This week, The Pioneer’s Tanisha Saxena engages in conversations with professors, economists, and graduates to glean their perspectives on the pressing issue of underemployment among college graduates.
In today’s competitive job market, obtaining a college degree is often touted as the key to unlocking a prosperous career. However, a close look at the employment landscape reveals a persistent challenge faced by many college graduates: underemployment, a dismal situation in which educated individuals find themselves in jobs for which they are overqualified, including those that do not require even a bachelor’s degree. This phenomenon has significant implications for both individual financial well-being and broader economic trends.
Underemployment rates:
a stubborn reality
Despite periods of historically low unemployment, underemployment among college graduates remains stubbornly high. Shockingly, a year after graduation, over half (52 per cent) of college graduates find themselves underemployed. Even a decade later, this figure only slightly improves, with 45 per cent still facing underemployment.
Secunderabad-based Rahul Nigam says: “I am a college graduate with a degree in hospitality management who aspires to work in the hotel industry. However, due to intense competition and limited job openings in the sector, I struggled to find employment in my field. As a result, I accepted a position as a customer service representative at a call center, a job that did not fully utilise my specialised skills and education. I spent my days handling customer inquiries and complaints over the phone, rather than engaging in tasks related to hotel management or guest services, which aligned more closely with my expertise and aspirations.”
Doctor Pushpesh Kumar, who teaches at the Department of Sociology at the University of Hyderabad, explains, “Despite academic qualifications, many struggle to find suitable employment, with statistics revealing significant gaps between graduates and available jobs. This phenomenon sheds light on systemic issues within the higher education and employment sectors, highlighting the urgent need for reforms.”
Going by the All India Survey on Higher Education (AISHE) for the academic year 2021-2022, there are a total of 1,168 universities or university-level institutions, 45,473 colleges, and 12,002 standalone institutions registered across the country.
Doctor Pushpesh adds, “One of the fundamental issues plaguing Indian universities is the adherence to outdated curricula that fail to keep pace with rapidly evolving industry demands. The static nature of these curricula renders graduates ill-prepared to navigate the dynamic and competitive job market, leading to a widening skills gap.”
The first job: a determining factor
The importance of the first job post-graduation cannot be overstated. Those who secure a college-level job initially are far less likely to slide into underemployment. A staggering 79 per cent remain in a college-level occupation five years after graduation, and of those, a whopping 86 per cent maintain this status a decade later.
Some economic factors contributing to underemployment in India, as highlighted by Narsimha Reddy, a retired professor of economics at the University of Hyderabad, are:
1. Impact of the COVID-19 pandemic: The pandemic has disrupted various sectors of the economy, leading to job losses and reduced working hours for many. While the economy has been gradually recovering, the pace of recovery may vary across different sectors, leading to continued underemployment in certain areas.
2. Slowdown in certain industries: Certain sectors, such as hospitality, tourism, and retail, have been particularly hard hit by the pandemic and may still be experiencing underemployment due to reduced demand and operational restrictions.
3. Structural issues in the labour market: Persistent issues such as skill mismatches, particularly between the skills possessed by the workforce and those demanded by employers in emerging industries, continue to contribute to underemployment.
4. Informal sector challenges: The informal sector, which employs a significant portion of India’s workforce, often lacks stability and proper protections, leading to underemployment and vulnerability for many workers.
5. Technological displacement: Rapid technological advancements, say AI, may continue to displace jobs in certain sectors, further exacerbating underemployment, unless efforts are made to reskill or upskill workers for new roles.
6. Youth unemployment: India has a large youth population, and the challenge of providing meaningful employment opportunities for young people remains significant, particularly in the context of limited job creation in certain sectors.
7. Policy impacts: Changes in government policies, including labour market reforms and industrial policies, can have implications for employment generation and underemployment rates.
8. Regional disparities: There may be regional disparities in employment opportunities, with certain states or regions experiencing higher rates of underemployment compared to others.
The sticky nature of underemployment
Once trapped in underemployment, escaping its clutches becomes increasingly challenging. A significant 73 per cent of graduates who start out underemployed remain so even 10 years after completing college. This persistence underscores the formidable obstacle underemployment poses to long-term career advancement.
“Getting out of a job that doesn’t match your skills can be really tough. Imagine you finish college and start working, but your job doesn’t really need what you learned. Well, for a lot of people, that stuck feeling doesn’t go away quickly. This is not just about feeling unhappy at work. It means missing chances to grow, earn more money, and do what you really want to do. Plus, it is not just about you; when many people feel stuck like this, it can slow down how much money gets spent, how much work gets done, and even how much the whole economy grows. To fix this, we need to help folks find better jobs that fit their skills and make sure they have the support they need to make it happen,” explains career counselor Satyendra Kumar Singh.
The psychological perspective
According to Shreya Malik, Lead Clinical Psychologist, Lissun: “Underemployment profoundly affects an individual’s mental well-being, leaving a lasting impact on their self-esteem and sense of achievement. This discrepancy between skills and job demands often leads to emotional distress, manifesting as depression, anxiety, and even physical health issues. In today’s dynamic market, characterised by diverse skill requirements, professionals face intense competition, emphasising the importance of cultivating a robust skill set and fostering a growth mindset.”
Furthermore, underemployment disrupts interpersonal relationships, as individuals grappling with feelings of inadequacy and insignificance may struggle to connect with others, perpetuating a vicious cycle of isolation and diminished self-worth.
In the context of underemployment, it is important to acknowledge the multi-faceted impact it can have on both individuals and their current employment situations. Beyond the evident strain on mental health and self-esteem, underemployment can significantly affect job performance and satisfaction.
“When individuals find themselves in roles that don’t fully utilise their skills or provide the level of challenge they desire, they may experience a sense of disengagement with their work. This can lead to decreased motivation, productivity, and overall job performance. Moreover, feeling undervalued in a position can erode job satisfaction and contribute to a negative work environment. Employees may struggle to find meaning or fulfillment in their work, which can ultimately impact their overall job satisfaction and even their willingness to remain with the organization,” opined psychologist and corporate wellness specialist, Praveen Raghavan.
Recognising these challenges, individuals facing underemployment can take proactive steps to mitigate its effects. This may include seeking opportunities for skill development, networking to explore alternative career paths, or advocating for oneself within the current organization to pursue roles that better align with one’s abilities and aspirations!
The financial toll
Beyond its psychological and professional toll, underemployment exacts a heavy financial cost. While graduates employed in college-level jobs typically earn 88 per cent more than high school diploma holders, underemployed graduates see only a marginal increase of about 25 per cent. This discrepancy leaves many underemployed graduates financially vulnerable, especially those burdened with student loan debt.
“As a recent graduate navigating underemployment, the financial toll is hitting hard. Despite dedicating years to earning my degree, the reality of low-paying jobs unrelated to my field makes it tough to cover basic expenses, let alone chip away at my student loans. It’s a constant struggle to stay afloat financially,” says Alex Dadu, a recent college graduate hailing from Gachibowli in Hyderabad.
Factors influencing underemployment
In a candid conversation, Vani, an esteemed assistant professor expressed her belief that the crux of contemporary societal issues lies within the confines of the school curriculum. She emphasised that while traditional education imparts valuable knowledge, the rapidly evolving landscape beyond classroom walls demands a broader spectrum of learning and unlearning. Vani highlighted the dynamic nature of the job market, citing the unprecedented rise of artificial intelligence as a prime example of ongoing shifts. She underscored the urgency of revamping the education system to effectively address these emerging challenges and prepare future generations for a multifaceted world.
“Not all degrees are created equal in the battle against underemployment. Fields requiring quantitative reasoning, such as computer science, engineering, and mathematics, boast the lowest underemployment rates, particularly immediately after graduation. Conversely, majors like public safety and security or general business fields face disproportionately higher levels of underemployment,” Vani emphasises.
While STEM programs are often championed as a ticket to high-paying, in-demand jobs, the reality is nuanced. While graduates with degrees in computer science, engineering, or mathematics typically experience low underemployment rates, those in life sciences fields like biology face higher hurdles.
In addition, completing internships emerges as a potent weapon against underemployment. Graduates who undertake at least one internship significantly reduce their odds of underemployment, regardless of other factors such as gender, race/ethnicity, or institutional characteristics. The benefits of internships extend across degree fields, highlighting their universal relevance in today’s job market.
Potential solutions
Vidyanagar-based Chartered Accountant Vijay shares, “In many countries abroad, part-time work culture is embraced and often seen as a viable option for individuals seeking flexibility in their schedules or balancing work with other responsibilities. This acceptance of part-time work makes it easier for people to find employment opportunities that suit their preferences and circumstances. However, in India, the notion of part-time work is less accepted and often viewed as unacceptable due to cultural norms and societal expectations surrounding employment. Moreover, the regulatory framework surrounding part-time work in India can be complex and restrictive, making it difficult for both employers and employees to navigate. This lack of acceptance and complexity surrounding part-time work further exacerbates the issue of underemployment in India, as individuals may be forced to either remain unemployed or accept full-time positions that do not fully utilise their skills and qualifications. Addressing these cultural attitudes and regulatory barriers is essential to creating a more inclusive and flexible labor market that accommodates the diverse needs and preferences of workers in India.”
Arshi Khan, a special educator, highlights, “I do believe that the issue of underemployment stems from the school curriculum, as the Indian curriculum still predominantly emphasises rote learning and theoretical knowledge over practical skills. Students seldom have the opportunity to engage in job-oriented skill development and vocational training. While there has been some recent effort to promote vocational training and skill development programs, the implementation of these initiatives remains limited. The National Education Policy (NEP) of 2020 advocates the integration of vocational education into the school curriculum and emphasizes the promotion of entrepreneurial skills among students. However, the realization of these goals still appears to be a distant prospect given the current ground reality.”
It is imperative to update the school curriculum by integrating practical skills alongside theoretical knowledge. “This could entail introducing vocational subjects, implementing project-based learning, and incorporating real-world problem-solving exercises to adequately equip students for the demands of the job market. Furthermore, promoting skill development programs at both the school and post-school levels is essential. Encouraging entrepreneurship among young people can create alternative avenues for employment, which could involve providing support in the form of mentorship, access to finance, and simplified regulations for starting businesses,” observes Khan.
Mukul Sharma, an economist, suggests, “Matching industry requirements with academic curricula is of utmost importance, especially in professional courses like the MBA. Industry could also be involved by academic institutions in pre-placement assessment of job candidates in terms of their strengths, and then the training of job candidates can be tailored towards and focused on their particular strengths, like an extrovert and outgoing person may be trained specifically in marketing.”
In sum, although various factors influence post-graduation employment outcomes, the specter of underemployment looms large over the college experience. As policymakers and educators seek solutions, addressing the root causes of underemployment-such as college major choice, internship opportunities, and systemic inequities-must remain paramount. Only through concerted efforts can we ensure that the promise of a college degree translates into meaningful employment opportunities for all graduates, regardless of background or circumstance.
The key to unlock India’s potential to become a developed nation by 2047, indubitably a tough task, lies in tapping its demographic dividend. It has been estimated that India is home to more than 600 million people aged between 18 and 35 years, with 65% of them under 35. As per experts, this demographic dividend of India is expected to persist at least until 2055-56 and will peak around 2041, when the share of the working-age population – 20-59 years – is expected to hit 59%. This being so, as per the India Employment Report 2024 jointly published by the International Labour Organisation (ILO) and the Institute of Human Development (IHD), India’s youth continue to grapple with soaring unemployment rates, with nearly 83 per cent of the jobless population belonging to this demographic.
The report highlights a concerning trend where the proportion of educated young people, possessing at least secondary education, among the total unemployed youth has nearly doubled from 35.2 per cent in 2000 to 65.7 per cent in 2022.
Aside from youth unemployment, underemployment increased between 2000 and 2019 and declined during the pandemic years, according to the report just released by Chief Economic Adviser V. Anantha Nageswaran. “The youth unemployment rate increased more than twofold between 2000 and 2019, from 5.7 per cent to 17.5 per cent, but then decreased to 12.4 per cent in 2022,” the report said.
The highest youth unemployment rates were observed among those with graduate degrees – a trend that is impacting women particularly. In 2022, women not engaged in employment, education, or training constituted nearly five times higher than the proportion of their male counterparts (at 48.4 per cent versus 9.8 per cent), accounting for around 95 per cent of the total youth population in this category.
