The Evolution of Employment in India: Trends, Challenges, and Future Prospects

Introduction

The rapid transformation of India’s employment landscape reflects the country’s dynamic economic growth and technological advancements, significantly influencing the future of work and the future of jobs. This article examines the current state of employment in India, focusing on recent trends, sectoral developments, and governmental initiatives aimed at fostering job creation and skill development. The discussion draws insights from the “Conference on Future of Jobs” held in New Delhi on January 15, 2025, organized by the Ministry of Labour & Employment (MoLE) and the Confederation of Indian Industry (CII), which explored the future jobs and skills required in emerging sectors. The conference highlighted the importance of shaping the future of work in India’s tech industry, emphasizing how technological advancements are redefining roles and creating new opportunities. 

Current Employment Scenario

Recent data indicates a significant expansion in India’s job market. The Worker Population Ratio (WPR) has shown a marked improvement, increasing from 46.8% in 2017-18 to 58.2% in 2023-24. This growth is further evidenced by the total estimated employment, which rose by 12.18 crore between 2017-18 and 2022-23, averaging an annual growth of 2.4 crore. According to the Reserve Bank of India, overall employment grew from 47.15 crore in 2014-15 to 64.33 crore in 2023-24, representing a total increase of 17.19 crore jobs over this period.

Sectoral Analysis

Service Sector

The service sector has been a primary driver of employment growth, with jobs increasing from 16.12 crore in 2017-18 to 20.15 crore in 2022-23, adding over 4 crore new positions. This growth aligns with India’s expanding role in the global digital economy, particularly evident in the establishment of 1,700 Global Capability Centres (GCCs) employing over two million people. These centers serve as hubs for emerging technologies such as artificial intelligence, data analytics, and blockchain.

Construction Sector

The construction sector has shown robust growth, with employment rising from 5.47 crore in 2017-18 to 7.47 crore in 2022-23, an increase of 2 crore jobs. This growth can be attributed to increased infrastructure development and urban expansion projects across the country.

Manufacturing Sector

Employment in the manufacturing sector grew from 5.47 crore in 2017-18 to 6.31 crore in 2022-23, an increase of 85 lakh jobs. This growth has been supported by initiatives such as the Production Linked Incentive (PLI) scheme, which aims to boost domestic manufacturing and attract foreign investment.

Government Initiatives and Policy Framework

The Indian government has implemented several initiatives to support job creation and skill development:

1. The 2024-25 Budget announced five employment and skilling schemes targeting 4.1 crore youth over five years, with a central outlay of ₹2 lakh crore.

2. The National Career Service (NCS) portal has seen a 214% increase in job vacancies in FY 2023-24 compared to FY 2022-23, exceeding 1 crore vacancies.

3. The Production Linked Incentive (PLI) scheme has been instrumental in attracting investments and creating employment opportunities in various manufacturing sectors.

4. The PM Gati Shakti National Master Plan aims to improve infrastructure connectivity, potentially creating numerous jobs in the logistics and transportation sectors.

Additional Information:

India has launched several employment-oriented schemes to address unemployment and foster job creation across diverse sectors. The following are key initiatives implemented by the government:

Employment Linked Incentive Schemes

The Union Budget 2024-25 introduced three major schemes:

1. Scheme A: Offers a one-month wage subsidy of up to ₹15,000 to first-time EPFO-registered employees, disbursed in three installments, aiming to benefit 2.1 crore individuals over two years.
2. Scheme B: Encourages manufacturing jobs by subsidizing employers for new hires’ EPFO contributions during the first four years of employment.
3. Scheme C: Reimburses employers up to ₹3,000 per month for two years towards EPFO contributions for new employees earning below ₹1 lakh monthly.

Skill Development Initiatives

• Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Focuses on providing short-term skill training to enhance employability.
• New Skill Development Scheme: Targets skilling 20 lakh youth over five years and upgrading 1,000 Industrial Training Institutes (ITIs).
• Internship Program: Plans 1 crore internships in top 500 companies over five years, with a monthly allowance of ₹5,000 and a one-time assistance of ₹6,000.

Rural Employment Schemes

• Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): Ensures 100 days of wage employment annually for rural households.
• Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY): Focuses on rural youth’s skill development for employment opportunities.

Urban Employment Initiatives

• Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM): Encourages sustainable self-employment in urban areas.

Entrepreneurship Support

• Prime Minister’s Employment Generation Programme (PMEGP): Facilitates self-employment through the establishment of micro-enterprises.
• Pradhan Mantri Mudra Yojana (PMMY): Provides loans up to ₹10 lakh for small and micro businesses.

Sector-Specific Schemes

• Production Linked Incentive Scheme: Promotes domestic manufacturing and job creation.
• Atmanirbhar Bharat Rozgar Yojana (ABRY): Incentivizes job creation by covering EPF contributions for new employees.

Social Security Measures

• Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM): Offers pension benefits to unorganized sector workers.
• NPS Vatsalya: Allows parents/guardians to contribute to a minor’s account, later converting it into a regular NPS account upon adulthood.

Emerging Sectors and Future Prospects

Hospitality and Tourism

The tourism industry is poised for significant growth, with a vision to contribute to a $3 trillion economy by 2047. Key trends include:

• Spiritual tourism
• Rural tourism
• Wellness tourism

The sector’s growth is expected to create substantial employment opportunities, with skills transferable to other industries such as retail and business process outsourcing.

Smart Manufacturing

Smart manufacturing is crucial for achieving India’s economic goals. With 90% of firms in this sector being MSMEs, there is considerable potential for job creation. The current objective is to generate over 100 million highly skilled jobs and position India as the second-largest global manufacturing hub.

Logistics

The logistics sector is experiencing rapid growth, with global projections reaching $18 trillion by 2030. In India, the sector is expected to grow to over $350 billion. This growth is driven by:

• Rising e-commerce
• Manufacturing incentives
• Transformative policies like the PM Gati Shakti National Master Plan

The Indian warehousing market is growing at a 14-15% CAGR and could reach $35 billion by FY 2027. Key trends in this sector include AI and automation, intra-storage robotics, and sustainable transportation initiatives.

Healthcare

The healthcare sector contributes significantly to the global GDP, accounting for approximately 10%. In India, this sector is growing at 7-10% annually. However, a global shortage of 18 million healthcare workers is expected by 2030, with India facing a gap of 2.7 million. Proposed solutions include:

• Increasing government health expenditure
• Upskilling in digital health technologies
• Developing medi-cities for medical tourism
• Strengthening rural healthcare infrastructure

Challenges and Policy Recommendations

Despite the positive trends, several challenges persist in India’s job market. Addressing these issues will be crucial for sustainable and inclusive growth. 

Key policy recommendations from the conference include:

1. Enhancing skill development and technological upskilling programs to meet the evolving demands of the job market.

2. Encouraging public-private partnerships to foster inclusive growth and bridge the skills gap.

3. Promoting digital literacy to prepare the workforce for an increasingly digitalized economy.

4. Instilling eco-friendly workforce values to align with global sustainability goals.

5. Prioritizing inclusivity and sustainability in workforce development to ensure equitable growth.

6. Strengthening industry-academia linkages to align educational outcomes with industry requirements.

7. Focusing on innovation and productivity enhancement to maintain competitiveness in the global market.

Conclusion

India’s employment landscape is undergoing a significant transformation, driven by technological advancements, policy initiatives, and changing global economic dynamics. The country’s focus on skill development, digital literacy, and sector-specific growth strategies positions it favorably to address both domestic employment needs and global workforce challenges.

As India moves towards its vision of becoming a global talent hub, continued emphasis on adaptability, continuous learning, and innovation will be crucial. The government’s proactive approach, coupled with private sector engagement, provides a strong foundation for addressing the challenges and opportunities in the evolving job market.

The future of employment in India appears promising, characterized by diversity and dynamism across various sectors. However, realizing this potential will require sustained efforts in policy implementation, skill development, and fostering an environment conducive to innovation and entrepreneurship. By addressing these aspects comprehensively, India can not only meet its Sustainable Development Goals but also emerge as a leading player in the global job market.

Prelims Practice Question

Q. With reference to recent trends in India’s job market, consider the following statements:

1. The Worker Population Ratio (WPR) in India increased from 46.8% in 2017-18 to 58.2% in 2023-24.
2. The service sector has been the primary driver of employment growth, with the establishment of Global Capability Centres (GCCs) playing a key role.
3. The manufacturing sector witnessed the highest employment growth among all sectors between 2017-18 and 2022-23.

Which of the statements given above is/are correct?

• (a) 1 and 2 only
• (b) 1 and 3 only
• (c) 2 and 3 only
• (d) 1, 2, and 3

Correct Answer: (a) 1 and 2 only

Explanation:
Statement 1 is correct: The WPR has shown a significant improvement, increasing from 46.8% in 2017-18 to 58.2% in 2023-24.
Statement 2 is correct: The service sector has been the primary driver of employment growth, supported by the establishment of Global Capability Centres (GCCs) employing over two million people in emerging technologies.
Statement 3 is incorrect: While the manufacturing sector saw growth, the construction sector witnessed a higher absolute increase in employment, with 2 crore jobs added compared to 85 lakh jobs in manufacturing.

Mains Practice Question

Analyze the recent trends in India’s job market with respect to sectoral contributions to employment growth. Discuss the role of government initiatives like the Production Linked Incentive (PLI) scheme and infrastructure development projects in driving this growth. (250W, 15M)