The employment challenge in Andhra

Andhra Pradesh faces a grave problem of high unemployment among the most educated people in the state. The unemployment rate in Andhra Pradesh stood at 6.15 per cent in September-December 2022. However, the unemployment rate among those who completed at least a graduation (henceforth referred to simply as graduates) was a whopping 35.1 per cent. In fact, over 73 per cent of the unemployed people in Andhra Pradesh were graduates.
 

Data for this analysis is from the 27th Wave of CMIE’s Consumer Pyramids Ho­u­s­ehold Survey during September-Decem­ber 2022. The Andhra Pradesh responses during this period were from 5,897 households.
 

Typically, in India, we see that the unemployment rate among more educated groups is higher. This is because educated people are more likely to seek employment. In the labour market terminology, educated people have a high labour participation rate. A similar trend follows in Andhra Pradesh. But it is concerning that the unemployment rate among its graduates is painfully high.
 

The graduate unemployment rate of 35.1 per cent in Andhra Pradesh is more than double the unemployment rate faced by graduates in India, which stood at 17.2 per cent in September-December 2022. This in turn is more than twice the unemployment rate of 7.47 per cent in India.
 

The unemployment rate in Andhra Pradesh was significantly lower among people with lower levels of education. People with maximum education of up to 9th standard faced an unemployment rate of less than one per cent. The rate increased to close to 4.6 per cent for people who completed education between 10th and 12th standards. Compared to this, the unemployment rate among graduates was almost 30 percentage points higher.
 

With an increase in the levels of education, there is also a rise in the share of working-age population who enter the labour force in Andhra Pradesh. The labour participation rate among people with maximum education of up to 9th standard was 32 per cent in September-December 2022. Among high school graduates (between 10th and 12th standards), the labour participation rate was higher at 38.8 per cent. Further, the labour participation rate among graduates was a little over 67 per cent, significantly higher compared to other groups.
 

While the labour partic­i­pation is high among gra­d­uates in Andhra Pradesh, a large share of those who enter the labour force are un­able to find employment. On the other hand, people in the labour force who have lower education levels are far less unemployed. In September-December 2022, there were 16.6 million people in the labour force in Andhra Pradesh. Around 8.63 million of them had a maximum education of up to 9th standard. Only around 7,000 people in this education group were unemployed and the remaining 8.62 million were employed.
 

The high employment witnessed am­o­ng people with education of upto 9th standard reflects in their high employment rate of 32 per cent in September-December 2022. This is as high as the labour participation rate among this education group, suggesting that almost everyone with up to 9th standard education who enters the labour force looking for employment is able to secure a job.

Among high school graduates, there were 0.27 million unemployed out of the 5.8 million people in the labour force in September-December 2022. The size of the workforce was over 5.5 million. This implies that close to 95 per cent of high school graduates who entered the labour force in September-December 2022 were able to find jobs in the state.
 

On the contrary, graduates fac­e­d adverse employment conditions. In Sep­tember-December 2022, 2.1 million graduates entered the labour force in search of em­ployment. Over 35 per cent, accounting for around 0.7 million, were unable to se­c­u­re jobs and hence forced to join the unemployed pool. In fact, the unemployment rate among graduates increased dramatically by over 10.6 percentage points in the past three years. Between September-December 2019 and the corresponding period in 2022, the graduate unemployment rate increased from 24.5 per cent to 35.1 per cent.
 

Alongside this rise in unemployment, employment among graduates in Andhra Pradesh fell from 1.7 million in September-December 2019 to 1.4 million in September-December 2022. The latter period recorded an employment rate of 43.5 per cent for graduates in the state.
 

In September-December 2022, there were around 15.5 million employed persons in the state. A little over 55 per cent of the workforce comprises people who had completed education of up to 9th standard. Close to 35.8 per cent were high school graduates who achieved a maximum education between 10th and 12th standards. A mere 8.8 per cent of the workforce of the state was graduates.
 

The employment numbers suggest that a bulk of the workforce of Andhra Pradesh is poorly educated. At the same time, a fairly large proportion with better education is unable to find jobs. It appears that people with higher education levels are not yielding returns in terms of finding suitable employment opportunities in the state.

Mahesh Vyas is MD & CEO, CMIE; Natasha Somayya is an analyst with CMIE