Youth in labour market: Graduate unemployment remains high in India

India’s demographic dividend is nearing its peak, a new report has said, pointing out that the country’s working-age population share will begin declining in just a few years or after 2030, to be more precise. While youth education levels have increased significantly over the last four decades, the report has, however, highlighted that unemployment remains high amongst India’s graduates.

Underlining the difficult education-to-employment transition, the State of Working India 2026 report said that graduate unemployment among 15–29-year-olds continues to remain high. “In India, nearly 40% of graduates in the labour force report open unemployment,” it said. More particularly, 40% of graduates in the 15–25-year age group were unemployed, and 20% in the 25-29-year-old age group.

About 51.2% of the graduate men find some kind of employment within a year, while only 4.6% reported that they had got permanent salaried jobs within a year of graduation, and just 2% got a white-collar job in the period.

“The problem of graduate unemployment has been magnified in recent years owing to the growing size of the graduate population,” the report said. As of 2023, it is estimated that 11 million out of 63 million graduates between the ages of 20 and 29 were unemployed.

In the last few years, the youth population has grown substantially along with the tertiary enrolment rate, which has led to an increase in the absolute number of graduates. Along with the high incidence of unemployment, this has resulted in a large number of unemployed graduates, it explained.

The report by Azim Premji University focuses on youth in the labour market: pathways from learning to earning.

The report also flagged a concerning trend, which pointed to increased distress in households, and an increasing share of young men cited the need to supplement household income as the reason for withdrawing from education. The share of young men in education has fallen to 12% in the last quarter of 2024 from 14% in the quarter just before the lockdown. “This has been accompanied by a corresponding increase in their share in employment,” it noted.

In 2023, as many as 72% of young men aged 15-24 years said they were not enrolled in education due to the need to support household income. This was much lower at 53% in 2017, the report said.

For women too, there is an increase in employment, although this is not accompanied by a decrease in education, but rather in their share of the labour force, it said.

The report further underlined that the pace of job creation in the coming decades is critical to ensure that the demographic dividend translates into an economic one.