The Indian labour market presents unique challenges, shaped by evolving economic sectors, socio economic disparities, women’s LFPR, new technology like AI and ML, climate change and market relevant education and training . As per MoSPI data, open unemployment is on a downward trend, but still above 6% is high. Hence while we continue to design policies that maximise the potential of the workforce , we look at the core issues in the Indian Labour Market .
Issue#1: Persisting Education & Skill Gaps-In 2024 around 62% of adults had less than secondary education , with 22% having no formal education at all. Only 4.1% of adults and 4.9% of youth received formal Vocational Training as in 2024. Given India’s federal structure, a combined State – Central Government approach can help address the Skill Gaps.
Issue#2 Persistent Labour Market Inequalities and Disparities- a) In 2024, the WPR is 76.3% for men, while only 40.3% for women. Women are more employed in agriculture (64.3%) and informal sector and the gender disparity would be less if level of recording of the informal sector is improved b) Rural areas have a high WPR of 62.1% in 2024, but of these 59.8% is still in agriculture. Technological upgradation can help reduce this agricultural dependence. Also, the higher the education level , the more is employment seeking beyond agriculture
Issue#3 Educated Youth unemployment is at double digit levels and the PM internship scheme started from 2024 and continuing is a real good measure at creating employable youth
Issue#4 Gig Economy & Technology- Advent of Artificial Intelligence and Automation is reducing demand for low skilled and creating demand for very high skilled workers who can integrate AI with their domain expertise which is happening, but at a lower scale. There are around 1 crore gig workers today and the number is expected to double in next 5 years. Fortunately Budget 2025 introduced Social Security measures for them , which was a much needed one. But we must mention that some highly skilled people are doing very well in Gig Economy and there is heterogeneity in Gig Employment
Issue#5 Climate Change-This is creating a demand for another class of skilled workers in solar and wind energy and waste management and helping India’s transition to a low carbon economy.
To sum up the key issue emerging is Skilling and Education and funding of the same. For upliftment of the full population and reaping the demographic advantage we enjoy Government support and is needed in Skill development. Fortunately people have accepted Contractual and Self Employment along with the evolving global Economy and they need to be equipped to cope up with the Market. Along with that we feel demand boosting measures are a constant need of today’s economy, be it Fiscal or Monetary one. Last, we need regular upgradation and strengthening of employment and labour market data.