Transforming India’s workforce: A blueprint for inclusive growth

As we observe May Day 2025, it is crucial to not only celebrate the contributions of India’s workforce but to also critically examine the road that lies ahead. The strength of our nation will be determined not merely by economic targets, but by how inclusively and sustainably we develop our human capital. With a population whose median age is just 29, India stands at a historic crossroads. Yet, demographic advantage is not destiny; it is an opportunity — one that must be consciously and strategically harnessed.

A Demographic Dividend Under Pressure

India possesses one of the world's youngest labour forces, but the opportunities to capitalise on this are narrowing. According to the ILO World Employment and Social Outlook: Trends 2025, while global unemployment remains low at 5.2%, youth unemployment globally is alarmingly high at 12.6%, with India reflecting similar trends.

Moreover, the latest Economic Survey 2024-25 notes that educated unemployment is particularly acute, with graduates facing difficulties matching their skills to the market's demands.

Unless systemic reforms are initiated urgently, India's demographic dividend could well become a demographic liability.

Accelerating the Rural to Non-Farm Transition: A National Imperative

The structure of employment in India remains a matter of concern. The Economic Survey 2024-25 documents that while agriculture still employs approximately 45% of the workforce, its contribution to GDP has fallen below 18%. Alarmingly, the share of employment in the manufacturing and services sectors has declined, reversing previous gains.

The World Bank’s India Development Update (2025) stresses that accelerated reforms are needed to spur private sector-led job creation, particularly in sectors like food processing, electronics, textiles, logistics, and the care economy.

India must swiftly expand labour-intensive industries, integrate rural youth into diversified value chains, and invest in infrastructure that can catalyse non-farm employment growth at scale.

Formalisation of the Workforce: Moving Beyond Pilot Efforts

Despite progress, informality remains entrenched. The Economic Survey 2024-25 estimates that over 70% of India's workforce is still engaged in informal employment, characterised by a lack of contracts, social security, and enforceable labour rights.

Simplifying labor compliances, enabling digital onboarding of MSMES into EPFO and ESIC networks, offering graduated tax incentives, and aggressively pushing self-declarations can drive faster formalization. Programs like the Prime Minister’s Employment Generation Program (PMEGP) must be scaled and restructured to prioritize formal job creation outcomes over disbursement metrics.

Unlocking the Full Potential of India’s Women

India cannot achieve sustainable growth without significantly improving female labour force participation. Although there have been improvements, with participation rising to 32.8% in 2024, we continue to trail comparable economies. Structural barriers — ranging from inadequate workplace safety, rigid working hours, to lack of affordable childcare — persist.

The Financial Times (2024) highlights that ensuring safer environments for women could raise India’s GDP by an estimated 20% over the next decade

States must prioritise investments in women's hostels, secure transport services, and flexible gig and part-time work opportunities in healthcare, retail, education, and tourism. Furthermore, maternity benefit frameworks must be recalibrated to balance social protection with employability, particularly for MSMES.

Building a Skilled, Future-Ready Workforce

India faces a daunting skill mismatch. According to the Future of Jobs Report 2025 by the World Economic Forum, while technological advancements are projected to create 170 million new roles globally by 2030, they will also displace 92 million existing jobs.

Without urgent investment in upskilling, a large segment of our youth risks being left behind.

Sector-specific skill mapping is crucial: mining skills for Jharkhand, tourism management in Goa, electronics assembly in Tamil Nadu, and fintech training in Bengaluru must be intensified. India's apprenticeship systems also need modernisation, learning from Germany’s dual system and Switzerland’s vocational excellence pathways. A National Skills Inventory and real-time labour market information system would allow dynamic matching of supply and demand.

Conclusion: A Call for Bold Action

The question is no longer just about "how many jobs" India creates. It is about what kind of jobs we create. Formal, secure, productive, and meaningful employment must be the standard, not the exception.

If we invest wisely in human capital, promote gender parity, drive rapid formalisation, and realign skilling to the demands of the future economy, India can indeed make its demographic dividend a global marvel rather than a lost opportunity.

On this May Day, let us recommit to building a workforce that will form the bedrock of India's ascent towards a resilient, inclusive, and prosperous future.

Views are personal. The author is Managing director of Quess Corp