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Is Bad Hiring Behind India’s Underemployment Crisis?

Updated on May 10, 2019

The next time you place an order for dinner to be delivered to your home, or book a cab to the office on your phone, stop for a moment to think about the person who is providing you the required service, and ask them a simple question: what is your educational background?

The most popular answers would probably be “Engineer”, “Diploma Holder”, “Ph.D”, etc. In fact, most of the “gig workforce” powering the growth of India’s mammoth food delivery and taxi hailing start-ups can be diagnosed as, perhaps, the biggest case of underemployment in the world.

A False Step

India’s struggle to create new jobs over the past few years have been well-documented. In a country where half of the 1.3 billion people fall under the age of 27, an unemployment rateof 7.2% (registered in February, 2019) could very easily lead to social unrest and a loss of faith in authorities. Similar dissatisfaction with low job creation has led a majority of Western countries to re-evaluate their liberal economic policies, which tend to favour the rich over the poor.

But, more importantly, why are well educated and qualified individuals going for temporary and unstable jobs which don’t utilise the full potential of their skills? Is the gig economy built upon choice or convenience, or is it a by-product of circumstances? After surveying ample evidence over the last couple of years, there is no doubt that Prime Minister Modi’s surprise demonetization program badly hurt the formal and informal employment sectors. However, while blue collar jobs are well on the path of recovery, the struggle to fill up white collar jobs has persisted and, in some cases, taken a turn for the worse.

Outdated Process

The diagnosis of this conundrum probably lies in the way hiring is done in India. Although today’s recruitment processes are very different to what they were ten years ago, hiring managers seem to ignore the fact that the current employment market is driven by candidates, and that job hunter expectations play a dominant role in the recruitment process.

Whether it is assessing skills or conducting lengthy interviews, hiring managers are asking candidates to pour more than ever into the job search process. In other words, while the world is seemingly functioning faster, the recruitment process is finding it difficult to get rid of the persistency of long lead times.

Candidates are impatient about landing a job, for various reasons like a precarious financial position, but the time-to-fill for Indian white collar jobs remains at 1-2 months. Rather than being actively involved in the prolonged nature of the recruitment process, job seekers are simply choosing the option to make a quick buck by joining the gig economy.

The Availability-Demand Gap

Secondly, there is a clear, distinct dissonance between the college degrees with which candidates are graduating and the skills or talents required by employers. This is reflected in the finding that underemployment among the well-educated is three times more than the Indian average. Colleges and fresh graduates would greatly benefit from a database which details the number and type of jobs in demand. Once armed with real-time information regarding the industry’s skill requirements, students can make better career decisions and educational institutions can formulate curriculum to stand the test of time.

While there is no doubt that the job creation policies implemented by the Indian Government are insufficient, there is much to be said about the inefficiencies of the recruitment process in the Indian employment market. The lengthy decision-making process demanded by hiring managers and lack of quality candidates are playing a significant role in pushing underemployment. It is time for all relevant stakeholders to face the harsh truth, and urgently pursue long-term reforms.

© 2019 Srinivas Dubba

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