India should prepare itself for a dynamic employment scenario

Artificial intelligence, cloud computing and the Internet of Things, among other technological forces, are significantly altering not just the way we work, but also the set of skills in demand.
Artificial intelligence, cloud computing and the Internet of Things, among other technological forces, are significantly altering not just the way we work, but also the set of skills in demand.


  • Our policy emphasis must go beyond job creation to encompass job preparedness for a demographic dividend to be realized.

Employment generation has been at the centre of policy discourse in all nations throughout modern history. No country can remain insulated from concerns of falling employment levels and the need to create gainful employment opportunities. For the most populous nation in the world, India, set to experience a demographic dividend on account of a youth bulge that will grant it the globe’s largest pool of working-age individuals, the question of employment generation assumes special importance. As per the second advance estimates of national income for 2023-24, as released by the Indian government recently, India’s real gross domestic product (GDP) is expected to increase by 7.6% this fiscal year, revised upwards from the earlier growth estimate of 7.3%. Also, as announced by finance minister Nirmala Sitharaman in her interim budget speech on 1 February, the government’s outlay on capital expenditure for the next year will be increased to about 11.1 trillion, up more than 11% from the 10 trillion budgeted for 2023-24 (and up 17% from this year’s revised budget estimate). The finance minister’s speech laid emphasis on the substantial multiplier effect of capex on both economic growth and employment generation.

Employment is the link between economic growth and higher standards of living. As per the latest Periodic Labour Force Survey’s quarterly data, India’s urban unemployment rate for individuals aged 15 and above decreased from 7.2% to 6.5% between October-December 2022 and the corresponding quarter of 2023. This is indeed an encouraging trend. However, in the coming years, New Delhi’s focus on creating robust employment opportunities should factor in multiple aspects of the country’s employment challenge, beyond just the quantity aspect.

While increasing the sheer number of jobs available is important, it’s equally vital to ensure that these jobs are meaningful and productive. Simply put, it’s not just about creating more jobs, but about fostering opportunities that truly contribute to the well-being and economic advancement of people. As of November 2023, India’s production-linked incentive (PLI) schemes had attracted investments exceeding 1 trillion, which has reportedly led to production/sales value of over 8.6 trillion and the creation of more than 678,000 lakh jobs, both directly and indirectly. There is vast scope to expand India’s scale of job creation to further accommodate the country’s expanding pool of working-age youth. Beyond this increase in scale, what must be emphasized is the optimal utilization of human capital to avoid underemployment and disguised unemployment.

The Economic Survey (2022-23) highlights an increase in the share of self-employed individuals and a decrease in that of regular wage/salaried workers in 2020-21, as compared to 2019-20, in both rural and urban areas. In order to address issues of unemployment, policymakers must understand the factors driving this increase in self-employment, as this rise can be either a positive reflection of heightened entrepreneurship or reflective of inadequate employment opportunities. When it comes to the employment scenario, it is crucial for policymakers to drill down for a look at underlying factors that could point to trends which may not be immediately evident.

Economic growth doesn’t always result in proportional job creation because various factors beyond GDP growth are essential for fostering employment opportunities. While the overall GDP growth figure is important, it’s equally critical to examine growth patterns across different sectors of the economy. What truly determines job creation is the composition of GDP growth across various sectors. For instance, a certain level of GDP increase in the information technology sector may not generate as many jobs as a similar increase in a more labour-intensive arena, such as textiles. Additionally, India must keep an eye on the future of job markets. Factoring in key trends that will drive future job markets is essential to formulate relevant policies that actually cater to the demands and potential of job seekers. One of these key trends is the digital transformation underway, the impact of which cannot be overstated. Artificial intelligence, cloud computing and the Internet of Things, among other technological forces, are significantly altering not just the way we work, but also the set of skills in demand. It is evident that job creation in the future is going to come from newer segments, altering the employment landscape we are familiar with. For instance, green jobs or types of employment focused on protecting the environment, including roles centred around energy efficiency, preserving resources and harnessing sustainable energy sources, are projected to grow in the years and decades ahead. Among the slew of changes that this will bring forth, we should expect new multifaceted roles to come into the picture.

Thus, the country needs to place a simultaneous policy emphasis on job creation and job preparedness among its working-age population. In this regard, while upskilling is crucial, it is the spirit of adaptability to changing circumstances that will stand India in good stead. Cultivating a mindset of continuous learning will embed agility in the country’s workforce, ensuring readiness for a fast-changing job market.

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