‘Lost generation’ warning as young struggle to find work

On a hot summer afternoon, 23-year old Nizamudin Abdul Rahim Khan is playing cricket on a muddy, unpaved road in the Rafiq Nagar slum of India’s financial capital, Mumbai.

Here, there is scant evidence of India’s fast-growing economy. Bordering what was once Asia’s largest rubbish dump, Rafiq Nagar and the surrounding areas are home to an estimated 800,000 people, most living in tiny rooms across narrow, dark alleys.

The young men and women in the area struggle to find jobs or work, and they mostly dawdle the day away, said Naseem Jafar Ali, who works with a local NGO.

India’s urban unemployment soared during the Covid-19 pandemic, reaching a high of 20.9 per cent in the April-June 2020 quarter, while wages fell. The unemployment rate has fallen since, but fewer full-time jobs are available.

Economists say more jobseekers, especially the young, are looking for low-paid casual work or falling back on unreliable self-employment, even though the broader economy is estimated to be growing at a world-beating 6.5 per cent.

India is overtaking China to become the world’s most populous nation with more than 1.4 billion people.

Nearly 53 per cent of them are under 30, its much-touted demographic dividend, but without jobs, tens of millions of young people are becoming a drag on the economy.

“Unemployment is only the tip of the iceberg. What remains hidden beneath is the serious crisis of underemployment and disguised unemployment,” said Radhicka Kapoor, a fellow at economic research agency ICRIER.

Khan, for instance, offers himself as casual labour for construction, earning about 10,000 rupees (HK$947) a month to help support his father and his four sisters. “If I get a permanent job, then there will be no problem,” he said.

The risk for India is a vicious cycle for the economy. Falling employment and earnings undermine India’s chances to fuel the economic growth needed to create jobs for its young and growing population.

Economist Jayati Ghosh calls the country’s demographic dividend a ticking time bomb.

“The fact that we have so many people who have been educated, have spent a lot of their own or family’s money but are not being able to find the jobs they need, that’s horrifying,” she said.

“It’s not just the question of potential loss to the economy … it is a lost generation.”

Unemployment is far more acute in India’s cities, where the cost of living is high and there is no backup in the form of a jobs guarantee programme, which the government offers in rural areas. Still, many of the rural jobless flock to the cities to find work.

While urban unemployment was at 6.8 per cent in the January-March quarter, the share of urban workers with full-time jobs has declined to 48.9 per cent as of December 2022, from an already low 50.5 per cent just before the start of the pandemic, government data shows.

This means that of the estimated urban workforce of about 150 million, only 73 million have full-time jobs.

For people in urban areas with full time jobs, average monthly wages, adjusted for inflation, stood at 17,507 rupees in the April-June 2022 quarter – the latest period for which government data is available.

This was a modest 1.2 per cent higher than the October-December 2019 period, before the start of the pandemic.

But for the self-employed, incomes have fallen to 14,762 rupees in the April-June 2022 quarter, according to research by Ghosh and C.P. Chandrashekhar, both at the University of Massachusetts, Amherst.

The figure was at 15,247 rupees in the October-December 2019 quarter.

“The big thing that has happened is the collapse of small businesses, which were the backbone of employment,” Ghosh said.