Project Title: Youth Empowerment-Making India’s Future Bright

Team Name: IIMB_IITD

Country: India

Mentor: Punit Asthana

Youth Unemployment in IndiaYouth unemployment is the lack of job opportunities for people typically in the age group of 15–24 [1]

Youth unemployment rate in India [2]

8.310 10.4

0

2

4

6

8

10

12

1994 2000 2005

Age distribution of unemployment rate in India [4]

0

20

40

60

80

100

0 5 10 15Females Males

Unemployment rate as no. of education years increases [3]

020406080

100120140160

Males

Females

State-wise distribution of youth unemployment rate in India [3]

0

2

4

6

8

10

15 to 19

20 to 24

25 to 34

35 to 44

45+

1993-94

2007-08

Consequences of Youth unemploymentFiscal challenges to nations: Youth unemployment costs the UK economy more than £155 million per week in benefits payments and lost productivity. Lifetime cost of educational underachievement for today’s 17-24 year olds will be £22 billion ($35 billion). [5]

Cost of Exclusion: Every 3 months of unemployment at age 22 is associated with an additional 1.3 months between age 28 & 33. Persons who experience 26 months of unemployment before age 22 typically earn $1400-1650 less than their peers at age 26, and $1050-1150 less at age 30. [6]

Resource wasted for developing economies: Limit inputs available urgently needed growth and makes it harder for developing countries to realize the benefits of labor-intensive growth strategies. Failure in realizing economic potential of young people; difference between sustained & faltering long term development . [7]

Increased risk for social pathologies: direct poverty effects on unemployed young people’s families include considerable “cognitive, health, nutrition and psychological deficits” for children raised in poverty. [8]

Chronic unemployment is associated with increased incidence of criminal behavior . [9]

Increased crime: Periods of unemployment often means vulnerability to crime, drugs, and disease. Most crimes committed by youth are committed during the afterschool hours. Lack of involvement in meaningful activities or employment often leads to criminal activity for disadvantaged youths. [10]

• Direct loss, of trained experts, to under-developed & developing countries.• India loses $2 bn a year because of the emigration of computer experts to the U.S [11]

• Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion annually.• Loss due to brain drain around 3% of the total skilled personnel available in India. [12]

• Average age of migrants between 20 & 40 – crucial from the youth's perspective. [12]

• Major reason is the wages paid in public & private sector: With exception of ICICI none of the public sector finance companies have done a serious job of revamping their pay scales. Similar is the case with private firms.

Problem of Brain Drain

in India

Causes of Youth unemployment

Why Youth fare worse than adults?• Lack of information, networks, social capital and connections among youth.• Lack of experience & credentials that address employers’ risk in making hiring commitments.• Lack of available jobs suited to entry-level skills, demographic mismatch b/w seekers & employers.• Lack of skills relevant to the workplace – lack of “21st century workplace skills” and focus.

Rural Unemployment in India – A major concern?• Characterized by seasonal unemployment and huge levels of migrant labor.

• Lack of subsidiary and other village industries; limited land & thus great pressure on land.

• Over dependence on nature as undeveloped and traditional methods of agriculture.

• Lack of education and ignorance about scientific and modern means of agriculture.

Education skill mismatch

-Increased cost of education especially technical.

- High number of students of graduating with inadequate skills.

High population & growth rate

- Less Jobs as compared to population growth

- Inadequate Education

- Low rate of Economic Growth

Socio economic causes

- Low literacy rate

- Slow economic growth resulting less export demands

- Lack of awareness about new job policies

Miscellaneous causes

-Rigid labor laws- Technology change forcing shift from labor to machines- Macro economic factor like recession & low investment

BC Model in India: Introduced in 2006. Outsourced representative of bank in remote areas. Work as the single person bank for the area. Key role is to accept deposits and remit money.

Problems faced by the BC Model• Operational Issues – cash handling and gullible client profile.• Regulatory concerns – Interest capping & cash settlement issues.• Social issues – Lack of financial literacy, awareness, exclusion.

Current Status of the initiative• Around 40% of 72,000 villages have a BC model working.• In Delhi, out of 113 unbanked villages have working BC model.• In Haryana, of 1843 unbanked villages, 1100 unbanked villages has already been provided banking facility as of March 2011.

Solution to the problems – Banking Correspondent Communication Architecture• Local shop-owners appointed as BCs. Deposits specific amount of money in the bank. Each time transaction happens in the village, pay/receive cash and credit/debit from their account. Solve the operational issues regarding BC model.• Figure on the right shows the diffusion of innovation curve , depicting how the target segment needs to be decided for this innovation. Currently it can be said to be in the innovator & early adopter stage.

Solution 1 - Financial Inclusion of YouthFinancial inclusion reduces the prevailing unemployment rate and the financial exclusion would mean people not using the

banking products of the financial sector. [13]

Current Status In India – Some statistics• Number of deposit accounts per 1000 persons : Rural India -325 ; Urban India – 724 [14]

• Number of bank branches per 1000 km: India - 22.57 ; UK – 45.16 ; Korea – 65.02 ; USA – 9.81 [15]

• Number of bank branches per 1,00,000 people: India - 6.30 ; USA – 30.86 ; UK – 18.30 ; Korea – 13.40 [15]

Solution to the problem: 'Banking-correspondent is the only model to increase financial inclusion′ [16]

Solution 2 - Access to work experienceP

ast

rese

arch

• Temporary work is an especially effective tool in improving labor market outcomes for long-term unemployed persons and others seen by employers as ‘bad risks’. [18]

• 10-13% improvement in long-term employment outcomes after 2 years for people who accepted short-term jobs as a ‘stepping’ stone out of unemployment. [19]

• Impact of temporary work experience: Before engaging in agency work, 34% of applicants in Sweden had prior full time work experience; after completion of agency work 85% obtained full time jobs. [20]

• In Switzerland, the pre- and post- agency work employment numbers were 47% and 71% respectively. And in France, the experience of agency work raised participation in full time work from 11% to 66% [21]

Prior work experience is positively associated with an individual’s ability to obtain permanent work at a later date. [17]

Ho

w t

o a

chie

ve?

• Series of internships, project work, temporary work, etc., structured in a low risk, low-stakes way so as to give young people easy access to new opportunities without requiring long-term commitments from employers or creating full time or dead-end jobs.

• Role of private employment services firm in finding initial work experiences for young people with limited skills and experience. These services can broker a series of short term work experiences that increase young people’s chance of finding a full time job.

• Short term experiences also fit well into summer or semester-long intervals in a young person’s ongoing education, so that work experience can be combined with or alternate with education, and can influence study and training choices.

• Firm can also help young people build a portfolio of progressively challenging work experiences. Thus a highly effective way of building their skills and employability over time.

Solution 3– Access to training programs for youth

What? Training programs focusing on training narrowly & intensively on the requirements of specific, available jobs, and including a post-training placement component based on prior hiring commitments from employers.

How? Training programs can be organized & managed by workforce intermediaries governments or NGOs, or by employers themselves. - Vocational training should be designed around the informal economy, where most young working people are found in developing countries.

Key Features? Must be demand driven i.e. oriented to filling specific needs and actual vacancies for local employers, and must prepare individuals for those specific, available jobs.- Must be based on a firm employer commitment to articulate its skills requirements to trainers and to work with program graduates. Post-employment counseling important.- Repeated engagement with experienced employer partners who participate in program design & the specification of skills requirements & have confidence in this process.

Employer’s benefits? Can help build capacity for organizations managing training programs, by sharing executive experience and advice.- Can contribute their own training and other resources, and improve the alignment of training with their own specific job requirements.- Can provide clear, skills-based specifications of the requirements and of their available positions, and information on the number and timing of available openings

Solution 4 - Government initiativesState and central government has brought many schemes to provide employment opportunities to the unemployed.

Solutions for Government Initiatives• Improvement of the employment exchange by granting more additional funds and more powers which would helpthem to coordinate with private companies to provide maximum job opportunities.• Providing improved educational facilities to citizens which would help in creating more employment• Elimination of child labor as that will enable the right implementation of the “Education for all” campaign• Create a network solution that will bridge the gap between opportunities made available and those opportunitiesreaching to the individuals who require them.• Increasing government funds to public sector companies would imply better functioning which will eventually helppeople who are unemployed and thus decreasing the unemployment rate• Increasing pay scales for employees who are working in government and public sectors will give less chance for peopleto stay unemployed as they prefer to be unemployed instead of working for low pay scales• Creating an independent ministry of employment and better tax transitions Implementing these steps strictly willdefinitely help to decrease unemployment to maximum extent

Integrated Rural Development

Program (IRDP)

Drought Prone Area Program

(DPAP)

Training for Self-Employment

Jawahar Rozgar Yojana

Employment in Foreign Countries

Nehru Rozgar Yojana (NRY)

Prime Minister’s Integrated Urban

Poverty Eradication Program

Jawahar Gram Samridhi Yojana

Pradhan Mantri Gramodaya Yojana

(Gramin Awas)

Pradhan Mantri Gram Sadak Yojana

(PMGSY)

Autyodya Anna Yojana.

Jai Prakash Rozgar Guarantee Yojana

(JPRGY).

The SwarnaJayanti Gram Swarozgar

Yojana

Pradhana Mantri Gramodaya

Yojanad

Measures implemented by Indian government to overcome unemployment

Problem: There are many good schemes implemented by the Government still the rate of unemployment is very high in India.

Solution 5 - Youth EntrepreneurshipSmall scale entrepreneurs (5-19 employees) are the primary engines of job growth in developing countries. [22]

Importance of Youth Entrepreneurship:1. Turn Job seekers into job providers2. Help in creating sustainable employment

opportunities3. Raise a developing country to the rank of

developed country

Problems:1. Lack of motivation programs for parents

to promote youth entrepreneurship. 2. Lack of orientation programs for teachers

to educate the teachers on youth entrepreneurship education needs

Support from Industry/employers1. Commit to purchasing from small-medium sized enterprises including youth-owned businesses.2. Provide mentoring services and business advice to guide & support youth-owned businesses. 3. Endorse entrepreneurial initiatives by their own employees when their career development

makes them ready to go out on their own & provide marketing opportunities as appropriate.

Promoting Youth Entrepreneurship1. Transforming educational system: Embedding entrepreneurship and innovation, cross-

disciplinary approaches and interactive teaching methods in education.2. Mentorship program: Collaborate with corporates and successful entrepreneurs to mentor

individuals and help them convert their ideas into real products/services. 3. Build policy commitment: Policies should send a strong signal of support for entrepreneurship

and also set the strategic framework in which schools and universities can work to implement programs and activities within their institutions.

Planned results & outcomesFinancial Inclusion

Access to work- ex

Access to Training

Government Initiatives

Entrepreneur-ship

Potential Impact

Very high. Will directly target the most disadvantaged youth & give them the capital.

High. Biggest problems faced by youth today. Help neutralize risks of employers

Very high. Directly link employers with potential employeesand make them ready as per the requirements.

Very High. Can affect all the individuals & youth suffering from unemployment.

High. Will directly help the individuals giving them an opportunity to become independent.

Reach

High. Done through the nation wide spread BC model already in its early adopter stage.

Average. Indian industrial sector largely unorganized. Difficult to approach.

Average. Limited due to the lack of infrastructure & facilities in rural India.

Vey high. Will be directly reaching to allthe population of the country.

High. Youth are highlyenthusiastic and this will have network effects, helping to increase reach.

Feasibility

Very high. BC model currently in process. Problems needs to be corrected.

Very high. Firms willing to adopt this model. Win-win situation for all

High. If the model developed properly, canbe scaled up very readily.

High. Due to the red tape & coalition govt., diff to enforce policy changes.

High. Many young people today have their own ideas but incubation remains a problem.

Resources required

High. Engagement with RBI & state govt. to enforce BC Model. Can be integrated with UID.

High. Partnerships with corporates and industry houses required.

Very high. Requires professional people/ trainers & adequate infrastructure.

Very High. Requires public support, political support and thus very difficult to gather.

Very high. Need trainers, mentors, capital, infrastructure and most importantly innovative ideas.

Time required on the

solution

Low. Need to chalk out finer details regarding the solutions to the current problems faced by the model.

Average. Need to design internship & short term programs that can help the youth to get a small experience.

High. Will need to develop a sustainable model that integrates the requirements of the youth & corporates.

Very high. Need to chalkout correct policy changes and then get them enforced in the Indian system.

Very high. As the resources required are very high, collecting them will require good amount of time.

References1. Indicator 2: Youth Unemployment Rate , Youth Employment Network, International Labor Organization, 2011.

2. Indian Census data for 1994, 2000 & 2005.

3. Parasuraman S. , Vaidehi Y., “A profile of Youth in India”, National Family Health Survey, India, 2005-06

4. Mahendra S., Venkatanarayana M., “Youth Employment and Unemployment in India”, Indira Gandhi Institute of Development Research, Mumbai, 2011

5. The Cost of Exclusion, The Prince’s Trust Update, 2010

6. The Cost of Exclusion, The Prince’s Trust Update, 2007

7. Dhillon, Yousef, “Inclusion: Meeting the 100 Million Youth Challenge”, 2007

8. Sum A., Pond N., “The Impacts of the 2001 National Recession and the Ensuing Jobless Recovery on the Employment of the Nation’s Teens and Young Adults, Prepared for the National League of Cities, Washington, D.C., 2002

9. International Labor Organization, 2000

10. Crowder A.., “Negative effects of youth unemployment”, Politics, Issues & News, 2011

11. United Nations Development Program (UNDP ) report, 2008

12. Indians Abroad Roster, Scientific and Technical Personnel Division of the Council of Scientific and Industrial Research (GSIR), 1962

13. Beg M., Financial Inclusion: Gateway for Poverty and Unemployment, 2011

14. RBI Basic Statistical Returns and Population Census, 2006

15. Beck T., Demirgu A., ‘Reaching Out: Access to and use of banking services across countries”, World Bank Policy Research, WPS 3754, World Bank, 2005.

16. Thorat U., “Banking-correspondent is the only model to increase financial inclusion”, 2010

17. Institute for the Study of Labor and OECD, 2002

18. Gerfin M., “A Microeconomic Evaluation of Active Labor Market policy in Switzerland”, 2002

19. Cockx, B. , Picchio, M., “Are Short-Lived Jobs Stepping Stones to Long-Lasting Jobs?,“ 2010

20. Youth Unemployment Challenge And Solutions, Manpower group, 2011

21. http://www.ciett.org/index.php?id=180

22. The World Bank’s Enterprise Surveys, International Finance Corporation, 2012