Challenge of creating a skilled workforce

India stands tall today as the world’s fastest-growing large economy. This has been accompanied by the creation of high-quality employment opportunities, as reflected in the latest Periodic Labour Survey, where positive trends can be observed across many indicators. The worker-population ratio (WPR) for people aged 15 and above increased by almost 10 percentage points, from 46.8 percent in 2017–18 to 56 percent in 2022–23. Similarly, the labour force participation rate (LFPR) significantly increased over the same five-year period, from 49.8 percent to 57.9 percent. This was supported by a concomitant decline in the unemployment rate, from 6 percent to 3.2 percent.

This employment landscape has undergone transformative changes over the years, with the emergence of dynamic sectors and entrepreneurial ventures. A host of government initiatives directed towards fostering gainful employment has created a conducive ecosystem fostering innovation, creativity and entrepreneurial talent.

At the same time, a strong impetus has been placed on developing a future-ready, inclusive and employable workforce with relevant and up-to-date skills, supported by various skill development programmes and affirmative action policies that will continue to shape India’s future of work.

The central government has undertaken a range of impactful measures to create a vibrant and conducive jobs ecosystem in the country. Notable initiatives, including Digital India, Skill India, Startup India, the Pradhan Mantri Kaushal Vikas Yojana, and Production-Linked Incentive Schemes across India’s strategic sectors, are supporting India’s aspirational youth and budding entrepreneurs through skilling, enhancing employability and boosting enterprise development. For example, the PLI scheme has created over 8 lakh new jobs.

The sustained level of government capex spending for physical, social and digital infrastructure, as reflected in consecutive budgets, has also created large scale employment. With over 33 percent increase in public capex for three preceding years, infrastructure construction has helped connect rural and urban India to create new employment and business opportunities.

A strong education sector is a critical enabler of human capital. The National Education Policy was introduced in 2020 to improve the quality of education, promote skill development and provide universal access to education. A host of digital education initiatives like DIKSHA, SWAYAM, PM e-vidya, etc., have been undertaken to facilitate multi-modal access to education.

The positive impacts of such initiatives are reflected in India’s education-wise employment indicators that show several positive trends. As per PLFS data, WPR in the 15 and above cohort for secondary education and above has increased from around 43.2 percent in 2017-18 to 50.3percent in 2022-23. The ratio for the categories of graduates, postgraduates and above also exhibited significant improvement, going up by 6.1 percent and 4.1 percent respectively over the six-year period. The LFPRs for all categories also displayed similar patterns, reinforcing the positive impact that strong education policies have had on employment.

As the employment landscape is witnessing a shift towards skill-based hiring, the importance of vocational training has great potential to boost employability by training workers in specific skill sets. Under the Skill India Mission, the Ministry of Skill Development and Entrepreneurship is implementing an array of schemes through its extensive network of centres, colleges and institutes. Both short-term and long-term training programmes are training youth and preparing them for the workforce through various schemes, such as Pradhan Mantri Kaushal Vikas Yojana, Jan Shikshan Sansthan, National Apprenticeship Promotion Scheme-2, etc. As per CII Research’s analysis of the annual PLFS data, the vocational training have also translated into higher jobs as a notable increase was seen in the proportion of workforce who received vocational training from 8.1 percent in 2017-18 to 27.4 percent in 2022-23.

According to PLFS estimates, the Female Labour Force Participation Rate also witnessed a significant increase from 23.3 percent in 2017–18 to 37 percent in 2022–23 (for the 15 and above cohort). This represents a sharp rise in working women, which will contribute greatly to further development. Education, skilling and credit enhancement programmes are further helping close the gender gap, particularly with a surge in the proportion of women in higher education and STEM areas. For accelerating the pace of job creation, CII has suggested an Employment Linked Incentive Scheme in sectors such as tourism, logistics, retail, film, animation and gaming. Greater focus on promoting labour intensive sectors such as textiles, leather and jewellery can also yield more employment.

Special attention needs to be accorded to equipping workers with skills in high-growth sectors, particularly in manufacturing, logistics, finance, healthcare and life sciences. With greater automation and Artificial Intelligence (AI), harnessing the potential of AI and related technologies with requisite skills must be top priorities.

India, with a young population with a median age of around 28 years, has immense potential to contribute significantly to global long term economic growth. It is being positioned as the largest provider of human resources in a world economy faced with the challenges of ageing populations. As India marches forward on the path of growth, propelled by innovation and its talented youth, the horizon of opportunity continues to expand, beckoning a bright and inclusive future for all.

This article was written by Mr Chandrajit Banerjee, Director General, Confederation on Indian Industry. It was first published in May 2024 in The New Indian Express.