Education challenges of employment

Most of the employed persons in India are poorly educated. The maximum education of a bulk of those employed in India is high school graduation. As of Sept­em­ber-December 2022, nearly 40 per cent of the workforce (we use the term to represent those who are employed) were high school graduates. The maximum educa­t­ion achieved by them was bet­ween the 10th and 12th standards.
 

India suffers from a poorly educated workforce that is confined to poor quality jobs. Most employment is informal and in the unorganised sector. This is not new. But India is still unable to solve this old problem.
 

Forty-eight per cent of the workforce had not even cleared their 10th exams — 28 per cent had cleared between the 6th and 9th standards and 20 per cent had cleared only the 5th stand­ard. The last 20 per cent — those that cleared the 5th standard — could be considered largely uneducated because it may not be necessary to clear exams to be promoted from one class to the other till the 5th standard.
 

Only 12 per cent of the workforce was a graduate or postgraduate. For reference, that ratio in the US is about 44 per cent for persons of 25 years or more (https://www.bls.gov/news.release/empsit.t04.htm).
 

India saw a major boom in higher education since the late 1990s. First, there was this explosive growth in engineering education to feed the rising demand for IT engineers. Then, there was a massive increase in management schools to feed the needs of financial markets and also in sales and human resource mana­g­e­ment. There were several other specialised courses to meet the requirements of an economy that was accelerating in the 1990s and the early 2000s. That explosion in higher education could be past its peak. At the end of that phase India is left with graduates and postgraduates accounting for a pathetic one-eighth of the total workforce.
 

Many graduates leave India’s shores and many more aspire to leave. It may not be an entirely misplaced conjecture that the best brains leave India for better prospects elsewhere. India, as we noted earlier, does not offer adequate jobs and not enough good quality jobs. The labour market conditions seem skewed against higher education. This is evident from the unemployment rate at different levels of educational qualification.
 

During September-December 2022, the unemployment rate in India was 7.5 per cent. But graduates (for brevity, graduates always include postgraduates) faced an unemployment rate that was more than double this number at 17.2 per cent. It was much lower but still quite high for persons with a maximum education between 10th and 12th standards, who faced an unemployment rate of 10.9 per cent.
 

People with lesser education face a much lower unemploym­ent rate and they also have a lo­wer labour participation rate. The labour participation rate inc­r­eases with education and so does the unemployment rate. We see this in the data for Septem­ber-December 2022 when the average labour participation rate (LPR) was 39.5 per cent and the unemployment rate was 7.5 per cent.
 

Those with a maximum education of 5th standard faced an unemployment rate of just one per cent. Their LPR was also very low at 30 per cent. The LPR for those with maximum education between 6th and 9th standard was 37.6 per cent and the unemployment rate was still less than two per cent. Then, for those with an education between 10th and 12th standards, the LPR rises to 40 per cent but the unemployment rate also rises to 10.9 per cent. The LPR is highest at 62.5 per cent for graduates but the unemployment rate is much higher at 17.2 per cent.
 

The LPR for graduates could get higher. The LPR for graduates (over 24 years of age) in the US was about 73 per cent in 2022. It is also worth noting that in the US, the unemployment rate drops as the education levels rise. This is the expected trajectory. However, it is quite the opposite in India.
 

The good news is that the LPR among graduates is rising. While graduates are facing very high unemployment rates in India, the condition has been improving slowly but steadily. The LPR for graduates in the September-December 2019 period was at its then peak of 61.5 per cent. During September-December 2020 in the aftermath of the Covid pandemic it tanked to its nadir at 56.7 per cent. Since then, it has almost steadily risen to reach a new high of 62.5 per cent in September-December 2022.

The unemployment rate faced by graduates during the pre-Covid September-December 2019 period was 14.6 per cent. It peaked at 21.2 per cent during September-December 2020 and has been sliding more or less steadily since then.
 

Conditions continue to remain hard for graduates. And, with the recent improvement in their LPR and unemployment rates, graduate jobs are not growing enough to make a difference to the composition of the workforce. During September-December 2019, graduates accounted for 13.2 per cent of the workforce. In January-April 2020, their share peaked at 13.7 as graduates did not suffer the severe immediate blow that others suffered. But, thereafter, their share fell to 11.7 per cent by September-December 2020. Graduates have still not reclaimed their pre-Covid share in the workforce.
 

The pace of change in the workforce in terms of its educational qualification seems rather slow.

The writer is MD & CEO, CMIE P Ltd