India's official unemployment rate

India's official unemployment rate last year was 3.8%, data released recently by the Labour Bureau shows, but, as always, averages hide many stories. A closer look at the numbers shows that unemployment rises with education level to 10% among graduates, and higher still for backward castes.  The Chandigarh-based Labour Bureau under the union ministry of labour and employment released the 'Employment and Unemployment Survey 2012' last week. The pan-India survey had a representative sample of 1.2 lakh households. According to the survey, India's official unemployment rate is 3.8%, with urban unemployment at 5.1% and rural at 3.5%. Unemployment is higher among women than among men; 6.7% for women as against 2.8% for men.  Calculations by TIG using the labour bureau numbers show that unemployment rises steadily with education level. While unemployment among the illiterate is 1.2%, unemployment among graduates is 9.4% and among post-graduates it is 10%. In the United States and United Kingdom, where recession has led to poor job growth, the unemployment rate for graduates is at a record high, but this is still under 5%, in comparison.For urban India, graduate unemployment is 8.2% while unemployment among post-graduates is slightly lower, at 7.7%.

These findings are consistent with those of the National Sample Survey 2009-10 which show that the higher the level of education, the higher the open unemployment, says Santosh Mehrotra, economist and director-general of the Institute of Applied Manpower Research, an autonomous institution under the Planning Commission. "The illiterate are the poorest, and the poorest simply cannot afford to be unemployed, so they do some work, even if they are under-employed," says Mehrotra. "As a result, in poor economies like ours, you see very little open unemployment," he says.

The correlation between low education and low unemployment also explains another finding of the Labour Bureau, that socially disadvantaged groups like scheduled castes, scheduled tribes and other backward classes have lower unemployment than "others". At the aggregate level, unemployment among SCs is 3.2%, for STs it is 2.7% and for OBCs it is 3.2% as compared to 5.4% for "others".

However this appears to be a result of lower education levels among backward groups, because at the higher end of the education spectrum, there is higher unemployment among backward castes than for "others". Among SCs, graduate unemployment is 11.3% and post-graduate unemployment 12.7%, while for "others", the corresponding figures are 9% and 9.7%. Unemployment among graduate and post-graduate STs and OBCs is also higher than for "others". Across social groups, graduate unemployment among women is above 25%.

Ram Mohan Kumar completed his BCom from a private college in Noida in 2008. The son of a carpenter, he is the first person in his family with a degree. "It was not possible for me to study after that because post-graduate courses are too expensive. I looked for a job doing accounts or insurance work after graduating but I could not get anything. Now I do odd jobs for a living. I feel my degree is just wasted," he says. Indu Rai, who like Kumar is dalit, completed her M.A in Sociology from Damoh in Madhya Pradesh. "I thought I could get a teaching job but everyone asks for a BEd. I have five siblings to educate. How can I do another degree now?" she asks over the phone.

Mehrotra says that the higher levels of unemployment among graduate SCs points to discrimination in the labour market, an issue that economist and Indian Council of Social Science Research chairman Sukhadeo Thorat has written about. In a landmark study, Thorat and his fellow researcher Paul Attewell answered job ads with fictional resumes. They found that applicants with a dalit surname were systematically less likely to be called for an interview than upper caste applicants with poorer qualifications than the dalit applicants.