What young want, and why creating good jobs is no longer optional

Why in the News

Almost 70 per cent of urban job seekers surveyed in Delhi said they were looking for a job that would place them on their ideal career path from the start, instead of settling for any job. The survey covered over 3,000 randomly sampled men and women, 24 years of age on average, living in middle-class residential areas of the capital, and was conducted in the summer of 2023. Their stated career goal was predominantly salaried or formal-sector employment. The Periodic Labour Force Survey (PLFS) for the same year records an urban labour market that cannot supply that goal, with less than 50 per cent of the urban workforce in salaried jobs. A follow-up experiment then exposed a random subset of the same job seekers to real-world job openings and salaries, and re-surveyed them a year later. Correcting their information lowered their expectations and left their aspirations untouched, so the contest is over who adjusts, the young or the labour market.

What is the Periodic Labour Force Survey (PLFS)?

1. Purpose: The PLFS is the official household survey that estimates how many people are working, seeking work or outside the labour force, and in what kind of work they are engaged.
2. Nodal body: The National Sample Survey Office under the Ministry of Statistics and Programme Implementation conducts it and is the principal source of employment estimates in India.
3. Activity status measures: Usual Status classifies a person by activity over the preceding 365 days, while Current Weekly Status treats a person as unemployed if they did not work even one hour in the reference week.

What do young urban job seekers actually want from work?

1. A career path, not a job: Almost 70 per cent said they wanted an opening that put them on their ideal career path from the start rather than any available job, and more men said this than women.
2. Formal salaried work is the goal: The stated career goal was predominantly salaried or formal-sector employment rather than casual or own-account work.
3. Women lean harder towards salaried jobs: More women job seekers aspired to salaried positions than men did.
4. Only 14 per cent of women prefer self-employment: Just 14 per cent of the women interviewed said they would rather work for themselves.
5. A third of men want to run enterprises: More than a third of the men wanted to start their own businesses.
6. Public sector preference is a myth: A comparable share of these men and women were looking for private-sector salaried jobs, which cuts against the dominant narrative of a strong preference for government jobs.

How far does the urban labour market fall short of those preferences?

1. Salaried work is a minority outcome: Less than 50 per cent of India’s urban workforce holds a salaried job.
2. It is scarcer still for the young: Merely one in every three employed 24-year-olds holds a salaried job, a lower share than for the workforce as a whole.
3. Government jobs are a tenth of the market: No more than 10 per cent of the urban workforce is in the public sector or government jobs.
4. The formal private sector is barely larger: Only about 15 per cent of the urban workforce is in the formal private sector.
5. Self-employment is the largest single category: Of those working, 40 per cent are self-employed.
6. Most self-employment is subsistence, not enterprise: An overwhelming majority of these businesses hire no worker at all and report an annual turnover of less than Rs 10 lakh, so the aspiration to build a firm meets a market of one-person shops.

Why do salary expectations diverge from what these jobs actually pay?

1. The occupations tested: Respondents were asked what they expected to earn as an accounts keeper, a primary school teacher, a data entry operator, a hospital attendant and an electrician, and each expectation was measured against actual PLFS earnings for the same occupation.
2. Expectations run up to 40 per cent above reality: Job seekers expect up to 40 per cent higher salary than the earnings the PLFS records for the same work.
3. Men are the more over-optimistic: Male job seekers expect almost Rs 8,000 more per month than the actual average earnings for these jobs.
4. The gap widens for salaried work: For salaried jobs specifically, male job seekers expect Rs 8,500 more per month than actual earnings.
5. The aggregate divergence exceeds 30 per cent: Taken together, salary expectations sit more than 30 per cent above reality, and the skew is sharper still among job seekers below 25 years of age, especially young men.
6. Information and inexperience explain the gap: A lack of information or outright misinformation about openings and pay, combined with inexperience of the job market, are the two obvious sources of the misalignment.

What did correcting job seekers’ information change, and what did it leave untouched?

1. The design: A random subset of the 3,000 job seekers was informed about real-world job opportunities and salaries, and both the informed and the non-informed groups were re-surveyed twelve months later.
2. Expectations fell: Accurate information significantly dampened labour-market expectations of landing the ideal job, relative to those who were not informed.
3. Men disengaged first: Men in particular became less likely to report that they were on their ideal career path.
4. Search effort fell with belief: That disillusionment was accompanied by a decline in men’s job-search intensity.
5. The two exits from a failed search: As preferred job offers fail to materialise, job seekers adjust expectations downwards and either remain in the same jobs or leave the labour market and enrol at educational institutions.
6. Aspirations did not move: The answer on whether aspirations changed is a clear no, since these men and women continued to aim for formal-sector jobs or dynamic entrepreneurship a year later, because aspirations are long-term goals and not easily malleable.
7. High education costs make the expectation rational: Good-quality education is increasingly bought from private institutions at rising cost, so a high expected salary is not only aspirational but necessary to recover that outlay.

Challenges to the Periodic Labour Force Survey

1. Informal work is under-captured: Household surveys do not fully record home-based, gig and platform work in a workforce that is about 90 per cent informal. Eg. Delivery and ride-hailing riders working across two aggregators are frequently recorded as ordinary self-employed workers. Fix. Align the activity definitions with International Labour Organization and System of National Accounts practice so multi-job holders, freelancers and platform workers are counted separately.
2. No skill mapping against job requirements: The survey does not match worker skills to the requirements of available jobs, so structural unemployment cannot be measured from it. Eg. The India Skills Report finding that only about half of graduates are employable has no counterpart in official survey data. Fix. Add a skills and job-requirement module so mismatch is measured rather than inferred.
3. Rural data has been low frequency: Rural estimates were historically produced only once a year, so rural distress is visible with a long lag. Eg. A monsoon failure that pushes workers back into farm labour shows up only in the following annual round. Fix. Extend high-frequency quarterly or monthly rounds to rural areas rather than confining them to towns.
4. Urban bias in the high-frequency rounds: The quarterly bulletins have been confined to urban areas, which under-measures the larger rural workforce. Eg. Quarterly urban unemployment rates are debated publicly while comparable rural numbers are unavailable. Fix. Publish a single integrated quarterly series covering both sectors on the same reference period.
5. New job categories are missing: Gig, digital, start-up and green jobs are not adequately represented in the occupational classification the survey uses. Eg. Solar installation and battery recycling roles have no distinct occupational code. Fix. Integrate Employees’ Provident Fund Organisation, National Career Service and PLFS records so emerging job creation is tracked from administrative data as well.

Conclusion

Young urban job seekers want formal salaried careers and dynamic enterprise, and correcting their information about the market lowers what they expect to earn without changing what they want. That asymmetry places the burden of adjustment on the economy rather than on the young, and realising these aspirations requires a structural transformation that creates jobs with regular pay and benefits. The four Labour Codes are a step in that direction, and creating good jobs and genuine career paths, rather than jobs alone, is no longer optional. Failure carries a specific cost, which is the squandered potential of an entire generation.

Employment and Unemployment in India

1. What is measured: An unemployed person is of working age, that is 15 years and above, without work, currently available for work and actively seeking it in a reference period.
2. Structure of the workforce: The Labour Force Participation Rate stood at 59.3 per cent in 2025, about 90 per cent of the workforce is informal, and nearly 58 per cent of salaried workers still lack a written contract.
3. The absorption problem: Services drive most output growth but employ under 30 per cent of the workforce, while manufacturing contributes only about 16 to 18 per cent of Gross Domestic Product against roughly 26 per cent in China.
4. Types of unemployment tested: Frictional, structural, cyclical, seasonal, disguised, voluntary and chronic unemployment are distinguished, with disguised unemployment concentrated in agriculture where marginal productivity approaches zero.

Laws and Rules Governing Employment in India

1. Code on Wages, 2019: Consolidates four wage laws, sets a statutory floor wage, and extends minimum wage cover beyond the roughly 30 per cent of workers it earlier reached.
2. Industrial Relations Code, 2020: Merges three laws, raises the closure and retrenchment approval threshold from 100 to 300 workers, and gives fixed-term workers parity and gratuity after one year.
3. Code on Social Security, 2020: Merges nine laws, defines gig and platform workers for the first time, and requires aggregators to contribute 1 to 2 per cent of turnover to a welfare pool.
4. Occupational Safety, Health and Working Conditions Code, 2020: Consolidates 13 laws into one licence, one registration and one return, and caps hours at 8 to 12 daily and 48 weekly.
5. Commencement of the four Codes: All four came into force on 21 November 2025, replacing a fragmented body of central labour legislation.
6. Mahatma Gandhi National Rural Employment Guarantee Act, 2005: Guarantees 100 days of wage employment per rural household in a financial year.

Government Initiatives for Employment Generation

1. PM Viksit Bharat Rozgar Yojana: An employment-linked incentive approved in July 2025 with a Rs 99,446 crore outlay, targeting 3.5 crore jobs over two years.
2. e-Shram Portal: A national database issuing Universal Account Numbers to unorganised workers and integrating access to more than 14 central schemes.
3. PM Internship Scheme: Launched in 2024 to offer 1 crore internships in top companies over five years.

Challenges in Employment Generation in India

1. Lopsided structural change: India moved from agriculture to services without a job-rich manufacturing phase, so the sector that absorbs low-skilled labour elsewhere never scaled here. Eg. Manufacturing’s share of output has been stuck near 17 per cent against a 25 per cent policy target. Fix. Direct incentives to textiles, leather, food processing and electronics assembly, which absorb low and semi-skilled workers at scale.
2. Capital-intensive investment bias: Investment flows to information technology and infrastructure rather than to labour-intensive activity, so output growth outruns job growth. Eg. Under the Production Linked Incentive scheme, most disbursed incentive has gone to large scale electronics assembly and pharmaceuticals, both capital intensive lines. Fix. Weight incentive schemes by jobs created per rupee of assistance rather than by output alone.
3. Firms stay small to avoid compliance: Threshold-linked obligations reward staying under the size limit, which caps productivity and formal hiring. Eg. Micro, small and medium enterprises face more than 1,450 annual compliances costing Rs 13 to 17 lakh. Fix. Extend the Jan Vishwas approach of decriminalising minor compliance offences, which already covered 183 provisions across 42 central Acts.
4. Skill deficit at both ends: Only about 4.7 per cent of the workforce has formal skill training, against roughly 96 per cent in South Korea, so employers and applicants describe different jobs. Eg. The Annual Status of Education Report 2023 found a quarter of rural youth aged 14 to 18 unable to read a Class 2 text. Fix. Tie curricula to Industry 4.0 and green job roles through mandatory industry-academia apprenticeship linkages.
5. Women are kept out of paid work: Caregiving, domestic duties and mobility barriers hold female participation far below male participation. Eg. Urban female Labour Force Participation Rate stood at 25.8 per cent against 75.6 per cent for men in 2024. Fix. Enforce creche provision and workplace safety obligations already carried in the Codes.

Matching Previous Year Question

“[2023, GS3, 15 marks] Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.”