According to a recent research by Kotak Institutional Equities, unemployment among persons with a diploma or degree remains high, despite considerable progress made in the last five years. It may take some time for the gap between individuals seeking employment and job possibilities to close.
According to the paper, the unemployment rate for people with diplomas is 12.1 percent as of June 2023, while it is 13.4 percent for graduates and 12.1 percent for post-graduates.
While the unemployment rate dramatically declined between 2018 and 2023, according to the annual labour force survey, the majority of the new positions were for independent contractors. However, the number of salaried workers decreased, showing that the quality of jobs hasn’t increased.
The surveys revealed a 510-basis point increase in ‘self-employed’ individuals in India, mainly driven by a 470 basis point rise in household helpers during the pandemic. Kotak brokerage points out that the agriculture, trade, and transport sectors also saw a significant increase in self-employed workers over the past five years. Rural females notably experienced increased participation and employment.
However, there has been uneven real wage growth across different market groups, which has hurt consumer spending. Between 2018 and 2023, the annual pay of salaried workers climbed at a CAGR of 3.4 percent, while the gross income of self-employed people increased at a CAGR of 1.8 percent.
For both the salaried and self-employed sectors, real income growth has been inconsistent, but has just turned positive after a protracted period of divergence, according to Kotak. However, the salaried sector may see difficulties in the upcoming quarters, particularly as a result of cost reductions in the IT sector, which could reverse this trend, according to the Kotak analysis.
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