Even as unemployment falls, lack of ‘decent work’ in India

GS-III | Indian Economy | Employment | Inclusive Growth | Human Resource Development

Introduction

• Unemployment Rate: From 6.1 percent in 2017-18 to 3.2 percent in 2023-24, India’s unemployment rate has decreased.
• Female Workforce Participation: As reported in government documents, female participation in the labor force also grew for the first time in several decades.
• Need to Evaluate the Quality of Jobs: Given all of the above mentioned positive factors, it is now an appropriate moment to investigate the types of jobs that have been created in India in recent years, as well as the work-related environments associated with these jobs.
• Employment with Dignity: It’s important to realize that just having a job doesn’t automatically provide for your basic needs of being secure, having a steady source of income, or having the ability to live with dignity.
• Examples of Insecure Employment: A worker who sews clothes and does not have an official contract; a person working as part of the “gig economy” (Uber driver, etc.), who doesn’t receive health insurance benefits; or a construction laborer who doesn’t receive paid time off from work, may all be defined as being employed. However, none of these individuals are guaranteed to experience the advantages associated with having a good job.
• ILO’s Definition of Decent Work: The International Labor Organization (ILO) defines “decent work” as employment where workers receive fair wages, have rights at their place of work, are provided with some form of social security, and have a sense of dignity.
• SDG-8: The principle is incorporated into Sustainable Development Goal 8 (SDG-8), which promotes “decent employment for everyone”.
• Labour Market Problems: From this point of view, India’s labor market continues to exhibit high rates of informal employment, low-quality jobs and growing inequality.

Measuring Decent Work

• Data Source: This analysis used data from two rounds of the Periodic Labour Force Survey (PLFS), 2017-18 and 2023-24, to assess the quality of employment in India.
• Decent Work Index (DWI): By creating a multi-dimensional Decent Work Index (DWI), which includes three sub-dimensions: employment status, employment opportunity and social security, and was applied to the five major industries (Agriculture, Manufacturing, Construction, Wholesale and Retail, and Transport), we have seen evidence that work conditions in India are improving over time.
• Overall Change: The DWI went from 0.247 during 2017-18 to 0.302 during 2023-24.
• Overall Level of Job Quality: The overall level of job quality is still at an alarming low, but there has been a positive trend in terms of job quality. Additionally, progress has varied significantly by sector, region, gender, and caste.

Sector-wise Performance in Decent Work

• Sectoral Improvement: In the manufacturing industry, as well as the transportation industry within the secondary and tertiary sectors, respectively, saw the greatest increase in decent work environments during this time frame.
• Manufacturing Sector: The DWI (Formalisation & Digitalisation) of the manufacturing industry has increased from 0.324 to 0.411. This is attributed to the slow but steady increase in both formalization and digitalization.
• Transport Sector: There was a major increase in the transport sector (from 0.285 to 0.35) which has primarily been caused by the growth of urban logistics and app-based platform work.
• Limited Social Security: The improvements that we have made in the job market, as well as the areas of improvement within those job markets, also highlight a major concern. In addition to the improvements that we have seen in the working environment in some sectors, social security benefits remain very limited.
• Lack of Labour Benefits: There are many employees who do not currently have a written contract, paid time off, provident fund benefits, and/or health insurance coverage.
• Labour Protection and Job Security: Although employment is expanding, labor protection and job security are not developing at a similar rate.
• Agriculture Sector: The agriculture sector, which is the largest employer in India today, has the lowest quality of job creation.
  • The number of DWI’s within the agriculture sector increased slightly from 0.211 to 0.267 during the study period. Many people working in the agricultural sector are either self-employed or work on their own family farms without being paid and therefore do not have a steady source of income nor do they receive the same types of protection as employees do.
  • The problem is not just low output; it is the growth of informal employment.
• Construction and Retail Sectors: Construction and retail sectors have a similar story.
  • Workers continue to rely on casual jobs, subcontracting, and other forms of precarious work.
  • Although welfare programs are written out, there still exist many implementation gaps that result in millions of workers being left out.

Rising Informal Employment in India

• Informal Workforce: According to the India Employment Report 2024 (ILO-IHD), almost 90% of India’s workforce continues to be employed in the informal sector. This share of the workforce has increased since 2019.
• Expansion of Informal Employment: Informal employment has spread throughout many areas of the labor market, including supply chains, app-based work within the gig and platform economies, logistics, home-based production, and even some parts of organized industry via contract work and outsourcing.

Social Inequalities in Decent Work

• Role of Education and Skills: The findings from the authors demonstrate that when individuals obtain education, formal employment at an enterprise level, and skills training, their ability to achieve a “decent” outcome in terms of work increases dramatically.
• Informalization of Job: Informalization of job over time reduces the creation of decent work opportunities in India.
• Caste and Gender Disadvantage: The increasing overlap of caste-based and gender-related disadvantages is of particular concern. Women belonging to Scheduled Tribes and Other Backward Classes (OBCs) experienced decreasing access to decent work opportunities during the period from 2017-18 to 2023-24; however, their male counterparts had increasing access.
• Impact of COVID-19: The negative effects on employment that come from being both female and in a disadvantaged social group have increased as a result of the COVID-19 pandemic.
• Structural Inequality: The image indicates that the unequal nature of India’s labor market extends beyond its purely economic dimension, as it has also developed a deep-rooted structural inequality based upon caste and gender.

Regional Disparities

• States That Have Achieved a High Level of Performance: States such as Goa, Kerala, Tamil Nadu and Haryana are substantially better at creating decent work.
• Lagging States: On the other hand, Bihar, Jharkhand, and Uttar Pradesh still remain behind.

Challenges and Implications of Poor-Quality Employment

• Policy Concern: The results suggest a significant policy problem: India is creating more employment opportunities but has failed to guarantee that those employment opportunities will have appropriate working environments, benefits, and job safety.
• Effect of Poor Quality Job Creation on Spending/Saving Habits of Workers: Poor quality job creation can negatively affect economic development. Employees who are not provided with social security benefits will have lower levels of spending, lower levels of saving, and remain more susceptible to being affected by negative economic trends.
• Impact on Productivity and Tax Collection: In addition, informal employment causes a reduction in productivity, diminishes the ability to collect taxes, and contributes to increased inequality.
• Need for Job-Quality Measures: India needs to take into account job-quality measures to determine whether its labor markets are successful. Reducing unemployment rates and increasing incomes alone will not provide a complete picture of how well India is performing in regards to employment.
• Viksit Bharat@2047: A nation that is striving to become Viksit Bharat by 2047 cannot continue to depend indefinitely upon unsafe, low wage, unprotected labor.
• Economic Development without Quality Employment: Economic development that doesn’t produce quality employment opportunities can result in a workforce that has jobs, but continues to be insecure, unstable, and unprotected.
• Change in Approach: A change in mindset is needed for India to move away from a ‘job counting approach’ towards a ‘job quality approach.’

Way Forward

• Social Protection: The results indicate the direction social policy needs to go. First, social protection needs to cover all workers – gig/platform workers, self-employed, farmers, and informal workers – via systems that are portable and can be accessed by workers regardless of their employment status.
  • The platforms (e.g. e-Shram) have been a great beginning for workers to register, however, the registration process itself will not provide any form of protection to the workers, as they require actual protection and not just a line item in a database.
• Formalization Policies: Second, formalization policies should focus on working conditions (labor), as opposed to solely focusing on registering businesses.
  • Enterprises who receive tax credits or government support need to have a connection with required employee protections, i.e., written employment agreements, paid time off, and social security payments.
• Intersectional Labour Policies: The third point is that there should be more of an focus on intersectional labour policies.
  • Since women of lower caste background were the ones that experienced negative effects rather than positive effects, it is imperative to implement targeted interventions such as childcare facilities, safe transportation, job skills training and protections against workplace discrimination.
• Worker-focused Labor Reform: Ultimately, labor reforms must focus on the interests of workers rather than simply providing businesses with a way to reduce their expenses.

Labour Codes and Implementation Challenges

• The Four Labour Codes: In 2025, the four Labour Codes were implemented to simplify labor regulations and provide greater protections.
• Implementation: However, implementation remains partial and inconsistent.
• Criticism: Critics state that even though the regulatory burden has been reduced for businesses, worker rights have potentially decreased due to the increase of contract work.

Conclusion

• True Measure of Development: The true measure of development is not just if people are working, but if their jobs provide them with respect and safety.
• Inclusive Development: Until that time, India’s success in creating jobs will be incomplete – no country can claim to be a developed nation if its working population is insecure.

UPSC Mains Practice Question

Q. Examine the challenges associated with the quality of employment in India. Discuss the need to shift from a ‘job-counting approach’ to a ‘job-quality approach’ for achieving inclusive growth and Viksit Bharat@2047.