India has made remarkable strides in education, technology, and economic growth in the past two decades. But the labour market is failing to generate enough high-quality jobs for its large and growing population; at the same time employers struggle to find workers with the right skills for the job openings they have.

Informal employment and self-employment are on the rise. The growing chasm between economic progress and productive employment opportunities for the country’s working age population is a critical challenge.

The country ranks in the bottom third globally for labour force participation, with a staggering 40 per cent of the population over 15 neither working nor seeking employment. The situation is particularly dire for women, with 58 per cent absent from the labour market. While female participation has shown some improvement, rising from 24.5 per cent in 2018-19 to 41.7 per cent in 2023-24, much of this increase is attributed to women entering agriculture — a sector characterised by informal and low-productivity work.

Precarity of work

What is even more concerning is the growing precarity of available work. Nearly half of India’s employment remains in agriculture, a sector plagued by informality and low productivity. Self-employment, another form of insecure work where most workers are beyond the purview of any labour or social protections, has also increased to 58.4 per cent of employment.

As much as 53.4 per cent of regular wage/salaried employees — a proxy for formal workers — do not have social security benefits. The rise of gig work, while potentially offering flexibility, generally comes with poor working conditions, uncertainty, and lack of social security. Despite all the hype over skills training, only 5 per cent of respondents in the Periodic Labour Force Survey 2023-24 identify as having any formal training. The number of youth Not in Education, Employment, or Training (NEET) stood at a concerning 33 per cent in 2020-21, highlighting the disconnect between education and employability. To address this crisis, we need a multi-faceted approach that starts with acknowledging that there is an employment crisis. The crisis can only be resolved with government — Central and State working with business, and civil society; each playing their role.

Ground-up approach

Rather than addressing more and better job creation top down through national-level strategies, we must look at job creation from the ground up through the lens of local/regional economies.

The government can help design effective and coordinated industrial policies that provide targeted support to labour-intensive manufacturing sectors like apparel, textiles, footwear, and jewellery; as well as locally salient service sectors like hospitality and tourism.

Within these relevant sectors, the government can support micro, small and medium enterprises through schemes that enable better access to finance; access to infrastructure such as reliable power supply and connectivity; and access to training. All of these efforts entail working closely with the private sector. These efforts must be complemented by building an effective, universal social security architecture to protect workers, especially those in informal employment.

The government should undertake review and reform of the education and skills-training architecture to address its many problems. The implementation of National Education Policy 2020 must be robust. The current skills training system needs an overhaul, with a greater emphasis on employer-based training, cluster-based approaches, and regulated apprenticeships.

The writer is President and Executive Director of the JustJobs Network