State of Working India 2026: India’s Youth Workforce is Growing and Becoming More Educated

New Delhi: According to the State of Working India 2026 report, India has made significant progress in expanding access to higher education for its youth (aged 15–29). The country has also advanced in facilitating the shift of workers from agriculture to industry and services, and in reducing discrimination based on gender and caste. However, several challenges still remain.

The report highlights that the growing number of educated and aspirational young people must be effectively integrated into the labor market. This will determine whether India can successfully convert its large working-age population into a driver of economic growth.

Indu Prasad, President of Azim Premji University, said, “Today, more young people are educated, aware, and eager to achieve something. This is a real accomplishment that we should be proud of.”

The report is based on official data spanning the last four decades. It examines changes in youth participation in education and employment, evaluates how effectively India has utilized its demographic growth, and identifies both challenges and opportunities in integrating people into the workforce.

Lead author Rosa Abraham, Associate Professor of Economics at Azim Premji University, stated, “This report traces a young person’s journey from education to job search and eventual employment. It also shows how this transition has evolved over the past forty years. We hope it will help in better understanding the challenges and contribute to more coordinated policymaking.”

Key Highlights

Demographic Dividend Window Closing
The proportion of India’s working-age population will begin to decline gradually after 2030. Creating sufficient and appropriate employment opportunities is crucial to converting this demographic advantage into economic growth.

Rising Education Levels
Over the past four decades, educational attainment among youth has increased significantly, especially among women. India’s higher education enrollment rate (28%) is comparable to countries with similar per capita income levels.

Decline in Male Enrollment
Male enrollment in higher education among youth dropped from 38% in 2017 to 34% by the end of 2024, largely due to the need to support household income.

Expansion of Higher Education Institutions
The number of colleges per lakh youth population increased from 29 in 2010 to 45 in 2021, mainly driven by private institutions. However, regional disparities remain significant.

Shortage of Teachers
The number of teachers has not kept pace with rising student enrollment. According to AICTE norms (1 teacher per 15–20 students), actual ratios are much higher—around 28 in private colleges and up to 47 in government institutions—highlighting the need for urgent recruitment.

Rapid Growth of Vocational Institutions
Since 2010, the number of Industrial Training Institutes (ITIs) has grown by nearly 300%, largely due to private sector expansion. However, concerns about quality—especially in private ITIs—have emerged.

Greater Inclusion, Persistent Financial Barriers
The share of students from the poorest households in higher education increased from 8% in 2007 to 15% in 2017. Despite this, financial constraints continue to limit access for many.

High Cost of Professional Education
Students from wealthier families are more likely to enroll in professional courses like engineering and medicine, as the cost often exceeds the annual per capita expenditure of poorer households.

Difficult Transition from Education to Employment
Unemployment remains high among graduates aged 15–29—around 40% for ages 15–25 and about 20% for ages 25–29. Only a small proportion secure stable jobs within a year of graduation.

Higher Earnings for Graduates
At the entry level, graduates typically earn about twice as much as non-graduates, and this income gap widens over time.

Stagnation in Male Graduate Wages
Since 2011, wage growth for young male graduates has slowed, although the gender wage gap among graduates has somewhat narrowed.

Shift Away from Agriculture
Young workers are moving away from agriculture faster than older workers, increasingly entering manufacturing and service sectors. Women’s participation is rising in fields such as IT, automobile manufacturing, and business services.

Decline in Caste and Gender-Based Occupational Segregation
Younger generations are less confined to traditional occupations associated with caste or gender.

Migration Driven by Labor Demand
Youth migration plays a crucial role in balancing regional disparities. Less developed states with younger populations remain key labor suppliers, while more developed and aging states increasingly depend on migrant labor.