New Delhi: Unemployment stands at nearly 40% for the 15 to 25 age group and 20% for those aged 25 to 29 despite the fact that educational enrolment has risen sharply for over four decades, a recently released report by the Azim Premji University revealed. The ‘State of Working India 2026‘ report highlights a widening gap between education and job creation. India’s youth population, aged 15 to 29, stands at 36.7 crore, accounting for a third of the working-age population. The report notes that 26.3 crore of this cohort are not in education and constitute the potential workforce. With a median age of 28 years, India is among the youngest economies globally, but this demographic dividend will begin to decline after 2030, making the pace of job creation in the coming decade critical.The transition from education to employment remains a severe challenge. The report states that 1.1 crore out of 6.3 crore graduates aged between 20 and 29 were unemployed in 2023. Unemployment stands at nearly 40% for the 15-to-25 age group and 20% for those aged 25 to 29. While 50% of young male graduates find employment within a year of reporting as unemployed, only 7% secure permanent salaried work. Further, it adds that graduate unemployment rates have remained largely unchanged between 35% and 40% since 1983.Educational enrolment has risen sharply over four decades, bringing India’s 28% tertiary enrolment rate on par with countries of similar per capita income. Among young women, enrolment increased from 38% in 1983 to 68% in 2023, while male enrolment rose from 49% to 73% in the same period. Scheduled Caste (SC) enrolment increased from 11% to 26%, and Scheduled Tribe (ST) enrolment from 8% to 21% between 2011 and 2023, though both remain below the national average.However, the report identifies a recent reversal in male enrolment. The share of young men in education fell from 38% in 2017 to 34% in late 2024. The data indicates that 72% of these men withdrew from education because of the need to support their household incomes.This educational expansion is driven by a massive increase in private institutions. Since liberalisation, higher education institutions grew from 1,644 to 69,534. College density improved from 29 colleges per lakh youth in 2010 to 45 in 2021. However, the report highlights a severe teacher shortage: against the All India Council for Technical Education (AICTE) norm of 15 to 20 students per teacher, private colleges average 28 students and public colleges 47.Vocational training has seen a similar trajectory. Industrial Training Institutes (ITIs) increased by nearly 300%, from 3,674 in 2005 to 14,582 by 2025, with private providers making up 80%. The report notes this expansion has come at the cost of institutional quality, with newer and private ITIs scoring lower on quality parameters and maintaining a tenuous link to manufacturing employment.While higher education has democratised — the share of tertiary students from the poorest households rose from 8% in 2007 to 15% in 2017 — financial barriers persist. A medicine degree costs approximately Rs 97,400 annually, and an engineering degree costs about Rs 23 lakh. The report states that these costs often exceed the annual per capita expenditure of poorer households, restricting access to professional courses and reinforcing inequalities in high-paying occupations.Those who do secure degrees command a strong wage premium, earning roughly twice as much as non-graduates at entry, a gap that widens over their lifetime. However, entry-level salaries for young male graduates have stagnated since 2011. Conversely, the gender pay gap in graduate earnings has converged, with young female graduates now earning as much as their male counterparts.There are significant shifts in the sectors where youth find work. Young workers are exiting agriculture faster than older cohorts. However, since 2017, the share of women in agriculture has increased, while the share of young men in the sector has stagnated. Young women are increasingly finding employment in modern services, including information technology, automobile manufacturing, textiles, and business support services. Older women remain predominantly engaged in community and personal services. For young men, major entry-level employers are trade, transport, and construction.The report also notes a decline in caste- and gender-based occupational segregation. For example, in 1983, young SC and ST workers accounted for 40% of their communities employed in the leather and footwear industry; by 2023, this fell to 24%. The largest increases for these communities have been in the manufacturing of paper, vehicles, and telecommunications equipment.Migration continues to function as an important labour market response. Youth constitute about 40% of informal migrant workers. Younger states like Bihar and Uttar Pradesh serve as net senders, while Delhi, Haryana, and Punjab are large net receivers, balancing regional disparities.To address these challenges, the report recommends integrating school and vocational curricula to enhance employability, strengthening National Career Services (NCS) to reduce labour market friction, and expanding social security systems to support young workers navigating the informal sector and migration.“More young people today are educated, informed, and ambitious than ever before. These are real achievements of which we can be proud,” Azim Premji University president Indu Prasad said.Rosa Abraham, lead author of the report and associate professor of Economics at Azim Premji University, said the research traces the transition of a young worker from education to job search and employment. “We hope the report will lay out some of the foundational work that will contribute to a better understanding of the challenges in this transition and enable coordinated policymaking.”