In 1992, Chinese leader Deng Xiaoping reportedly said that if West Asia had oil, China would have rare earths. In two decades, China was actually dominating the rare earths chain end-to-end, from mining to magnets.
Today, it controls 70% of rare earths mining, 90% of processing and 93% of magnet production. Not surprisingly, it can and does use this monopoly as a political bargaining chip.
What, then, is India’s equivalent resource the world needs but cannot easily replicate or replace? The answer is not mineral or metal. It is people.
Demographic deluge
India has a unique combination of population size and age distribution, which gives it a massive number of young people. The United Nations estimates that in 2025, the world’s working-age population—generally defined as persons aged 15 to 64 years—will be around 5.3 billion.
Of this, India alone contributes slightly over a billion, exceeding China’s share of 986 million. Indonesia, with 194 million, is in distant third place.
This trend is expected to persist over the next decade. By 2040, India is estimated to have a 19% share in the global working-age population, and a similarly high share of persons in younger age categories. No other country will match India in sheer numbers of young working adults, and this fact lends its demographic dividend considerable weight.
The developed world is already ageing, and China’s demographic profile is shifting towards older cohorts. Emerging markets with similar median ages (such as Indonesia, Mexico and South Africa) don’t compare in terms of the magnitude of the working-age population.
Employability jinx?
India’s working-age population is indeed a valuable resource, but its economic value can be unlocked only when they are employable. The India Skills Report (ISR) can help us assess trends in job readiness across states, ages and educational domains.
The latest report shows that the overall employability of graduates has gone up from 38.1% in 2016 to 56.4% now (that’s the share of job candidates who scored more than 60% in a test administered as part of the survey). That’s a big improvement, but it still means that 45% of graduates are not employable.
Further, there is a great disparity across domains. Management and engineering graduates are the most job-ready, and those from industrial training institutes and polytechnics the least, suggesting that professional degrees offer better job prospects than vocational education.
Unfortunately, most Indians don’t opt for higher education: the share is just 28% for 18- to 23-year-olds, shows the 2021-22 All India Survey of Higher Education. Either by choice (say, desire to work in one’s own business) or circumstance (e.g. need to earn a living, or marriage), many young adults don’t get a formal college degree.
Jobs of the future
Given the relatively low level of higher education in India, can its people find jobs and stay economically productive? The answer is yes, provided the workforce can be trained and moulded for the jobs of the future.
The good news is that a university degree is no longer necessary; artificial intelligence (AI) has democratized knowledge, making it accessible to everyone. India has a ready pool of talent to drive AI adoption in organizations and AI acceptance is fairly high.
The bad news is that most jobs will be modified by AI usage, and a few will be lost to automation. However, jobs requiring unpredictable responses, dynamic problem solving, or attributes such as manual dexterity or human empathy are less likely to be automated.
For example, AI can write basic code accurately, but it will be less efficient in caring for an infant. Thus, while automation and AI will touch all occupations, some jobs will be affected more than others. This insight can be used to formulate policies that leverage our demographics into a productive resource.
Skilling crisis
Knowledge and skills are the key drivers of employability, and India’s labour force is weak on both fronts. Around 73% of persons over the age of 15 received up to or less than a secondary school education, according to the 2023-24 Periodic Labour Force Survey. And a mere 4% of individuals aged 15 to 59 received formal vocational or technical training.
To transform this labour pool into a world class workforce, it will be necessary to skill workers to make them more employable. Skilling less-educated workers is critical to enhancing their employability.
The government has already initiated several skilling and internship programs, to build an ecosystem ranging from foundational AI training for school students to skilling rural entrepreneurs.
Greater focus on professions that are the least vulnerable to automation, such as face-to-face customer service, elder care, phlebotomy and early childhood education, will create future-ready workers.
For example, the development of the caregiver industry with trained, reliable and humane professionals would give India an edge in rapidly ageing overseas markets, as well as serve domestic needs.
Missing women
Finally, more women need to enter and remain in the workforce. India’s female labour force participation rate (LFPR) shows a rising trend, but is still very low, especially in urban India.
Both supply- and demand-side factors contribute to low female LFPR. The supply of women workers is restricted by social norms, which often limit women to household work.
On the demand side, the challenge is that women often transition in and out of work due to family responsibilities, according to a 2021 paper by economists Ashwini Deshpande and Jitendra Singh. The latter explains the popularity of flexible-hours-based gig and platform work among women.
Women form over 28% of the gig workforce on the creative side (culture, music, writing) and 24% in non-creative sectors (estimates by ISR 2026). The government has launched several initiatives to upskill women and support female entrepreneurs.
However, to achieve its target of 70% female LFPR by 2047, more needs to be done. For example, facilities such as good public transport systems with effective last-mile connectivity, well-managed childcare centres and safe commutes will create a more enabling environment for working women.
The author is an independent writer in economics and finance.