Over half of India’s graduates are working in jobs that require lower skill levels, highlighting a significant disconnect between educational attainment and employment opportunities. 

Even more alarming, 88% of India’s workforce remains in low-skill occupations, despite expanded access to higher education, according to a new report by the Institute for Competitiveness, the Indian affiliate of Harvard Business School’s Institute for Strategy and Competitiveness.

The report, titled Skills for the Future: Transforming India’s Workforce Landscape, draws on data from the Periodic Labour Force Survey (2017-18 to 2023-24). 

It reveals that just 8.25% of graduates (classified as Educational Skill Level 3) are employed in roles that align with their qualifications. In contrast, more than half are in positions that fall below their education level, reported the Times of India. 

The skills crisis is further exacerbated by regional disparities. 

While Union Territories (UTs) and states like Chandigarh, Puducherry, Goa, and Kerala show better alignment between skills and jobs, others, particularly Bihar and Uttar Pradesh, lag significantly in the domain of high-skill employment.

The report also points out that a vast majority of the workforce remains concentrated in Skill Level 1 and 2 roles, such as manual labour, domestic work, and street vending, even as participation in both education and vocational training programmes has increased in recent years.

The Mismatch Table featured in the report, released by Jayant Chaudhary, Minister of Skill Development and Entrepreneurship, highlights the alarming extent of skill underutilisation in India’s workforce.

It shows that over 50% of graduates are employed in Skill Level 2 occupations, such as clerical jobs, machine operation, and sales roles that typically require lower qualifications than a graduate degree. 

While 38.23% of graduates are working in Skill Level 4 jobs that match their educational qualifications, a significant 28.12% of postgraduates are still in mid-skill roles, indicating persistent underemployment even among highly educated individuals. 

The report also notes cases of under qualification, where individuals without formal higher education are engaged in high-skill jobs, often through Technical and Vocational Education and Training (TVET) or informal learning. 

These mismatches reflect deep structural inefficiencies in India’s labour market and are mirrored in wage disparities as well. These expose the structural inefficiencies in the country. 

Workers in Skill Level 1 jobs earn minimum wages, while those in Skill Level 2 have seen 5-6% annual wage growth. In contrast, professionals in Skill Levels 3 and 4 have benefited from annual wage increases of 8-12%, underscoring the importance of transitioning more workers into high-competency roles. 

Despite these challenges, the report finds some positive trends. 

States like Delhi, Puducherry, and Goa have shown a satisfactory rise in the share of mid- and high-skill jobs. 

Primary school enrollment is nearly universal, and transition rates from school to higher education are improving, with a Gross Enrolment Ratio (GER) of 57.56% at the higher secondary level and a 78.41% transition rate from secondary to higher secondary in 2021-22. 

Additionally, TVET programmes are helping some under qualified individuals access high-skill roles by offering practical, hands-on training. 

To address the widening skills mismatch, the report proposes a comprehensive policy roadmap. Key recommendations include institutionalising a disaggregated Skill Gap Analysis Survey, creating a centralised Skill Data Repository, updating the National Classification of Occupations (NCO), aligning skill development efforts with regional industrial clusters, integrating TVET with mainstream education, and incentivising employers to recruit candidates certified under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY). 

These reforms are seen as crucial for building a future-ready workforce equipped to navigate a rapidly evolving digital, green, and globally competitive economy, in line with India’s Vision 2047.