Graduate Unemployment Reaches 40% Amid Warning of Dwindling Economic Opportunities

India's Labour Market Report 2026: Challenges and Recommendations

Demographic Shifts and Job Creation India's working-age population share is expected to decline after 2030, emphasizing the need for robust job creation in the coming decades to translate the demographic dividend into an economic one.

Graduate Unemployment and Salaried Employment 40% of 15- to 25-year-olds and 20% of 25- to 29-year-olds remain unemployed. Only a small share of graduates secure stable salaried jobs within a year of graduation. The impact of Artificial Intelligence (AI) on entry-level salaried employment remains uncertain, but the last half decade has seen inadequate salaried employment generation.

Employment Growth and Sectoral Distribution Between 2021-22 and 2023-24, India's employed population increased from 490 million to 572 million, with employment rates rising from 71 to 74 percent for men and from 26 to 34 percent for women. The majority of employment creation has been in agriculture, with 40 million jobs added, mainly among women.

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Self-Employment and Education The number of women in own-account self-employment has seen a four-fold increase since 2017. Self-employment earnings among women and salaried earnings for both men and women have largely stagnated. Youth education levels have increased significantly over four decades, especially among women, with 28% of India's tertiary enrolment rate comparable to countries with similar per capita incomes.

Key Challenges and Recommendations

• Expand adequate salaried employment opportunities to meet the aspirations and capabilities of a highly educated workforce.
• Integrate school and vocational curricula to bridge education and skills gaps and enhance employability.
• Expand social security systems to support young workers navigating the school-to-work transition, including migrant youth workers.
• Enable workers to move from unorganised to organised sector jobs.