Explosive mix of being educated & jobless

Aunindyo Chakravarty

Senior Economic Analyst

About a decade ago, I was pleasantly surprised when our driver’s son proved me wrong. He had insisted on doing a graphic designing course, and although I had paid for it, I was convinced that it wouldn’t get him a job. But not only did he get employed straight after completing his course, but it also paid a decent salary.

The small private IT school he had joined was opening a branch in Chandigarh, and he had been offered a job as its manager. It wasn’t exactly what he was trained to do, but it was good money. There were some initial costs — his parents had to fund his first month’s expenses in the new city, but he promised to pay them back as soon as he got his first salary.

And he did exactly as he had promised. Our driver was extremely proud that his son was now making more than he would ever hope to earn. After all, that is what all the sacrifices were for, to get him educated. The boy’s mother, I learnt, had already started looking for a good girl for him. No ordinary girl would do, since their son was now earning more than all his friends and cousins.

One night, a couple of weeks later, our driver got a call. The second month’s salary was getting delayed and his son needed cash to pay his rent and buy food. So, some money was transferred into his account. The salary never came. One unpaid month rolled over into the next. Till finally, the owner of the IT school shut the branch down, because there wasn’t enough demand for his courses.

Since that day, our driver’s son has never got another job. He first tried his hand at being an entrepreneur, by using his designing skills to become an interior design contractor. His father provided the initial capital, and then they got caught in delayed payments. The business collapsed. He then worked several gig jobs — as a delivery man, shop assistant, part-time Uber driver, helper at a path lab. In his early 30s now, he is married, with a child, but no job.

His younger brother saw what happened to him and decided to give up studies right after his 10th Boards. I told my driver to force him to finish high school, but I had no answer when he asked how it would help his younger son. In fact, the younger one did end up with work. He joined a local car mechanic’s workshop as an apprentice, at just Rs 3,000 a month. After a year of getting work out of him for free, the workshop owner hired him for monthly salary of Rs 15,000. He also gets tips from a few customers, and ends up with Rs 2,000-3,000 more per month.

The elder brother with a college degree and a diploma in graphic designing has no work. The younger one, who reconciled to a life of a low-paid blue-collar work, is bringing some money home.

This is not an isolated story. This is what has been happening to young people across India, well before Covid-19 exacerbated the unemployment crisis. The CMIE estimates that there were about 10 crore graduates and post-graduates in India. Out of these, about 6.4 crore were willing to work, but only 5.2 crore were employed. That means about 1.2 crore graduates in India who want work are currently unemployed.

Most of these would be younger people. Those fresh out of college are more optimistic about their chances of getting a ‘suitable’ job — something commensurate with what they were trained to do. They hedge their bets by simultaneously enrolling in post-graduate courses, hoping to exit as soon as they get their dream job. By the time they are about 25, their families start putting pressure on them to get married and ‘settle down’. So, they begin to lower their expectations. By the time these same people hit 30, they take anything available, usually way below what they had initially hoped for as their chosen career.

This graph is replicated in unemployment numbers. The CMIE’s data for January to April 2020 tells us that the ‘greater’ unemployment rate — those who are actively seeking work and those who are willing to work but not actively looking for it — among young people in the 20-24 age bracket is a whopping 52 per cent. This number drops sharply to 22 per cent for 25-29-year-olds, and then to 13 per cent in the 30-34 age group, finally settling in the 10-12 per cent range for those between 35 and 59 years of age.

It is also likely that younger people look for secure salaried jobs, and when they don’t get it, they become self-employed, as they grow older. The word ‘self-employed’ conjures up glamourous images of free entrepreneurship, but in reality, it is mostly very low-paid itinerant work — domestic helps, plumbers, electricians, carpenters, hawkers, cab and auto-rickshaw drivers, car mechanics. The government’s own data tells us that the average monthly earning of a self-employed person in 2018-19 was just Rs 8,363. On the other hand, a regular formal job provided an average monthly salary of Rs 25,866.

That explains why, over the past decade, young people have lost their urge to become entrepreneurs and wanted stable government jobs. Two CSDS-Lokniti surveys done in 2007 and 2016 chronicled this massive change in job aspirations among the youth. In 2007, 48 per cent of young people in big cities wanted government jobs. By 2016, that number had risen to 62 per cent. Amongst graduates, the number of young people seeking government jobs rose from 54 per cent in 2007 to 73 per cent in 2016.

It is in this context that one should look at the calamitous impact of Covid-19 on salaried jobs. The CMIE data tells us that about 21 million salaried jobs were lost during the lockdown period. The latest four-month unemployment data shows that 6.6 million white-collar salaried jobs were lost between May and August this year. These are the best-paid and most-stable jobs in the country. Those who lost these jobs are also most likely to have graduate and post-graduate degrees.

This is a powder keg that is waiting to explode. The political class will ignore it at its own peril.