The Growth vs Jobs Dilemma
Imagine this: you’ve studied for years, earned your degree, and finally landed a job — but the role barely uses your skills, pays little, and leaves you underutilized. That’s the story of millions of young Indians today.
Despite India being the fastest-growing large economy, Morgan Stanley warns that growth isn’t fast enough to create quality jobs. Their report says India must grow at an exceptional 12.2% every year just to address its underemployment crisis.
The question is: if our GDP is already racing ahead at 6–7%, why are so many Indians — especially the youth — still struggling to find meaningful work?
Let’s dive deep into the jobs paradox, the risks of ignoring underemployment, and what India must do to unlock its demographic dividend before the window closes.
What is Underemployment and Why is it a Bigger Problem than Unemployment?
When we talk about jobs in India, the focus is often on “unemployment rates.” But the silent crisis is underemployment.
- Unemployment: No job at all.
- Underemployment: Having a job, but one that doesn’t match your skills, pays too little, or uses only part of your potential.
In India, the definition of “employed” is very loose. If you worked for just one hour in the past week — even unpaid family work — you’re officially “employed.” That’s why many Indians are trapped in informal jobs or farm work that don’t really secure their future.
👉 Think of it like having a cricket team where the best batsmen are forced to be water boys. They’re technically “on the team” but not being used where they can score.
What You Should Remember
Unemployment is visible, underemployment is hidden. India’s challenge is not just giving jobs — it’s about creating meaningful, productive, and dignified work.
India’s Youth Unemployment: The Ticking Time Bomb
India’s youth unemployment rate is 17.6%, the highest in Asia. But the deeper issue is that even those who get jobs aren’t getting the right ones.
- Urban young women (15–29 years): 25.7% unemployment
- Urban young men: 15.6%
- Rural youth: 12–14%
That means millions of young Indians — the very group that should be driving innovation, productivity, and consumption — are being left behind.
With India’s median age at just 28.4, this is both a massive opportunity and a huge risk. If young people don’t get jobs, they either migrate abroad, settle for low-skill work, or worse, lose hope in the system.
👉 It’s like having the world’s largest cricket academy but not enough stadiums for players to showcase their talent.
What You Should Remember
Youth are India’s biggest asset. But if they remain jobless or underemployed, this asset can quickly turn into a social and economic liability.
Why 6–7% GDP Growth Isn’t Enough
On paper, India is doing well. GDP growth was 7.8% in the June quarter — higher than expected. But Morgan Stanley’s analysis shows why this isn’t sufficient.
- To keep unemployment stable → India needs 7.4% growth
- To absorb more people entering the workforce → India needs 9.3% growth
- To reduce underemployment → India needs 12.2% growth
Right now, our economy is growing at 6.5% on average — barely enough to hold things steady, let alone fix the deeper jobs crisis.
👉 Think of it like filling a leaking bucket. Even if you pour water (GDP growth) in, unless you pour at twice the speed (12.2%), the bucket will never fill because the leaks (unemployment + underemployment) keep draining it.
What You Should Remember
India is growing fast, but not fast enough for jobs. Quantity of growth isn’t the issue — the quality and speed are.
Why Underemployment is Rising: 5 Major Factors
- Shift back to agriculture:
Farm jobs are at a 17-year peak, not because agriculture is booming, but because people aren’t finding better jobs elsewhere. - Low industrial and export growth:
India’s share in global exports is just 1.8%, way below its population and GDP weight. - Skill mismatch:
Too many graduates lack employable skills, while industries complain of not finding the right talent. - Automation & AI:
Service-sector jobs (like BPOs) are under threat from AI and automation. - Weak domestic consumption:
With 603 million Indians living on less than $3.65/day, demand remains weak, keeping businesses from expanding and hiring.
👉 In simple terms: India has a young team, but the coach (policy, economy) isn’t giving them the right pitch to play on.
What You Should Remember
Underemployment is not just a job issue. It’s tied to skills, exports, consumption, and technology. It needs a 360-degree solution.
India’s Demographic Dividend: A Once-in-a-Lifetime Window
Between 2025 and 2035, India will hit its sweet spot: nearly 69% of its population will be of working age.
Compared to China — whose demographic window has already closed — India gets an extra two decades. But if these workers don’t get jobs, the dividend becomes a demographic disaster.
👉 It’s like having the biggest IPL squad in history, but no tournament to play in.
What You Should Remember
India’s demographic dividend is real — but it’s not automatic. It must be earned through reforms, investments, and job creation.
The Reforms India Needs to Fix the Jobs Crisis
To hit 12.2% growth and solve underemployment, India must act on multiple fronts:
1. Boost Manufacturing and Exports
- Every 1 job in exports → creates 2 more in logistics, transport, and services.
- Focus on sectors like electronics, semiconductors, textiles, and green energy.
2. Invest in Infrastructure
- Highways, railways, and smart cities → not just construction jobs, but long-term industrial growth.
3. Skills and Education Reform
- Move from “degree-based hiring” to “skill-based hiring.”
- Vocational training and apprenticeships must become mainstream.
4. Embrace Technology Smartly
- Instead of fearing AI, India must upskill workers for AI-related roles.
- Create incentives for startups in deep tech, green tech, and automation.
5. Inclusive Growth Policies
- More support for women in the workforce.
- Social safety nets for vulnerable groups.
👉 In cricket terms: India doesn’t just need good batsmen (growth) — it needs bowlers, fielders, and a strategy to win the whole match (jobs, skills, exports, inclusion).
What You Should Remember
The jobs challenge can’t be solved by one policy. It needs a team effort — government, private sector, and youth together.
Conclusion: The Race Against Time
India stands at a historic crossroads. With the world’s largest youth population, the next decade will decide whether we become the next growth engine or fall into a jobs trap.
Morgan Stanley’s warning isn’t a prediction of doom — it’s a call to action. 12.2% growth may sound ambitious, but with the right reforms, India can unlock the potential of its youth and turn underemployment into productivity.
The window is open now. The question is — will we climb through it or let it shut?
