India is special not only for its size, but also composition. It has a young population unlike most countries where the demographic trend is towards an ageing population. Until 2040, people of working age here will be far in excess of dependents. Currently two-third of the population is under the age of 35. It is significant for the economy, as the demographic dividend offers tremendous opportunity to the country to become a global economic giant. And India needs to take urgent measures to prevent this demographic dividend from becoming a demographic disaster.

If the youth are not skilled and gainfully placed, a young workforce advantage can fast turn into a liability. Crime, political unrests, and other social and socio-political vagaries can lead to huge economic repercussions. Movements such as the Arab Spring and Jasmine Revolution are cases in point. 

India intends to equip its youth, but unfortunately the global jobs market is deteriorating. According to the International Labour Organization, the global unemployment rate this year is 5.9%. It was 5.5% before 2007. In India, the unemployment rate among the youth has persisted at around 10%, while it has dropped for older cohorts.

This is in sync with the global trends in unemployment. About 74 million youths (aged 15 to 24) were looking for work in 2014. Youth unemployment rates mostly tend to be thrice that of adults, which, in case of young women, is disproportionately higher across regions. 

The government needs to proactively seize the opportunities that this landscape promises. As of now, India’s labour force has an unusually low percentage of skilled workers – at about 2%. This figure is downright dismal compared to developed economies, such as Britain (70%), Germany (75%), and Asian nations like Japan (80%). At the Vibrant Gujarat summit in January, the minister of state for skill development and entrepreneurship, Rajiv Pratap Rudy, said that there was a shortage of about 30 crore skilled labour in the Indian economy.

The government is working towards a new plan for skill development. A draft policy is expected to be published in March 2015. While the policy might scale up initiatives, it remains to be seen if the 2009 target of providing vocational training to 500 million by 2022 is scaled up or not. 

The Indian economy has both demand for labour and the potential to supply it. Skill is the only missing piece in the equation!