Did you know that less than 1 in 10 Indian graduates actually end up working in jobs that match their education level?
That’s not just a number—it’s a national concern. A recent report by the Institute for Competitiveness, in collaboration with Harvard Business School, has shed light on a growing issue: India’s educated youth are being underutilized, and the job market is in distress.
Understanding the Indian Employment Crisis
Let’s break it down. While India is proud of its booming education sector and tech-savvy graduates, only 8.25% of them are actually landing jobs that require their qualifications. The rest? They’re working as clerks, machine operators, and retail workers—jobs that don’t need a college degree.
What the Numbers Say
Here’s what the data from the Periodic Labour Force Survey (PLFS) says:
- 8.25% of graduates are employed in jobs aligned with their qualifications.
- Over 50% of graduates are working in Skill Level 2 jobs, like sales staff or clerical roles.
- A massive 38.23% of Skill Level 4 jobs are held by people with graduate degrees—showing how education isn’t being matched with opportunity.
Isn’t that ironic? You go through years of higher education, only to end up in a role you could’ve taken right after school.
National Classification of Occupations (NCO): Explained
To understand why this matters, we need to look at how jobs are classified. The NCO categorizes every job role under Skill Levels 1 to 4:
- Skill Level 1: Basic roles like cleaners, helpers
- Skill Level 2: Clerical, sales, machine operators
- Skill Level 3: Technicians, supervisors
- Skill Level 4: Professionals, managers, experts
Now, here’s the mismatch: people educated for Skill Level 3 or 4 jobs are mostly stuck in Level 2 or even Level 1 roles.
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Overqualification: Wasted Potential
According to the report:
- 28.12% of people in high-skill jobs are still working below their education level.
- A shocking 38.23% of Skill Level 4 jobs are filled by graduates, meaning postgraduates and highly educated individuals are competing for entry-level work.
This means one thing: we’re producing too many degrees without creating enough high-level jobs.
Graduate Oversupply: Are We Producing Too Many Degrees?
Let’s face it. The “graduate boom” in India isn’t always a good thing.
We’re pushing millions into colleges, but not enough into employable skills. Degrees don’t guarantee jobs anymore, especially when industry demand doesn’t align with what’s being taught.
Result? A backlog of smart, educated, yet unemployable youth.
Underqualification: The Other Side of the Story
But there’s another side to this coin.
In Skill Level 2 jobs, 8.56% of workers don’t even have the basic required education. How did they get there?
Simple: on-the-job training, informal learning, and vocational skills.
These people prove that education isn’t everything, but without structure, it leads to inconsistent quality and stagnant growth.
Role of TVET: The Bridge We Need
This is where Technical and Vocational Education and Training (TVET) becomes crucial. It equips people with job-ready skills without needing a formal degree.
Unfortunately, India’s TVET ecosystem is underfunded and inaccessible in rural and semi-urban areas.
We need more polytechnic institutes, skill centers, and certification programs to upskill the unqualified and reskill the overqualified.
Geographical Disparity in Employment Trends
Some states are more affected than others.
Most Affected States
- Bihar: 63.64% still in Skill Level 1 jobs
- Jharkhand, Madhya Pradesh, Rajasthan: Over 57% in the lowest skill tier
Better Performing States
- Goa: 31.97% at Skill Level 1
- Kerala: 32.98%
- Chandigarh: 32.71%
Clearly, the problem is regional, and a one-size-fits-all approach won’t work.
Female Education & GER Trends
There’s good news here.
States like West Bengal (93.38%) and Kerala (89.45%) have made massive progress in female enrolment in higher education (GER).
But Lakshadweep saw a 90% drop in female GER over the past decade. That’s not just a number—it’s a disaster in the making.
Skill Level 4: A Rare Achievement in India
Only 2.17% of Indians have education suited for Skill Level 4 jobs.
Top 5 States by Skill Level 4 Workforce
- Chandigarh – 11.21%
- Uttarakhand – 4.99%
- Puducherry – 4.76%
- Haryana – 4.35%
- Himachal Pradesh – 4.01%
Meanwhile, Bihar, Jharkhand, and Odisha barely touch the 1% mark.
Economic Impact of Upskilling
Now here’s the game-changer:
Upskilling from intermediate to advanced levels can increase wages by up to 149%!
Imagine the boost in GDP and family incomes if we tap into this hidden potential. But that requires policy-level investment and vision.
India’s Funding Crisis in Higher Education
India spends only 3.06% of its budget on education.
Experts suggest raising this to 4.89%, which still might not be enough considering the ₹88,000 crore funding gap in higher education.
If we don’t act fast, the consequences will be irreversible.
The Road Ahead: Recommendations from Experts
Here’s what needs to be done ASAP:
- Granular Skill Data Collection to guide policy
- Regular Skill Gap Analysis by Sector Skill Councils
- Update NCO Codes to reflect today’s job landscape
- Merge PLFS with NCO codes for smarter job mapping
Demographic Deadline: Time is Running Out
India has 650 million youth under 25. That’s our advantage—for now.
But by 2046, the elderly will outnumber children. If we don’t act now, this demographic dividend will become a demographic disaster.
The clock is ticking.
