India’s employment landscape has seen changes between 2017-18 and 2023-24. The availability of annual labour data through the Periodic Labour Force Survey (PLFS) has enabled detailed analysis. The Labour Force Participation Rate (LFPR) rose from 36.9% to 45.1%. Employment increased by 154 million jobs, outpacing the growth of job seekers and reducing unemployment to just over 3%. Despite these gains, several persistent issues complicate policy decisions.
Labour Force Participation and Employment Growth
Between 2017-18 and 2023-24, India’s workforce expanded rapidly. The number of employed persons rose from 34.7% to 43.7% of the population. Job seekers grew at 4.3% annually, while population growth was only 1%. This indicates rising labour market engagement. However, a large share remains in low-skilled jobs, especially in agriculture, which grew faster than non-agricultural sectors.
Sectoral Employment Concentration and Skills Mismatch
Agriculture employs 46% of the workforce, up from 44%. Growth in agriculture employment (5.7% annually) outpaced overall workforce growth. Meanwhile, professional, support services, and education sectors grew at about 1% annually. This shows a mismatch between skills available and market demand. Most workers are in low-technology sectors like agriculture, construction, trade, and household services, which offer low wages and limited productivity gains.
Youth Employment and Economic Participation
A third of Indians aged 15-29 are neither in education, training, nor job searching. Nearly half of these youth prepare for government jobs, reflecting economic rent-seeking. Social and economic barriers such as relocation fears and family concerns contribute. Addressing this requires skill development, easier access to capital, support for MSMEs, and reforms like limiting competitive exam attempts and faster insolvency resolution under the Insolvency and Bankruptcy Code.
Gender Gap in Labour Force Participation
Male participation ranges from 52% to 64%, averaging 56%. Female participation varies widely from 18% to 55%, averaging about 30%. This gap threatens the demographic dividend. Increasing female participation to 50% requires improving education, workplace safety, entrepreneurship support, and social awareness. Vocational training and infrastructure investment are also vital.
Income Growth and Inequality Among Workers
Salaried workers’ incomes rose 3.8% annually but below inflation. Female salaried workers saw only 3% growth. Casual workers had higher nominal income growth (8.4%-9.2%) due to minimum wage laws. Self-employed workers, who form the majority, had stagnant or negative income growth, especially women (-1.3%). This marks concerns over inequality and living standards. Measures needed include collateral-free credit, deregulation, business ease, marketing help, and technology access.
Labour Laws and Social Security
Only 24 million of 329 million non-agricultural workers are fully covered by labour welfare laws. Labour regulations currently serve a small segment. Relaxing labour laws for firms with up to 1,000 workers, with plans to increase to 5,000, can improve scale economies. Social security must extend to all establishments with more than 10 workers, including gig and casual workers. Efficient fund management and incentives for states to implement codes are essential.
Questions for UPSC:
- Critically analyse the challenges of labour force participation in India and suggest policy measures to enhance youth employment.
- Explain the impact of gender disparity in labour participation on India’s demographic dividend with suitable examples.
- What are the implications of skill mismatch in India’s employment sectors? How can skill development programmes address this issue?
- Comment on the role of labour laws and social security in protecting workers’ rights and promoting industrial growth in India.
