Clipped from: https://www.financialexpress.com/opinion/jobs-as-growth-push/4120085/
Employment should be the Budget’s central theme; the key solution is a competitive economy.
On the one hand, the future of work is already here, with digital, artificial intelligence (AI), and green tech leading the charge, but the labour market is constrained by a “skill gap” and “jobless growth” remains a common refrain. This is a paradoxical situation.
As the government stated in a press communique in October last year, “employment carries both economic and social weight (and) higher job levels signal a stronger economy, stimulate consumption, and fuel sustained growth”.
This fits in well with the fact that at a structural level, the country, with its fast-rising working age population and low dependency ratio, is uniquely placed to leverage potentially high jobs growth for economic advancement.
However, the much-vaunted demographic dividend is not yet being satisfactorily realised, and a misalignment of the workforce with the needs of a rapidly digitising economy is apparent.
Future of work
On the one hand, the future of work is already here, with digital, artificial intelligence (AI), and green tech leading the charge, but the labour market is constrained by a “skill gap” and “jobless growth” remains a common refrain. This is a paradoxical situation.
To be sure, 7-8 million people enter the employment market every year, and only a small fraction of them manage to get decent jobs. The demographic dividend was best to be reaped in the early part of the second decade of the millennium.
Though this peak period is already behind us by over a decade, the dividend continues to be under-exploited. But there is still a window to take residual benefit of the country’s youthful demography, before it closes in another two decades.
On a cautionary note, unless job seekers acquire the right specialised skills which potential employers are looking for, they will increasingly manifest themselves as a burden on the labour market.
What does official data say?
Going by official data, the employment scenario, however, is not that grim. Anecdotal evidence, and some of the independent databases suggest otherwise.
According to the ministry of labour and employment, employment rose to over 643 million in 2023-24 from 475 million in 2017-18. Also, in 2024-25 itself, over 12.9 million net subscribers were added to the Employees’ Provident Fund Organisation, more than double the additions in 2018-19, signifying a high pace of employment formalisation.
The Centre for Monitoring Indian Economy (CMIE), on the other hand, has estimated the monthly unemployment rate (UR) at 6.91% in December 2025, significantly higher than the corresponding official Periodic Labour Force Survey figure of 4.8%, though methodologies of the two do differ. Annual UR for 2024-25 was estimated by the CMIE at 8.07%.
That official employment figures include “self-employment” with low or little income and “rising” employment in the farm sector cannot be glossed over. Contract work is rising and accounts for 42% of the workforce in organised manufacturing.
The phenomenal rise of the gig workforce—estimated to grow from 10 million in 2024-25 to 23.5 million by 2029-30—also supports official data. The sector indeed offers respite to the young and desperate job seekers, but long working hours and wages below minimum thresholds are the norm here.
Indeed, many job schemes have been rolled out in the last decade. Instead of resting on its laurels, the government should employ policy vehicles like the Budget more effectively to ensure that millions of well-paying jobs are produced.
High-value roles in AI, product design, and finance should be complemented by new blue-collar tech jobs, and remunerative manufacturing and service-sector jobs in conventional sectors with higher employment elasticity.
Designing more schemes that could prove to be unequal to the task may not be of much help. A more efficacious employment policy would be to take decisive steps that would make the economy structurally more competition-driven.
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