South Asia's growth-jobs paradox: High GDP, low employment

A persistent paradox plagues South Asia: robust economic expansion has not yielded sufficient well-paying jobs for a growing, educated population. This disconnect, highlighted by the 2024 upheaval in Bangladesh and youth protests in India, signals a shared regional crisis where aspirations outpace employment opportunities.

While India and Bangladesh have maintained impressive 6-7% annual growth for over three decades, and Pakistan has seen slower but steady growth, the creation of formal, productive employment has lagged significantly. This has fueled widespread anger, particularly among the youth. In India, nearly 40% of graduates under 25 are unemployed, with overall youth joblessness near 29%. A vast majority of Indian workers remain in informal, insecure jobs.

Economic theory suggests that growth should naturally lead to job creation as workers move from low-output agriculture to more productive sectors. However, countries like India and Bangladesh complicate this narrative. India's economic transformation shows that while agriculture's share of GDP has shrunk dramatically, it still employs a disproportionately large segment of the workforce. This indicates chronic underemployment and a slow structural shift.

Furthermore, the nature of growth matters. India's booming IT sector, a global tech hub attracting significant investment, employs only about 1% of the national workforce. Similarly, global capability centers add a limited number of jobs. This suggests that while GDP may climb, the benefits are not translating into widespread employment, especially as productivity-boosting technologies can displace workers faster than new industries absorb them. The result is a widening gap between economic growth and job creation, threatening social stability.