India at Work: Challenges and the Road Ahead

Over the past two decades, India’s economy has expanded steadily, with per capita income growing at about 5% per year (World Bank).1 But behind this headline growth lies a more sobering story about jobs. The pace of employment growth has lagged far behind, at just 1.6% per year. Official estimates suggest that catering to the expanding workforce would require about 8 million non-farm jobs to be created annually, on average, until 2030 (Economic Survey of India 2023-2024).2

Despite recent improvements in workforce participation — an increase of 10.5 percentage points since 2017 — there are key challenges to the creation of good-quality jobs. Agriculture and low-productivity self-employment still account for most jobs in India, even expanding their share in recent years. Indian growth has been services-led, but the segments of the sector that drive growth are not the ones that create jobs at scale. Manufacturing sector’s share of employment, as well as its contribution to growth, has remained unchanged. Average real wages have been virtually stagnant due to low labour productivity, and most workers lack job security and social protection. Further, job creation in India is unevenly distributed across regions, with southern states and urban centres accounting for most of the increase in non-agricultural employment.

This report lays out six key insights about jobs and employment trends in India today. We begin with the biggest challenge: while job creation outside of agriculture is on the rise, it is still quite limited. Moreover, even within non-agricultural jobs, real wages and work productivity have stagnated over the past decade. This suggests two things: a) that jobs are not being created in relatively more productive sectors, and b) that the supply of workers looking for jobs in the non-agricultural sector exceeds the availability of these jobs. This is especially true for young people under 25: many have more education than ever before, but still struggle to find good work, either because there aren’t enough opportunities, or they do not have the right skills. The jobs that do exist are often informal, meaning they lack basic protections like social security or health benefits. Women’s employment, although increasing, is still very low. Women are a major source of untapped talent, and bringing more of them into the workforce is essential for India’s future economic growth. Finally, growth has been highly uneven across the country. Just 13 cities have accounted for over half of India’s growth, leading to unequal job opportunities and driving large numbers of people to migrate to a few urban centres.

To navigate these challenges, we need to address crucial questions: what policy levers can best unlock job-rich growth, improve job quality, and expand access to opportunity across regions? We hope this report sparks wider debate on the most urgent and impactful solutions.