IMPROVING JOB QUALITY: INDIA NEEDS TO GENERATE MORE PRODUCTIVE EMPLOYMENT

Why In News?

The Indian labour market faces a structural paradox where record-low unemployment rates mask a crisis of low-quality jobs, high graduate unemployment, and a vast informal workforce despite rising statutory wages.

Present Status Of Employment In India

Key Employment Indicators

Unemployment Rate (UR): The overall unemployment rate for persons aged 15 years and above was estimated at 4.9% in February 2026. (Source: Periodic Labour Force Survey (PLFS))

Labour Force Participation Rate (LFPR): The LFPR remained steady at 55.9% in February 2026. (Source: PLFS)

Worker Population Ratio (WPR): The WPR, reflecting the proportion of the population that is employed, stood at 53.2% in February 2026. (Source: PLFS)

Workforce Size: On average, 61.6 crore persons were employed in the country during the 2025 calendar year. (Source: PLFS)  

Structural & Sectoral Trends

Shift to Formalisation: Share of workers in regular wage or salaried employment increased to 23.6% in 2025 compared to 22.4% in 2024. (Source: PLFS)

Sectoral Distribution: Agriculture remains the largest employer, although its share declined from 44.8% in 2024 to 43.0% in 2025, while manufacturing participation improved to 12.1%. (Source: PLFS)

Rise of the Gig Economy: India's gig workforce is estimated to grow from 1 crore in 2024–25 to 2.35 crore by 2029–30. (Source: NITI Aayog) 

Female Participation: Female LFPR reached 40.0% in 2025, though it still lags behind the male participation rate of 79.1%. (Source: PLFS)

Education Mismatch: Approximately 40% of young graduates remain unemployed or underemployed, indicating a persistent mismatch between educational attainment and professional requirements. 

What is Job Quality?

Based on international frameworks—specifically the OECD Job Quality Framework and the ILO Decent Work Agenda—job quality is generally evaluated through three primary dimensions:

• Earnings Quality: Not just the level of pay, but its distribution and purchasing power.
• Labour Market Security: The risk of job loss and the presence of social safety nets like unemployment insurance.
• Quality of the Working Environment: This includes non-economic aspects like safety, working hours, autonomy, and workplace relationships.

The United Nations Economic Commission for Europe (UNECE) adds that job quality must also measure "security of employment," "skills development," and "social dialogue".

Current Scenario of Job Quality in India

High Informality and Lack of Security 

Informal Employment: About 90% of India's total workforce is engaged in informal work, meaning they lack legal protection and social security.

Lack of Contracts: Among regular wage/salaried employees in the non-agriculture sector, 58% do not have a written job contract. (Source: PLFS)

No Social Benefits: Approximately 53.4% of regular wage/salaried employees are not eligible for any social security benefits (Source: PLFS) 

Stagnant Wages and Earnings

Wage Stagnation: While casual labour wages saw a modest upward trend between 2012 and 2022, the real wages of regular workers have either remained stagnant or declined. (Source: India Employment Report)

Minimum Wage Compliance: Unskilled casual workers in agriculture (62%) and construction (70%) did not receive the prescribed daily minimum wage in 2022. (Source: India Employment Report)

Structural Regression in Employment

Reverse Migration: Post-2019, there has been a reversal of the slow transition towards non-farm employment, with a rise in the share of agricultural employment. (Source: India Employment Report 2024)

Youth Unemployment: Share of educated youth among all unemployed people increased from 54.2% in 2000 to 65.7% in 2022. (Source: India Employment Report)

Youth Share: India's youth account for almost 83% of the total unemployed workforce. (Source: India Employment Report) 

Gender Disparities in Job Quality

Distress-Led Participation: Recent rise in the Female Labour Force Participation Rate (LFPR) is largely driven by an increase in self-employment, specifically unpaid family work, rather than high-quality wage employment. (Source: State of Working India)

Self-Employment Earnings: Real earnings from self-employment declined after 2019, indicating that the rise in employment numbers did not translate to better incomes. (Source: State of Working India) 

Challenges in Generating Productive Employment

The inability to move workers from low-productivity sectors (like subsistence farming) to high-productivity sectors (like modern manufacturing) is the primary bottleneck. 

Structural Mismatch (GDP vs Jobs)

Agriculture: Contributes only 18.2% to GDP but still employs 45.8% of the workforce, leading to massive "disguised unemployment". (Source: PLFS)

Manufacturing Stagnation: Share of manufacturing in total employment has remained stagnant at around 12-14% for decades, failing to become the mass employer that it was for China or Vietnam. (Source: India Employment Report)

Services-Led Growth: While the services sector drives over 50% of GDP, it requires high skills (IT, Finance) that the average rural worker lacks, creating a "skills barrier". (Source: RBI) 

The "Missing Middle" Syndrome

Indian industry is dominated by millions of micro-enterprises (employing <10 people) and a few large conglomerates, with very few medium-sized firms.

Dwarfism: Micro-enterprises account for 99% of MSMEs but often lack the capital to upgrade technology or pay productivity-linked wages.

Productivity Gap: Labour productivity in the informal sector is nearly one-fifth of that in the formal sector, keeping wages perpetually low.

The Employability Crisis

Skill Deficit: Only 4.4% of the workforce has received formal vocational training, compared to 52% in the USA and 96% in South Korea. (Source: NSDM)

Graduate Unemployment: Unemployment rate is highest among graduates (29.1%), indicating that the education system is not producing industry-ready skills. (Source: India Employment Report) 

Key Government Initiatives

The government has shifted focus from "wage entitlement" (like MGNREGA) to "productivity enhancement" schemes.

Linked Incentive (PLI) Scheme: Targeting 14 key sectors (like Electronics, Pharma, Textiles) with an outlay of ₹1.97 lakh crore. Sectors like mobile manufacturing have seen massive employment surges, though lagging in others.

PM Vishwakarma Scheme: Targeting the informal artisan economy. Provides collateral-free loans (5% interest), ₹15,000 toolkit incentive, and skill training to artisans in 18 traditional trades .

Skill India Mission (PMKVY 4.0): Focuses on Industry 4.0 skills like AI, Robotics, and 3D Printing to improve employability.

PM SVANidhi: Micro-credit facility for street vendors to restart businesses, promoting self-reliance over charity.  

Employment Linked Incentive (ELI) Scheme: Announced in the Union Budget 2024-25 to bridge the gap between "having a job" and "having a formal job."

eShram Portal: To create a National Database of Unorganized Workers (NDUW) and link them to social security schemes.

Way Forward: A Roadmap for High-Quality Jobs

Implementing a National Employment Policy (NEP)

India currently manages employment through fragmented schemes across different ministries (Labour, Skill, MSME, Commerce).

• Unified Framework: An NEP would align industrial, trade, and educational policies to ensure that "employment generation" is a central objective of economic growth, rather than a byproduct.
• Sectoral Mapping: Identifying high-growth, labor-intensive sectors like the Care Economy and Green Energy for targeted investment.

Scaling up MSMEs: From "Dwarfs" to "Giants"

Most Indian firms are too small to be productive. Policy must incentivize "scaling up" rather than just "staying small."

• Cluster-Based Development: Strengthening industrial clusters (e.g., One District One Product) allows small units to share expensive infrastructure and technology, boosting their collective productivity.
• Removing Regulatory Cholesterol: Rationalizing the compliance requirements that discourage small firms from hiring formal, permanent staff.

Closing the Skill-Employability Gap

Education must translate into market-ready skills to reduce graduate unemployment.

• Industry-Led Apprenticeships: Strengthening the National Apprenticeship Promotion Scheme (NAPS) to make on-the-job training a mandatory part of higher education.
• Focus on 'Future Skills': Investing in digital literacy and vocational training for Industry 4.0 (AI, IoT, Robotics) to prevent technological displacement.

Leveraging the Care and Green Economies

• The Care Economy: Investing in health, education, and childcare could create 11 million jobs, while also freeing up women to join the formal workforce. (Source: ILO)
• Green Jobs: The transition to renewable energy is expected to create 3.4 million jobs by 2030 in solar and wind energy sectors. (Source: CEEW)

Formalizing the Informal through Social Security

Universal Social Security: Effective implementation of the Code on Social Security (2020) to provide insurance and pension benefits to gig and platform workers.

Urban Employment Guarantee: Parliamentary Standing Committee on Labour suggested piloting an Urban Employment Guarantee Scheme (on the lines of MGNREGA) to provide a safety net and build climate-resilient urban infrastructure.

Enhancing Female Labour Force Participation (FLFP)

Support Infrastructure: Providing safe transport, creche facilities, and flexible working modules to move women from "unpaid family work" to "paid formal work".

Conclusion

The transition from low-productivity informal work to high-productivity formal jobs is not just an economic necessity but a social imperative. By shifting focus from "minimum wages" to "living wages" and from "survival" to "security," India can truly capitalize on its demographic dividend.

Source: BUSINESS-STANDARD

PRACTICE QUESTION Q. Distinguish between "Job Quantity" and "Job Quality." Why is "Earnings Quality" and "Labour Market Security" essential for India’s long-term economic stability? 150 words