India's job market failing to absorb educated youth: Kotak report
What's the story
A study by Kotak Institutional Equities shows that despite some progress in the past five years, unemployment rates among educated Indians remain high. The report points out a big gap between job opportunities and job seekers, which may take time to close. As of June 2023, the unemployment rate for diploma holders is 12.1%, while it's 13.4% for graduates and 12.1% for post-graduates.
Details
Increase in self-employed individuals
The yearly labor force survey reveals a drop in unemployment rates from 2018 to 2023, but most new jobs created were for self-employed individuals. There was a decline in the number of salaried workers, suggesting that job quality hasn't improved much. The surveys showed a 510 basis point increase in self-employed individuals in India, mainly driven by a 470 basis point rise in household helpers during the pandemic.
What Next?
Sector-wise employment and wage growth
According to Kotak's report, the agriculture, trade, and transport sectors experienced a major boost in self-employed workers over the past five years. Rural females saw increased participation and employment. However, real wage growth has been inconsistent across different segments, negatively affecting consumption. Annual wages for salaried workers grew at a 3.4% CAGR, while self-employed individuals experienced a 1.8% CAGR increase in gross earnings from 2018 to 2023.
Insights
Challenges ahead for the salaried sector
Kotak states that real income growth has been unpredictable for both salaried and self-employed segments but has recently turned positive after a long period of divergence. However, the salaried sector may face challenges in the upcoming quarters, particularly due to cost reductions in the IT industry, which could impact this trend.