Economic Survey 2024-25 highlights skills mismatch; over 50% graduates, 40% postgraduates underemployed

NEW DELHI: Only 8.25% of graduates are in jobs which correspond to their educational qualification, states the Economic Survey, tabled in the Parliament on Friday. Highlighting data from Institute for Competitiveness, the survey states that low educational skills in the workforce has led to a mismatch between their academic qualifications and job market demands.

In its chapter on “Employment and Skill Development: Existential Priorities”, the Economic Survey report lists the key challenges in the skill landscape.

“A key challenge in the skill landscape is the prevalence of low-skilled workers, which is attributable to the quality of educational outcomes across different levels of education. Low educational skills in the workforce make a mismatch between their academic qualifications and job market demands. This mismatch has resulted in over 53% of graduates and 36% of postgraduates being underemployed in roles below their educational qualifications,” stated the survey.

Economic Survey 2024-25: Skill mismatch

The skill mismatch is higher among those with higher levels of education – graduates and postgraduates.

While more than half of graduates are in jobs at “elementary” or “semi-skilled” levels, more than 44% of postgraduates are similarly underemployed, with just 63.26% in “specialised” jobs befitting their level of education.

The table below shows the education and skill levels of those surveyed.

Distribution of workers by years/level of education and skill requirement at their jobs (in %)

The figures in the table represent the percentage of the workforce with a specific educational skill level and the corresponding occupational skill where they are employed.

The right matches would be between

• 10 years of education and “elementary”

• 12 years and “semi-skilled”

• Graduate and “high-competency skilled”

• Postgraduate and “specialised”.

The figures representing the percentage of workers in jobs that match their level of education have been rendered in bold.

The data shows that levels of education and employment match for the majority only for the group with 12 years of education – 72.18% of these workers are employed in semi-skilled jobs.

The data also suggests that large sections might be employed in jobs requiring more skills than they are likely to be trained for – 66.3% of workers with 10 years of informal education are engaged in “semi-skilled” jobs where the appropriate place for them would be in “elementary”. Similarly, 38.23% graduates are in “specialised” jobs.

“This represents the skill match between educational and occupational skills,” the report says.

“Skill mismatch can result from imperfect matching between employers and workers, primarily driven by labour market inefficiencies or an imbalance between aggregate supply and demand for specific skills. When the mismatch is due to the gap between the expected and actual skills of workers, it reflects a broader issue of misalignment between the demand for specific competencies and their availability in the labour force,” added the survey.

Further stating that the skilling and ecosystem is evolving, the survey states that according to Periodic Labour Force Survey (PLFS) report 2023-24, 4.9% of the youth in the age cohort of 15-29 years have received formal vocational or technical training, while another 21.2% received training through informal sources.

Also read Budget 2025: Gen Z needs upskilling to enter workforce; education sector hopes for technology integration

Economic Survey: Educational qualification of workforce

As per the PLFS 2023-24 data, 90.2% of the workforce has equivalent to or less than a secondary level of education.

The table below shows the educational levels of the working force.

Percentage distribution of workers by levels of education

Source: PLFS Unit level data

“This educational skill composition, as a result, leads to most of the workforce (88.2%) being involved in low-competency occupations- elementary skilled and semi-skilled occupational skills,” added the survey.

Hence those involved in specialised skills and high competency skills just constitute 9.3% and 2.5% respectively.

“The composition of skills by education and occupations has major implications on the earnings of individuals and the economy. According to the PLFS data, there is a strong link between educational attainment, occupational roles, and income levels,” the survey added.

The data shows that 4.2% of the workforce, equipped with advanced education and specialised skills, earn between Rs 4 lakh and Rs 8 lakh annually. About 46% earn less than Rs 1 lakh, most of them low-to-semi-skilled workers like agricultural labourers, clerical staff, factory workers, and small-scale service providers.

Economic Survey 2024-25: Vocational training

As per the PLFS 2023-24 data 65.3 per cent of the workforce received no form of vocational training.

A small percentage of 4.1 had only received vocational training, for 9.3% it was learning on the job and 7.1% was self learning.

For those whose learning was hereditary passed on in the family constituted 11.6%.