20 to 24 years. The data for the October to December period last year revealed a worrisome trend, with the unemployment rate in this age group climbing to 44.49%, up from 43.65% in the previous quarter. Additionally, the unemployment rate among 25- to 29-year-olds surged to 14.33% during the same period, marking a noticeable increase from 13.35% in the prior quarter.

The decline in white-collar job opportunities, particularly within India's information technology (IT) sector, has been cited as a primary factor contributing to the escalating youth unemployment issue. India, known for having the world's largest youth population, witnessed a substantial 43.3 million university enrollments in the fiscal year ending March 2022, as per the latest government data.

"We've seen consistently high growth of the economy, but I don't think employment has kept up pace," highlighted Chandra Garisa, CEO of recruitment firm Foundit. Garisa emphasized the decline in white-collar job availability, particularly in the IT sector, attributing it to the slowdown in hiring within this segment.

Impact of Technology Advancements

The adoption of automation and artificial intelligence (AI) has resulted in many roles within the IT industry becoming redundant, indicating a broader shift in employment dynamics. Notably, the majority of college graduates, who were previously sought after for basic skills, are now facing diminished job prospects as technology increasingly fulfills these fundamental requirements.

Data from Foundit revealed a substantial 18% decline in online hiring for both IT hardware and software sections last year compared to 2022, with IT experiencing the most significant decrease in hiring activity across the 14 sectors analyzed. Moreover, there was an overall 5% reduction in job postings in 2023 compared to the previous year.

Skill Mismatch and Job Creation

Suyash Rai, deputy director and fellow at Carnegie India, emphasized the concerning mismatch between the demand and supply of jobs, delineating it as a growing social issue in India. Garisa further expounded on this, noting that youth unemployment stems from a transitional skill mismatch, where students possessing IT-related skills encounter a job market that increasingly favors the manufacturing industry.

Growth in job opportunities within the manufacturing sector, particularly for roles requiring AI skills, signifies a shift in employment demands. Garisa underscored the evolving nature of career expectations for fresh graduates, emphasizing that the requisites for quality career opportunities have substantially transformed over the past few years.

As India grapples with the evolving employment landscape, it is imperative for policymakers, educational institutions, and industry stakeholders to address the burgeoning challenges of youth unemployment. Bridging the gap between skill acquisition, industry demands, and youth perceptions will be vital in fostering a more inclusive and dynamic workforce for the future.

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