In certain regions, highly educated youth are desperately seeking stable employment in the world’s most populous country. Meanwhile, factory owners in other areas grapple with the challenge of retaining their workforce.
Growing Pains In A Growing Economy
The bustling streets of Musallahpur, located in the northern Indian city of Patna, are filled with the familiar sights of commercial centers across India—crowded foot traffic, banners, and vending carts. However, amidst the chaos, there is a singular focus: assisting young individuals in securing government jobs.
Within the brick-built classrooms of Musallahpur, twenty-somethings gather, carrying heavy backpacks, as they prepare for standardized employment exams. With nearly 1,800 applicants vying for each top-tier job in the state, they understand the astronomical odds stacked against them. Yet, in a country where millions are trapped in underemployment, it is their only ray of hope.
Feast Or Famine
A thousand miles to the south, in the city of Coimbatore, a busy entrepreneur in the automotive parts industry named M. Ramesh faces a different facet of India’s formidable employment challenge. While the government grapples with an excess of potential workers, Mr. Ramesh finds himself with a severe shortage.
To produce intricate aluminum castings that meet the stringent requirements of high-speed performance at 200 miles per hour, he requires committed and skilled workers. Unfortunately, he struggles to find individuals who possess the necessary capabilities and reliability, whether from the impoverished regions of northern India or elsewhere. Consequently, he stands on the precipice of partially automating his factory within a week, turning to machines in the hope of reducing the dependence on human labor.
As India surpasses China to become the world’s most populous nation, resolving its employment mismatch becomes one of the country’s most critical tasks. Success in this endeavor could pave the way for a more prosperous middle-income future, fulfilling India’s potential to make a global impact. However, failure to address the issue risks entrenching vast segments of the population in enduring poverty for decades to come.
The destiny of the world’s largest generation of workers hangs in the balance.
Demographic Difficulties
India’s young and expanding population, with a continual influx of students entering the workforce each year, is the envy of countries grappling with an aging populace and shrinking labor force. The country’s annual economic growth of approximately 6 percent serves as a global beacon of hope.
However, this growth fails to generate sufficient employment opportunities. Moreover, the available jobs often do not align with the skills and aspirations of the country’s potential workforce.
These circumstances carry implications for the entire world. If India is to fuel growth elsewhere as China does, it must harness the full potential of its workforce. Within India itself, failing to match the youth with adequate employment has severe consequences. The unmet aspirations of these educated and heavily indebted workers have become a volatile force. Last summer, young men across the state of Bihar, with Patna as its capital, set trains ablaze in furious protest against a plan that threatened to eliminate jobs in the armed forces.
An equally significant risk lies in squandering human potential on an immense scale. India’s anticipated “demographic dividend,” arising from its steadily growing population, could instead lead to a vast cohort forced to settle for unfulfilling and unproductive work, or worse, drop out of the workforce entirely.
Simultaneously, managers grapple with substantial personnel challenges. Finding individuals willing to uproot themselves for vital factory jobs, essential for long-term economic growth, proves arduous. Training these workers can be costly, and retaining them often borders on the impossible.
Manual Vs Machine
While economists assert that a more robust manufacturing sector is crucial if India follows a traditional path to development, many businesses attempt to circumvent labor issues through automation. Consequently, India edges closer to the phenomenon of “premature deindustrialization,” with manufacturing jobs disappearing before they can work their usual magic in alleviating poverty.
“We either have to go for full automation, drastically reducing our workforce, or consider conducting business with fewer people,” remarks Jayakumar Ramdass, the joint managing director of Mahendra Pumps, another thriving industrial enterprise in Coimbatore.
Aspirational Poverty
In Bihar, India’s youngest, poorest, and fastest-growing state with over 120 million people, an intricate web of longstanding social structures and low urbanization rates presents a complex chicken-or-egg dilemma, questioning what perpetuates poverty in such areas.
Entrepreneurship here often translates to self-employment, and self-employment is a euphemism for unemployment. More than half of India’s workforce is technically self-employed, often engaged in fragmented work. Picture a railway station where ten rickshaw drivers await passengers, yet there are only enough fares for two or three.
Consequently, many young Indians strive not for grand aspirations, but for stability. In Bihar, this translates to securing a government job, irrespective of its status. Even a low-ranking position in the Prohibition office, such as an under-registrar, is considered a coveted prize.
However, the competition is fierce. Approximately half a million young people took the annual preliminary test for the Bihar Public Services Commission in February, vying for a total of 281 jobs. For every batch of 2,000 hopefuls, only one will emerge successful.
The odds at the national level are similarly disheartening. From 2014 to 2022, over 220 million job applications were submitted to the central government. Of those, just 720,000—less than one-third of one percent—resulted in success, as confirmed by a government minister in Parliament.
Education Vs Opportunity
Nevertheless, Patna, Bihar’s capital, continues to attract thousands of students from densely populated rural areas, dedicating years to preparing for state examinations, diligently studying subjects like calculus and geology.
Praveen Kumar, a 27-year-old student and employee at a coaching center in Patna, exemplifies the struggle. Despite his parents never leaving their family farm, he obtained a bachelor’s degree in mathematics and ventured to wealthier regions of the country in search of work.
However, the reality he encountered was disheartening. Friends with engineering degrees found themselves on assembly lines, earning a mere $146 per month by assembling mobile phone chargers. While this income exceeded what they would have earned in their hometowns, it did not justify prolonged separation from their families.
Returning to Bihar in frustration, Mr. Kumar confessed, “I was getting frustrated sitting at home.” At times, he contemplated suicide. But then, he found solace in the dream of securing admission to the civil service.
Since then, he relocated to Patna and attempted the exams four times. While studying, he earns $110 per month by producing educational videos for students like himself. With this income, he manages to support himself, his wife, and their four-month-old baby.
Work Or Want
In a country where outright unemployment is almost nonexistent, many individuals scrape by in low-wage, low-productivity occupations. “People cannot afford to be unemployed,” states Amit Basole, an economics professor at Azim Premji University in Bengaluru. Consequently, they are compelled to work tirelessly in positions that offer meager compensation.
However, one demographic stands out—the educated youth. At a stage in life when they can briefly hold out for better opportunities, those under 30 with a minimum of 12 years of schooling face unemployment rates ranging from 15 to 20 percent, while young women experience rates as high as 50 percent.
When all else fails, even highly educated young people settle for whatever work they can find, whether it’s menial labor in urban areas or assisting with farming back in their home villages.
In Mr. Kumar’s village, Nai Naiyawan, signs of unemployment manifest subtly. Numerous intricately carved wooden doorways remain padlocked along the quiet rural lanes. Entire families have left their homes in search of temporary employment.
Although conditions have improved compared to his father’s time, with access to electricity, affordable phone and internet services, and subsidized grains, opportunities for employment in the village remain scarce. “Here, there is no employment,” remarks Mr. Kumar. “Otherwise, all things are good.”
Those who remain in the village tend to engage in livestock rearing and openly idle away their weekdays. However, the men in their early 20s are completing university degrees and dreaming of securing government jobs through standardized tests.
Human Capital
Coimbatore, located in the southern state of Tamil Nadu, offers a glimpse of the future India aspires to achieve. The state boasts a lower fertility rate compared to Bihar, and its business community is diverse, with approximately 100,000 small to medium-sized companies specializing in casting, machining, and irrigation equipment.
Nonetheless, these businesses face a persistent challenge—a reliable labor supply. M. Ramesh, the managing director of Alphacraft, an auto parts manufacturer, expresses optimism about nearly every aspect of his business. Orders are increasing, shipping costs are being streamlined, and growth prospects span three continents. His only setback is an unreliable workforce “because they are all coming from distant parts of the country.”
The majority of the 200 workers who come from outside Tamil Nadu, particularly Bihar, only speak Hindi, while the local population primarily communicates in Tamil.
Mr. Ramesh requires these workers as the youth in Tamil Nadu are exploring alternative options. Many have obtained higher degrees, including bachelor’s degrees in technology, and refuse to settle for factory jobs. Instead, they prefer lower-paying roles like scooter-based delivery app drivers, which they consider “tech jobs,” while daydreaming about securing professional employment in the future.
Mr. Ramesh takes pride in offering better living standards to the workers who remain loyal to his company, providing significantly higher wages than government jobs in Bihar. However, he and other business owners and managers in Coimbatore are investing heavily in automation. Although they currently rely on migrant workers, they hope to reduce their dependence on them once they can afford further automation.
Without the growth of industries in places like Bihar and an adequate supply of skilled and committed factory workers in locations like Coimbatore, India’s demographic advantage may remain overshadowed, casting a cloud over its potential for a brighter future.
