AICyberLex Nexus

Key Words: VET, Employability, PLFS, Informal Sector, India

Introduction:

With its vast and youthful population, India's demographic advantage presents both an opportunity and a challenge. Youth, defined as those between the ages of 15 and 29, make up a significant portion of the labour force in the nation (Government of India, 2011). Vocational education and training (VET), which attempts to give young people market-relevant skills to improve their career prospects, is a critical area of attention. Despite the government's concerted efforts to enhance youth employability through a variety of skill development initiatives, such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and the National Skill Development Mission (NSDM) (NSDC, 2013; Mehrotra et al., 2014), significant challenges exist. One such difficulty is converting vocational education and training (VET) into official job prospects, which might be challenging given the growing informality of the labour market (Mehrotra & Parida, 2017). Studies indicate that although the quantity of young people obtaining technical and vocational training has grown—from 11 million in 2004–05 to 22.5 million in 2017–18—there has not been a commensurate growth in employment, with only 9.5 million of these trained individuals securing jobs during the same period (Mehrotra et al., 2019). This underscores the need for further interventions in the field of vocational education and training.

With a pressing need to address the substantial mismatch between the skills that vocational training institutes impart and the demands of the labour market, even with the government's audacious goal of skilling 500 million workers (Tilak, 2002; UNESCO, 2011), this research becomes increasingly crucial as in comparison to other emerging countries, only about 6% of the Indian labour force has completed formal vocational training (Mehrotra, S. 2018) .The rise of informal employment continues to outpace the establishment of formal jobs (Mehrotra & Parida, 2019), leading to a situation where young people with vocational training are frequently employed in the unorganized sector, where they need more opportunities for career advancement and job stability. Gender differences in employment possibilities also contribute to this issue, with female youngsters facing more unemployment rates despite identical qualifications (Singh et al., 2020).

The research gap is evident in the need for a comprehensive analysis focusing on the employability of vocationally trained youth, particularly in the informal sector. While several studies have explored the expansion of vocational training programs in India, this study aims to fill the gap by examining the employment patterns of vocationally trained youth in formal and informal sectors, disaggregated by gender, location, and socio-economic factors. The goal is to provide insight into how well vocational training programs improve employability, given the rapid technological change, informal work, and socioeconomic inequality in the labour market. Policymakers, educators, and industry stakeholders must understand these dynamics to effectively bridge the gap between vocational training and meaningful employment.

Review of Literature

Compared to other developing and developed countries, participation in formal vocational education and training (VET) has remained quite low in India (Tilak, 2002; UNESCO, 2011). India is currently in a critical phase where it must maintain annual economic growth of more than 5% while simultaneously giving its growing number of young, educated, and skilled workers decent jobs. To increase the number of skilled workers, the government has implemented a number of initiatives (NSDC, 2013; Mehrotra et al., 2015; Jindal and Bhardwaj, 2016). Consequently, between 2004–05 and 2017–18, the number of youths with technical education and vocational training more than doubled, from 11 million to almost 22.5 million. But over that time, there have been 9.5 million jobs that are open to these young people with training. Meanwhile, industrialization and automation have led to a continuous decline in work prospects in agriculture. This increases has its significance even further to provide non-agricultural occupations for the increasing number of young people who are educated and skilled. (Mehrotra and Parida 2017, 2019). Despite an increase in the working-age population, the Indian economy is facing difficulties with employment. Particularly in the formal industries, government initiatives to increase skilled workers through vocational training have lagged behind the expansion in employment. Agriculture is losing jobs, while the manufacturing sector has lost jobs in spite of programs like "Make in India" (Mehrotra et al., 2014). There is an increase in informal employment, and a large number of youths do not have official education or training (Mehrotra and Parida, 2017). While previously dependable industries like manufacturing and construction have stagnated, the services sector frequently provides unstable work despite being a source of new opportunities. India's demographic advantage could become a liability due to the stalling of non-farm job development, as informal work and youth unemployment rise.

A critical study of India's efforts to develop skills is provided in "From the Informal to the Formal Economy: Skills Initiatives in India" by Santosh Mehrotra. The book focuses on the difficulties faced by the informal sector while trying to make the switch to formal employment. One important conclusion is that informality keeps people in low-paying, low-skill occupations and impedes equitable economic growth by restricting access to formal training opportunities and social security. The chapter draws attention to a substantial mismatch in skills between training programs and labour market demands, especially in the industrial sector, which undercuts some businesses and sends many skilled workers into unrelated fields. Various ministries are leading sector-specific efforts, but their efficacy is hampered by a lack of infrastructure and coordination. He also emphasizes the need for increased public-private cooperation in the development of skills, given that many skilled adolescents continue to work in informal jobs as a result of private training programs that frequently conflict with governmental initiatives. The chapter also highlights issues with program quality in vocational training, especially at Industrial Training Institutes (ITIs), where many of the trainers are underqualified. In order to guarantee that skill development results in official employment prospects, the findings generally urge for a more coordinated approach to skill development, addressing training quality, skill mismatches, and increasing teamwork.

According to the safety net theory, those who are risk averse and seek reduced unemployment rates and incomes that are similar to higher education choose for vocational education and training (VET) (Arum & Shavit, 1995; Ryan, 2001; Shavit & Muller, 2000; Werfhorst, 2002). However, institutional issues like training length, employer involvement, and stratification affect how successful VET is as a safety net (Iannelli & Raffe, 2007; Shavit & Muller, 1998, 2000). High unemployment rates and other circumstances, such as competition from engineering graduates, can reduce VET's usefulness as a safety net in India, even though it does give a salary premium. (Psacharopoulos & Loxley, 1985; Anderson & Werfhorst, 2010; Scherer, 2005; Korpi et al., 2003) The constant high rates of unemployment among VET graduates are among the most urgent challenges. VET graduates routinely have greater unemployment rates, even when compared to non-VET graduates. For example, in the 61st round of the NSSO data, the unemployment rate for VET graduates was 17.35%, but the rate for non-VET graduates was 13.2%. Despite a minor increase in the 66th round (from 13.2% to 10.8%), VET graduates' unemployment rate remained much higher than that of non-VET graduates (2.6%). (Tutan Ahmed ,2016)

Data and Methodology

The Periodic labour force survey (PLFS) data is used to analyze the trends and patterns of informal sector workers with Vocational Education and Training (VET) in India. This data is collected by National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation (MOSPI), Government of India. The data are collected for the time period 2017-18, 2018-19, 2019-20, 2020-21, 2021-22, 2022-23. To check the informality in the labour market, we considered worker those are working without any social security benefit. For the estimation, this study has used the descriptive statistics analysis. To estimate the broad sectors, this study has used national Industrial Classification (NIC) codes. It also followed the MOSPI definition to estimate employment and unemployment figures for this study.

Results and Discussions:

Trends and Patterns of Informal Youth Employment and Unemployment in India

Youth employment is still underrepresented in the labour market with around 30-40% employment rate, with a slight increase over the years from 2017–18 to 2022–23 (Figure 1, panel A), despite expanded opportunities for older age groups, as indicated by the stagnating participation rate. This pattern suggests possible problems, including skill mismatches, a shortage of jobs created specifically for younger people, or obstacles to entering the labour market, such as rapid technological change demands a greater intensity of knowledge and skills in producing, applying, and diffusing technologies. In turn, all these have changed the nature, contents, and types of skills the industry demands. Although the overall employment rate is rising, indicating favourable macroeconomic trends, the youth unemployment rate is relatively stable, suggesting that targeted policies may not be meeting the demands of this group in terms of employment. This is consistent with long-standing worries about whether government policies and programs are doing enough to promote youth employment.

Youth unemployment peaked in 2017 18 at over 18% (Figure 1, panel B) as the Indian economy underwent a structural transition, contributing significantly to the fall in manufacturing and agriculture jobs and the insufficient growth of non-farm and formal sector employment. Initiatives such as "Make in India" have not been able to generate enough jobs, and the speed at which automation progresses has further reduced the number of job prospects in conventional industries. In addition, the demonetization brought about economic disruptions in late 2016 and the introduction of the Goods and Services Tax (GST) in 2017, primarily affecting small and informal sector businesses that employ a significant section of the labour population. These elements made it more difficult to create jobs during that time, which led to a sharp increase in unemployment rates, particularly for young people and those with vocational training. But by 2022–2023, it had significantly decreased to less than 10%. (Figure 1, panel B) The significant decrease in youth unemployment is encouraging since it shows more young people are obtaining employment. However, a careful analysis of this development is necessary. The notable reduction in youth unemployment may indicate an increase in informal or insecure work rather than the emergence of high-quality jobs. Furthermore, youth employment rates are steady despite declining unemployment, which raises the possibility that many young people are underemployed or working in positions that do not align with their expectations or skill sets. This underscores the urgent need to reorganize the job market to give young people access to more meaningful and long-lasting employment possibilities.

In conclusion, while overall employment and unemployment rates show signs of recovery, youth employment is rather stagnant, indicating that specific interventions are needed to integrate young people into the labour market properly. These interventions could include targeted skills training programs, mentorship initiatives, or policy changes to encourage youth-friendly job creation. However, the most crucial aspect is the need to remove the obstacles that keep young people from obtaining greater employment prospects while bringing interventions in the coursework of VET. These obstacles could include a lack of access to education, discrimination in the job market, or economic factors such as high living costs. Addressing these issues is a necessity for the future of youth employment.

Figure 1: Trends of employment and unemployment in India

Source: Author’s plot using PLFS data

Employability of Vocationally Trained Youth in India

Over the years, the employment trends of young people in India with vocational training have shown a significant shift. From 2017–18 to 2022–2023, youth have demonstrated their adaptability by engaging in various occupations, including Own Account Workers, Employers, Unpaid Family Workers, Regular Employees, Casual Workers, and other forms of work, as illustrated in Table 1. A discernible pattern is the marginal decrease in the percentage of Own Account Workers, which went from 24.0% in 2017–18 to 22.9% in 2022–2023. This indicates a little decline in youngsters with vocational training engaging in entrepreneurship, most likely due to obstacles to resource acquisition or challenges maintaining enterprises with the new government interventions. Comparably, the percentage of Employers has increased just slightly, from 0.7% in 2017–18 to 1.4% in 2022–2023. Rather than encouraging entrepreneurship, vocational education in India is frequently designed to produce trained workers, so graduates are more likely to look for work than launch their own companies. especially young people from lower socioeconomic backgrounds. Finally, the prevalence of the unorganized sector and limited availability of formal finance networks could hinder persons with vocational training from growing their businesses, although some movement has been towards leadership roles, this rise is still modest, suggesting that a tiny fraction of vocationally trained youth is becoming employers.

One concerning trend is the significant increase in the percentage of unpaid family workers, which has jumped from 21.6% in 2017–18 to 27.7% in 2022–2023. This raises questions about the effectiveness of vocational training in securing formal employment for these individuals, given their increasing reliance on unpaid labour.

On the other hand, the percentage of regular employees decreased from 38.4% in 2018–19 to 30.2% in 2022–2023 after reaching its peak. The decline shows that regular employment indicates more significant problems in the labour market, as formal job creation is not keeping up with demand. The drop in regular work is especially alarming since it implies that young people with vocational training are having more difficulty obtaining formal contracts for steady, long-term employment, which could put their financial security in danger . The small fraction of casual workers (between 0.1% and 0.2% of the workforce) suggests that teenagers with vocational training may not have many options for temporary or short-term work. At the same time, this could also reflect the absence of prospects in this field. This underscores the urgent need for policy changes to address these challenges.

Furthermore, the Other Works category varies from 16.8% to 18.7%, indicating that many with vocational training work in non-traditional or undefined positions. This information not only highlights the variety of career paths these young people take but also underscores the need for comprehensive research to understand and support their diverse work situations.

Table 1: Employment pattern of vocationally trained youth in India

Source: Author’s estimation using PLFS data

Table 2 provides more insight into the sectoral employment trends of young people with vocational training, highlighting their financial difficulties. The percentage of young people employed in agriculture has increased gradually, rising from 27.16% in 2017–18 to 33.05% in 2022–2023. This pattern implies that many young people with vocational training still depend on agriculture, a field generally linked to low productivity and few employment options. Concerns are raised concerning other sectors' potential to absorb this workforce and the consequent pressure on skilled youth to engage in less productive, frequently informal agricultural occupations due to the growing proportion of youth with vocational training in agriculture. Employment in the manufacturing sector, which has historically drawn in skilled workers, is trending lower. Manufacturing employed 25.55% of youngsters with vocational training in 2017–18; by 2022–2023, that number had dropped to 20.1%. This decrease suggests there is less need for workers in the manufacturing sector, which could bring automation, a stagnating economy, or a lack of job growth. It appears that vocational training is not producing significant employment in this crucial industry, as evidenced by the declining prospects in manufacturing. Youth employment in the non-manufacturing sector—which includes infrastructure and construction—has increased slightly, rising from 11.32% in 2017–18 to 14.71% in 2022–2023. This indicates a slight increase in specific industries, such as construction, which can provide prospects for temporary work but still make up a lower share of the overall employment pattern than other industries. In conclusion, the service industry continues to be the biggest employer of young people with vocational training despite a minor decline in its percentage from 35.97% in 2017–18 to 32.14% in 2022–2023. Even with the downturn, the service industry continues to be a major employer of young people with vocational training, even though many of these positions are probably in low-skilled industries like retail, hospitality, or informal services, where pay and job stability are scarce. There may be fewer prospects for new entrants in the service sector due to increased competition or saturation, which could explain the minor decline in employment. However, the decline in manufacturing employment is a more pressing issue, as it not only affects the employment prospects of young people but also has broader implications for the economy.

The data points to a number of significant issues pertaining to young people in India regarding vocational training and employability. The primary goal of vocational training is to equip young people with the skills necessary for productive employment. However, there appears to be a problem with many vocationally trained youths finding stable, well-paying jobs, as evidenced by the rising percentage of unpaid family labour, the decline in regular employment, and the growing reliance on low-productivity sectors like agriculture. The mismatch between the demand for skilled personnel in the labour market and vocational training is further highlighted by the diminishing employment in manufacturing, a critical industry.

These trends underscore the urgent need for India's vocational training programs to better align with the demands of the labour market, especially in industries like manufacturing and services where more stable and well-paying jobs may be found. The government and legislators must urgently address the issues that hinder young people from entering the workforce, such as the skills gap between what the sector needs and what training institutions can offer, and the lack of resources for entrepreneurs. Without these interventions, youth with occupational training may continue to have few options, leading to underemployment or unofficial work.

Table 2: Sectoral employment pattern of vocationally trained youth in India

Source: Author’s estimation using PLFS data

Table 3 makes evident the considerable obstacles that India's young people with vocational training face in obtaining legitimate employment, as most of them continue to work in the unofficial sector across various demographic categories. There is a clear gender gap in the workforce, with men working primarily in informal settings and women returning to informal work after making some progress in formal employment. The data shows a gender gap in employment patterns, especially between the formal and informal sectors. The informal industry has always employed more men than women (an average of 77.3% in 2022–2023). Female patterns, on the other hand, exhibit more fluctuations. Between 2017–18 (37.7%) and 2018–19 (52.5%), their presence in the formal sector increased dramatically, but by 2022–2023, it had fallen to 38.8%. In the meantime, women's participation in the unorganized sector began to rise again in 2022–2023 after first declining (from 62.3% in 2017–18 to 47.5% in 2018–19). Given that more women are entering the informal labor market, which often pays less and has fewer benefits than official employment, this tendency illustrates how vulnerable women are in the labour market.

There is an apparent disparity between adolescents in rural and urban locations. Adolescents in rural areas are forced to labour informally because of fewer formal employment possibilities. The employment patterns in rural and urban regions differ from one another. The percentage of young people with vocational training working in the informal sector in rural areas has increased from 81.2% in 2017–18 to 84.9% in 2022–23. On the other hand, a more significant percentage of young people work in the formal sector in metropolitan regions; nevertheless, this percentage varies, reaching a peak of 44.7% in 2021–2022 before falling to 42.2% in 2022–2023. The disparity in work prospects between rural and urban locations underscores rural youngsters' difficulties in obtaining formal employment, mainly because job creation in the industrial and service sectors is restricted in rural areas.

Social groups who are already socioeconomically disadvantaged, such as SCs and STs, are overrepresented in the unorganized sector, demonstrating the enduring nature of inequality in the labour market. In the informal sector, Scheduled Tribes (ST) and Scheduled Castes (SC) are primarily employed. For example, in 2021–22, 87.3% of ST youngsters worked informally, a considerable rise from 72.5% in 2017–18. Similarly, the percentage of SC youngsters participating in the informal sector has remained relatively constant, hovering around 80%. The employment patterns of Other Backward Classes (OBCs) and "Other" categories are more balanced, with a higher percentage of formal employment, especially for the latter group, which peaked at 44.4% in 2018–19. Nevertheless, by 2022–2023, employment in the formal sector dropped to 36.8%, even in the "Other" category. This indicates that formal work prospects are decreasing for all social groups, with the most disadvantaged groups—such as SCs and STs—being disproportionately impacted.

Similarly, Muslims, a minority population, have remarkably high rates of informal employment, suggesting that structural obstacles are preventing them from obtaining regular employment. The majority religion of Hindus, with a minor increase to 71.6% in 2022–2023 from 70% of their vocationally trained youth worked in the informal sector over time. However, Muslims exhibit even greater levels of informality; by 2022–2023, 92.4% of Muslim youth will be employed in the unorganized sector, up from 85.6% in 2018–19. While Christians made up a more significant percentage of the official employment population in previous years (44.7% in 2018–19), by 2022–2023, that percentage had dropped to 44.1%. All religious backgrounds continue to have a high employment rate in the unofficial sector, indicating that formal work opportunities are scarce.

The relationship between employment type and standard of living indicates that job quality is highly influenced by economic background. The unequal distribution of possibilities in the Indian labour market is highlighted by the fact that youth from lower-income groups are virtually totally confined to the informal sector. In contrast, youth from higher-income groups have a far better chance of getting formal positions. Standard of living demonstrates a high association with employment in both the formal and informal sectors, as measured by Monthly Per Capita Expenditure (MPCE) quintiles. The informal sector employs a large majority of youth from the lowest quintile (MPCE Quintile 1); their percentage of employed youth often exceeds 90% and peaks at 95% in 2022–2023. On the other hand, youngsters from the top quintile (MPCE Quintile 5) are more likely to be employed in the formal sector; in 2022–2023, over half (55.6%) of them worked in this capacity.

These trends imply that youth cannot obtain formal employment through vocational training alone. Vocationally trained youth will continue to encounter major obstacles in finding stable and secure employment if structural problems including regional economic disparities, social inequality, and restricted formal job creation are not addressed.

Table 3: Employment pattern of vocationally trained youth in Indian Labour market

Source: Author’s estimation using PLFS data

Concluding Remarks and Policy Suggestion

This research work shows some important results about the employability of youth who have gone through vocational training in India from 2017 up to 2023. However, a significant number of these young people still work in the informal sector despite an increase in vocational training programs. Especially, the unemployment rate peaked at 2017-18 demonstrating that there is a gap between training and formal job market demands. Although there was a slight increase of those vocationally trained youths who turned into entrepreneurs or self-employed from 0.7% during the year 2017-18 to 1.4% during the year 2022-23, this growth is insignificant pointing out limited success on shifts to employer roles. Most of the vocally qualified workforce continues being absorbed by service sector while chance of manufacturing has been steadily declining. In rural areas informal employment dominates whereas more formal jobs are found in urban areas. Gender imbalances are still a challenge as female graduates experience higher unemployment rates compared to their male colleagues.

Several policy solutions emerge to address these issues. Industry partnerships are necessary for vocational training programmers in order to align their particular content with what is needed by the ever-changing labour market. More formal jobs need to be created particularly in rural areas if we want to attract more individuals from the informal economy into gainful employment. Providing credit facilities, mentorship and entrepreneurship programs can help to encourage youth into self-employment. Investments in rural training and support initiatives is important for this gap between towns and villages. This can be done through offering equal opportunities for hiring that would encourage gender equity in workforce as well as breaking down existing barriers for women into male-dominated fields. Another way is augmenting apprenticeship schemes through public-private partnerships which provide practical experience opportunities while enhancing employability of young people across all industries.

To sum up, addressing the employability problems faced by India’s youth who have undergone vocational training requires a well-rounded approach. Properly matching education with what the labour market wants, boosting entrepreneurship, dealing with gender inequalities and increasing formal job opportunities will make sure that India can utilize its young and talented population to the maximum creating faster economic growth in return.

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