Even as Unemployment Falls, Lack of ‘Decent Work’ in India

UPSC Syllabus: Gs Paper 3- Employment

Introduction

India’s unemployment rate declined from 6.1% in 2017–18 to 3.2% in 2023–24, alongside rising female workforce participation. Yet, employment does not always provide decent work—fair income, workplace rights, social security and dignity. The Decent Work Index improved, but remained low, while informality and unequal outcomes persisted across sectors, regions, caste and gender. The concern is therefore not how many jobs India creates, but their quality and security.

Progress in Employment Quality: Recent Trends

1. Meaning of Decent Work Index (DWI): The Decent Work Index (DWI) is a composite measure used to assess job quality across three dimensions: employment status, employment opportunity and social security.
2. Overall Improvement in Job Quality: India’s DWI increased from 0.247 in 2017–18 to 0.302 in 2023–24, indicating improvement, although overall employment quality remained low.
3. Manufacturing Sector: The DWI rose from 0.324 to 0.411, reflecting gradual formalisation and digitalisation.
4. Transport Sector: The DWI improved from 0.285 to 0.350, driven by the expansion of urban logistics and app-based platform work.
5. Agriculture Sector: The DWI increased from 0.211 to 0.267, but agriculture remained the lowest-performing sector, with widespread self-employment, unpaid family work, unstable incomes and limited social protection.

1. Regional Variation in Employment Quality: Goa, Keralam, Tamil Nadu and Haryana perform substantially better in decent-work creation, while Bihar, Jharkhand and Uttar Pradesh continue to lag behind.

Key Concerns: Nature and Quality of Employment

1. Widespread Informal Employment: Nearly 90% of India’s workforce remains informally employed, with informality extending across organised industries, supply chains, logistics, gig work and home-based production.
2. Inadequate Social Security: Many workers lack written contracts, paid leave, provident fund benefits and insurance coverage, leaving them without adequate protection against income insecurity and economic shocks.
3. Insecure Employment Arrangements: Construction and retail workers often depend on casual employment, subcontracting and insecure labour arrangements, while contractualisation and outsourcing weaken employment security in other sectors.
4. Limited Protection Despite Employment Growth: Rising employment opportunities have not been matched by stronger labour protections, leaving many workers without stable livelihoods, workplace rights or adequate social security.

Structural Challenges to Decent Work

1. Informalisation and Weak Formalisation: Informality persists even within organised industries, as contractualisation and outsourcing expand, while formalisation policies often focus on business registration rather than actual working conditions.
2. Implementation Gaps in Welfare Schemes: Existing welfare schemes face implementation gaps that exclude millions of workers, preventing policy provisions from translating into effective social protection and livelihood security.
3. Caste and Gender-Based Inequality: Women from Scheduled Tribes (STs) and Other Backward Classes (OBCs) experienced declining decent-work outcomes between 2017–18 and 2023–24, even as outcomes for men improved.
4. Intersectional Labour Market Disadvantage: The labour market penalty for being both female and socially marginalised has intensified after COVID-19, reflecting structural inequalities rooted in caste and gender hierarchies.
5. Unequal Access to Education and Skills: Education, skill training and formal enterprise employment improve decent-work outcomes, but unequal access to these opportunities restricts workers’ entry into better-quality employment.
6. Economic Costs of Poor-Quality Employment: Workers without social security spend and save less, while informality depresses productivity, weakens tax capacity and increases inequality, affecting broader economic development.

Government Initiatives and Policy Framework

1. Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY): Incentivises formal job creation through financial support for eligible first-time employees and employers creating additional formal employment, supporting workforce formalisation.
2. National Career Service (NCS): The Ministry of Labour and Employment operates an online platform connecting jobseekers, employers, vocational guidance and training providers to improve employment opportunities.
3. PM Internship Scheme: Provides structured corporate internship opportunities to youth, helping bridge the gap between educational learning and industry requirements through practical workplace exposure.
4. Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025: Replaced MGNREGA from 1 July 2026, providing a guarantee of 125 days of wage employment per financial year to eligible rural households.
5. e-Shram Portal: Creates a national database of unorganised workers and facilitates access to social security and welfare schemes, although registration alone does not guarantee effective protection.
6. Four Labour Codes: Introduced in 2025 with the promise of simplifying labour regulation and expanding protections, but implementation remains partial and inconsistent, raising concerns about worker safeguards.

Way Forward

1. Universal Social Protection: Extend portable and accessible social security to gig and platform workers, self-employed individuals, farmers and informal workers, regardless of their employment status.
2. Link Incentives with Worker Protection: Make tax incentives and subsidies conditional on meaningful worker protections, including written contracts, paid leave and social security contributions, to encourage better employment practices.
3. Focus Formalisation on Working Conditions: Assess formalisation through actual labour conditions and worker protections rather than business registration alone, ensuring that formal enterprises provide decent employment.
4. Adopt Gender-Responsive Labour Policies: Provide childcare facilities, safe transportation, skill training and safeguards against workplace discrimination, particularly for women from marginalised caste groups.
5. Strengthen Worker-Centric Labour Reforms: Design labour reforms around workers’ needs rather than primarily reducing business compliance costs, while ensuring that contractualisation does not weaken workplace protections.
6. Ensure Effective Implementation: Translate labour regulations and social security provisions into accessible benefits, enforceable workplace rights and meaningful protection for workers across different employment arrangements.

Conclusion

India must move from counting jobs to improving their quality. Employment should provide fair income, dignity, security and social protection. Effective labour reforms, wider coverage and inclusive policies are essential to reduce inequality and make growth sustainable. Decent work for all must form a core part of the Viksit Bharat 2047 vision.

Question for practice:

Discuss the recent trends in employment quality in India and the performance of major economic sectors based on the Decent Work Index (DWI).

Source: The Hindu