20 Jul The Stark Reality of the Missing Jobs for India’s Gen Z
Why in the News?
India’s demographic dividend is under scrutiny as recent Periodic Labour Force Survey (PLFS) 2023–24 data reveal rising unemployment, poor-quality employment, low labour force participation, and limited social security coverage among Generation Z (Gen Z). The findings raise concerns about India’s ability to convert its large youth population into a productive workforce amid rapid technological change and structural labour market challenges.
Who is Gen Z?
Generation Z (Gen Z) refers to individuals born between 1997 and 2012.
According to the United Nations (2025):
- India has approximately 371 million young people, making it one of the world’s largest youth populations.
- The working-age Gen Z population (15–26 years) is estimated at 29.94 crore, based on PLFS 2023–24.
- Millennials (born between 1981 and 1996) constitute about 35 crore individuals aged 27–42 years.
Key Findings of PLFS 2023–24
1. Low Labour Force Participation Rate (LFPR)
Labour Force Participation Rate (LFPR) measures the proportion of the working-age population that is either employed or actively seeking employment.
Major Findings
- Gen Z LFPR: 41.7%
- Millennials LFPR: 75%
Rural–Urban Divide
- Rural Gen Z LFPR: 44.1%
- Urban Gen Z LFPR: 37.2%
The lower participation in urban areas reflects longer periods spent in education and skill development.
Gender Gap
- Rural young males: 59.3%
- Urban young males: 51.3%
- Rural young females: 28%
- Urban young females: 21.1%
The data indicate persistent barriers to female labour force participation.
2. Rising Youth Unemployment
The unemployment situation among Gen Z is significantly worse than that of Millennials.
Overall Unemployment Rate
- Gen Z: 11.9%
- Millennials: 2%
Urban Unemployment
- Urban Gen Z unemployment: 17.1%
Urban Female Unemployment
- Urban Gen Z women unemployment: 22.6%
The figures suggest that educated urban youth are facing increasing difficulty in finding suitable employment.
3. Graduate Unemployment Trap
Contrary to expectations, higher education is not guaranteeing employment.
Graduate Unemployment
Among Gen Z:
- Male graduates: 29%
- Female graduates: 36.9%
Among Millennials:
- Male graduates: 5.2%
- Female graduates: 13.8%
This reflects a growing mismatch between educational qualifications and labour market demand.
4. Poor Quality of Employment
A large proportion of employed Gen Z workers remain engaged in insecure or informal jobs.
Social Security Coverage
- Only 20.1% of Gen Z workers receive social security benefits.
Formal Employment
- Only 14.1% have formal employment contracts.
Contractual Employment
- Merely 17.3% work under contractual arrangements.
The majority of young workers remain outside the formal employment ecosystem.
5. Informalisation of Employment
Recent trends show increasing informalisation even within formal sectors.
Characteristics include:
- Casual employment
- Wage insecurity
- Lack of written contracts
- Limited legal protection
- Absence of pension and insurance benefits
Such employment offers limited long-term economic security.
Reasons Behind the Jobs Crisis
Education–Employment Mismatch
Many graduates possess qualifications that do not align with industry requirements.
Automation and Artificial Intelligence
Rapid adoption of automation and AI is transforming job profiles, reducing demand for routine and low-skilled occupations while increasing demand for advanced digital skills.
Weak School-to-Work Transition
Young people spend more years in education, but the transition into productive employment remains slow and uncertain.
Low Female Labour Force Participation
Women continue to face multiple barriers, including:
- Safety concerns
- Social norms
- Childcare responsibilities
- Limited access to flexible employment
Slow Growth of Labour-Intensive Sectors
Sectors capable of generating large-scale employment—such as manufacturing, textiles, construction, and MSMEs—have not expanded sufficiently to absorb the growing workforce.
Implications
Demographic Dividend at Risk
India’s demographic dividend can only be realised if the working-age population is productively employed.
Persistent youth unemployment may transform the demographic dividend into a demographic burden.
Rising Informality
Expansion of insecure employment reduces income stability, productivity, and social protection.
Social and Economic Consequences
Prolonged unemployment may lead to:
- Income inequality
- Social unrest
- Declining consumer demand
- Reduced economic growth
- Skill depreciation
Way Forward
Expand Labour-Intensive Manufacturing
Promote sectors such as:
- Textiles
- Food processing
- Electronics
- Leather
- Tourism
Strengthen Skill Development
- Improve industry-academia collaboration.
- Align curricula with emerging technologies.
- Promote digital and AI-related skills.
Improve School-to-Work Transition
- Expand apprenticeship programmes.
- Encourage internships.
- Promote campus-industry partnerships.
Increase Female Workforce Participation
Measures include:
- Safe public transport
- Affordable childcare
- Flexible working arrangements
- Workplace safety
- Equal employment opportunities
Strengthen Social Security
Expand access to:
- Health insurance
- Pension schemes
- Written employment contracts
- Labour law protections
Government Initiatives
- Skill India Mission
- PM Internship Scheme
- National Career Service (NCS)
- PM Kaushal Vikas Yojana (PMKVY)
- Production Linked Incentive (PLI) Scheme
- Make in India
- Digital India
- Startup India
These initiatives aim to enhance employability, generate jobs, and strengthen India’s manufacturing and services sectors.
Key Terms for UPSC
- Demographic Dividend: Economic growth potential arising from a large working-age population.
- Labour Force Participation Rate (LFPR): Percentage of working-age people who are employed or actively seeking employment.
- Unemployment Rate (UR): Percentage of the labour force without work but actively seeking employment.
- Informal Employment: Employment lacking formal contracts, legal protection, and social security.
- Graduate Unemployment: Unemployment among individuals with higher educational qualifications.
- School-to-Work Transition: Movement of young people from education into productive employment.
UPSC Prelims Practice Question
Q. With reference to the employment situation of Generation Z (Gen Z) in India, consider the following statements:
- The Labour Force Participation Rate (LFPR) of Gen Z is significantly lower than that of Millennials.
- According to PLFS 2023–24, unemployment among urban Gen Z women is higher than the overall Gen Z unemployment rate.
- Higher educational attainment has completely eliminated unemployment among Gen Z graduates.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: (a)
Explanation
- Statement 1 is Correct: PLFS 2023–24 estimates the LFPR of Gen Z at about 41.7%, compared with 75% for Millennials.
- Statement 2 is Correct: Urban Gen Z women face an unemployment rate of 22.6%, substantially higher than the overall Gen Z unemployment rate of 11.9%.
- Statement 3 is Incorrect: The article highlights a graduate unemployment trap, with unemployment remaining high even among graduates, particularly women.
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