Chapter Essence
Chapter 12 examines India's labour market through two complementary lenses: employment structure and skill development. It maps the state of employment across organised manufacturing, unincorporated enterprises, gig workers, and the female workforce. It then analyses India's skilling architecture — from early vocational education in schools to apprenticeships, industry-driven training, innovative financing, and accountability frameworks. The central thesis: India has the quantity of labour but must urgently shift from enrolment metrics to outcome metrics in skilling, while closing structural barriers that exclude women and youth from quality jobs.
56.2 cr
Employed (Q2 FY26, PLFS)
41.7%
FLFPR (2023-24) — up from 23.3% in 2017-18
57 lakh
Jobs Added in Manufacturing (FY15–FY24)
31 cr+
e-Shram Registrations
120 lakh
Gig Workers (FY25) — up from 77L in FY21
56.3%
Overall Youth Employability (India Skill Report 2026)
34.7%
Vocational/Technical Training Penetration (2023-24)
43.47 lakh
Apprentices under PM-NAPS
Labour Market Indicators (H1 FY26, PLFS): LFPR stabilising at ~55%; Unemployment Rate (CWS) declining from 5.4% → 4.7–4.8%. 56.2 crore people employed in Q2 FY26. 8.7 lakh new jobs created in Q2 vs Q1 FY26.
💡 Concept: Demographic Dividend vs Longevity Dividend
India's workforce structure is at a pivotal juncture — two distinct but sequential opportunities:
- Demographic Dividend: The economic growth potential when the working-age population (15–64 years) outnumbers non-working-age groups. India's dividend is projected to peak around 2030 (~65% of population in 15–59 years).
- Longevity Dividend: Economic and societal benefits from longer, healthier, productive lives as TFR falls below replacement and life expectancy rises.
- Policy implication: Harvest the demographic dividend now through job creation and skilling. Prepare for the longevity dividend through lifelong learning, NCD prevention, and age-friendly work policies.
| Indicator | Rural | Urban | Key Feature |
|---|
| Dominant sector | Agriculture (57.7%) | Services (62.0%) | Structural divide |
| Employment type | Self-employed (62.8%) | Regular wage/salary (49.8%) | Informality vs formality |
| Women's work pattern | Helpers/own-account (37.5%) | Regular wages (10.8%) | Preference for flexibility |
| Q2 FY26 employment share | Agriculture: 42.4% | Self-employed: 55.8% | Seasonal agricultural rise |
💡 Concept: Time Use Survey (TUS) 2024 — The Dual Burden on Women
MoSPI's second national Time Use Survey (January–December 2024) reveals deep gender asymmetry in paid/unpaid work division:
- Employment participation: 75% men vs 25% women in 15–59 age group (up from 70.9% and 21.8% in 2019)
- Caregiving: 41% women vs 21.4% men participate; women spend 140 min/day vs 74 min/day for men
- Unpaid work: Women average 363 min/day vs 123 min/day for men
- Paid work: Men 414 min/day vs women 302 min/day
- Total combined burden: Women spend more total time (paid + unpaid) than men — the classic 'double burden'
- Policy implication: Care sector development (crèches, Anganwadis, professionalised care work) is key to unlocking female labour force participation
ASI FY24 Highlights: Organised manufacturing added 57 lakh jobs over FY15–FY24 (CAGR 4%). FY24 alone saw +10 lakh jobs (+6% YoY). Large factories (>100 workers): employ 79% of workforce, with higher wages and NVA per person engaged. Large factories almost doubled (97% increase) vs 26% for smaller ones in FY14–FY24.
Top Manufacturing States (by employment share):
Tamil Nadu (15%) → Gujarat (13%) → Maharashtra (13%) → UP (8%) → Karnataka (6%) → Haryana (6%) → Telangana (5%).
Together: ~60% of total manufacturing employment.
Top 8 Industry Groups (~60% of manufacturing employment):
Food Products (11%), Basic Metals (8%), Textiles (9%), Wearing Apparel (7%), Motor Vehicles/Trailers (7%), Chemicals & Chemical Products (6%), Machinery & Equipment (6%), Other Non-Metallic Mineral Products (6%).
Unincorporated Non-Agricultural Sector (QBUSE Q2 FY26): 7.9 crore establishments employing 12.9 crore individuals. Working owners: 60% of employed. Rural workforce: 6 crore. Women: 28.7% of sector workforce. Internet use by businesses: 26% (2023-24) → 39% (Q2 FY26) — rapid digitisation.
🎯 Policy Concept: e-Shram — National Database for Unorganised Workers
Launched as the first pan-India registration platform for unorganised workers:
- Coverage: 31 crore+ workers registered (Jan 2026) — construction, migrant, gig, street vendors, domestic workers, agriculture workers
- Gender inclusion: Women = 54% of registrants
- Universal Account Number (UAN): Linked to Aadhaar + mobile; ensures portability across platforms, locations, and employment arrangements
- Scheme integration: 18 social security schemes integrated — including One-Nation-One-Ration Card, PMSYM, NCS
- NCS integration: 5.9 crore registered job seekers; 53 lakh job providers; 2.8 crore vacancies in FY25; 200%+ increase in vacancies (FY24 vs FY23)
FLFPR Progress: Rose from 23.3% (2017-18) → 41.7% (2023-24). Female unemployment rate fell from 5.6% → 3.2%. Female-headed establishments: 24.2% (2021-22) → 26.2% (2023-24). In manufacturing sector: 58.4% of establishments are female-headed.
💡 Concept: Pink Tax on Mobility
The Pink Tax on Mobility refers to the extra cost women pay to reach the same destinations compared to men, due to gender-specific safety needs not addressed by the transport system.
- Women travel during off-peak hours, with children, making multiple short trips — patterns not served by standard public transit
- World Bank 2021 (Mumbai): 31% of women cited commuting as a barrier to work; 13% — childcare; 19% — domestic duties
- Women choose safer but more expensive transport modes → higher mobility cost → workforce exclusion
- Policy responses: Kochi's Women Police Control Room vans, Hyderabad's SHE Teams, NCRTC women driver training (21-day programme), Chennai's inclusive street design manual, Bhubaneswar's Janpath Street
Housing
Sakhi Niwas & Thozhi Hostels
- Sakhi Niwas scheme (MoWCD): safe, affordable hostels for working women
- Tamil Nadu's Thozhi Hostels: PPP model with crèches, kitchens, shared spaces
- Expanding secure rental housing → improves access to urban jobs
Ecosystem
State-Level PPP Models
- Telangana WE-Hub: Connects women with start-up ecosystems and investors
- Kerala Kudumbashree: Microfinance + collective enterprises in non-traditional roles (construction, logistics)
- Maharashtra MAVIM: Links SHGs to formal credit and enterprise support
Labour Codes
Gender Provisions in Labour Codes
- Women can work night shifts (with safety infrastructure mandatory)
- Work-from-home provision (Section 59(5), CSS 2020) post-maternity
- Equal wages (Code on Wages, 2019); crèche provision (CSS 2020)
- ISF estimates: gender provisions could elevate FLFPR to 33.7%
STEM
Improving Women's STEM Access
- Women: 43% of STEM enrolment (2021-22) — improving but below parity
- Only 2.9% of employed women in rural+urban have advanced degrees
- STEM barriers: social expectations, mobility, early marriage, higher education costs
- Women in STEM unlock white-collar services and modern manufacturing roles
Notified November 21, 2025: Four Labour Codes consolidate 29 central laws into a streamlined framework, balancing flexibility with worker protection. States are notifying draft rules — 32 states/UTs have published draft rules.
💡 Concept: The Four Labour Codes
Consolidation of 29 central laws (and 140+ central+state laws) into four comprehensive codes:
- Code on Wages, 2019: Minimum wage, equal wages, timely payment, National Floor Wage (₹178–500/day). Inspector-cum-Facilitator replaces the traditional 'Inspector' role.
- Industrial Relations Code, 2020: Formalises fixed-term employment; raises thresholds for layoff/retrenchment/closure; Industrial Tribunals expedite disputes (years → months)
- Code on Social Security (CSS), 2020: Formally recognises gig and platform workers (Section 2(35)); portable benefits via UAN; aggregators contribute 1–2% of annual turnover (capped at 5% of worker payouts) for gig worker social security
- OSH Code, 2020: Mandatory appointment letters for all workers; portable social security for migrant workers; equal benefits for fixed-term and contract workers; single pan-India registration/licence/return
| Impact Area | Projection | Source |
|---|
| New jobs (organised sector, medium-term) | ~77 lakh jobs | SBI Ecowrap Nov 2025 |
| Unemployment rate reduction | UR falls to 1.9–2.9% | SBI |
| Formalisation rate | 60.4% → 75.5% | SBI |
| Compliance cost reduction | 30–40% | Indian Staffing Federation |
| Consumption boost (Code on Wages) | ~₹75,000 crore | SBI |
| GDP contribution by 2029-30 | +1.25% of GDP | ISF |
| Gig worker social security (by 2030) | 2.35 crore workers potentially covered | CSS 2020 |
Gig Economy Scale: 77 lakh workers (FY21) → 120 lakh workers (FY25) — a 55% increase. Now >2% of total workforce. Projected to constitute 6.7% of non-agricultural workforce by 2029-30, contributing ₹2.35 lakh crore to GDP. Driven by 80 crore+ smartphone users and 15 billion UPI transactions/month.
💡 Concept: McKinsey's 4 Types of Gig Workers
Policy should move workers from categories iii & iv to i & ii — making gig work a choice rather than a necessity:
- i. Free Agents: Gig work is primary income AND they prefer it — maximum autonomy
- ii. Casual Earners: Use gig work for supplementary income or skills — choice-driven
- iii. Reluctants: Rely on gig work but would prefer a regular job — necessity-driven
- iv. Financially Strapped: Take any gig work just to make ends meet — most vulnerable
Demand structure: Low-skill/high-turnover (retail, food service) → Middle-skill generalists (taxi, beauticians) → High-skill specialists (programmers, physicians). NITI Aayog: high-skill gig workers projected at 27.5%; low-skill at 33.8% by 2030.
Gig Worker Challenges: 40% earn below ₹15,000/month. 'Thin-file' credit access (no credit history). Algorithmic control over work allocation and wages. Income volatility prevents access to mortgages, loans. Limited social security and fear of AI/ML displacing jobs.
Global Regulatory Trend: Spain's 'Ley Rider' (2021) — food couriers recognised as employees. EU Platform Workers Directive (2024) — corrects misclassification, regulates algorithmic decision-making. ILO (2025) — formal standards on decent work in platform economy. Seattle, New York City — minimum wage laws and anti-retaliation measures for app-based workers.
🎯 Policy Concept: Earned Wage Access (EWA)
EWA (On-Demand Pay) allows workers to access part or all of their earned wages before the scheduled payday. Evidence from an RCT (March 2023–October 2024, 800+ women workers, Good Business Lab):
- Reduced high-interest informal borrowings
- 20% decline in workers forgoing essential expenditures
- Significant reduction in worker turnover
- Increase in worker productivity
- Addresses cognitive bandwidth loss from financial stress — workers distracted by financial worries are ~5× less productive
Vocational Training Progress: Share of individuals (15–59 yrs) with some vocational/technical training: 8.1% (2017-18) → 34.7% (2023-24). However, formal vocational training: only 4.9% (youth 15–29). NCAER (2025): a 12-pp increase in skilled workforce could lead to >13% increase in employment in labour-intensive sectors by 2030.
🎯 Policy Concept: Skill India Digital Hub (SIDH)
SIDH is the central governance reform of India's skilling ecosystem — a unified digital platform for all government skill, education, employment, and entrepreneurship initiatives:
- Single portal for programmes across central and state governments
- Multilingual, digital skilling through learning management system
- Portable verified credentials for workers
- Streamlines registration, course delivery, credentialing, and job matching
- Integration with NCS portal and e-Shram → real-time monitoring
- Industry 4.0 aligned courses — connects training directly with labour market demand
- Integration of APAAR IDs enables longitudinal tracking of students from school through employment
PMKVY 4.0
Pradhan Mantri Kaushal Vikas Yojana
- Training in NSQF-aligned job roles developed by industry-led SSCs
- Sectoral focus: digital tech, green energy, healthcare, agri, financial services, e-commerce
- Flexi-MoU: firms customise training per evolving needs; 10,000 trainees so far
- CAG 2025 audit found gaps: inconsistent data management, fund disbursement delays, low placement outcomes
Artisans
PM Vishwakarma Scheme
- Covers 18 traditional trades (carpenter, cobbler, blacksmith, potter, etc.)
- 30 lakh beneficiaries registered; 23.09 lakh trained (Dec 2025)
- PM Vishwakarma digital certificate + ID card
- Toolkit e-voucher up to ₹15,000
- Collateral-free loans up to ₹3 lakh at concessional rates
- Online marketing via e-commerce; 30,000+ on GeM
ITI Reform
PM SETU (ITI Upgradation)
- Upgrade 1,000 govt ITIs (200 hub + 800 spoke)
- Smart classrooms, modern labs, digital content
- 5 sector-specific National Centres of Excellence (with global partners)
- 169 NSQF trades developed; 31 future-skills courses (AI, IoT, RE, 3D printing)
- Implementation through SPVs with anchor industry partners
Higher Ed
NCrF & Apprenticeships
- National Credit Framework (NCrF): credit accumulation across academic, vocational, work-based routes
- Multiple entry-exit provisions in HEIs
- SWAYAM Plus (Feb 2024): industry-aligned courses in AI, data analytics, robotics
- NATS 2.0: 5.23 lakh apprentices in FY25; 12 lakh+ DBT stipend transfers
School Skilling Gap (PARAKH 2024): Only 47% of schools offer skill-based courses at Grade IX+. Participation is just 29%. Only 4.9% of youth (15–29 yrs) have received formal vocational training. Without early vocational exposure, STW (School-to-Work) transitions remain weak.
💡 Concept: Dual Vocational System — International Models
Countries with strong vocational outcomes share five structural features:
- Early orientation: Germany's differentiated lower secondary, China's post-lower-secondary bifurcation, Australia's vocational options after 7 years of compulsory education, USA's Career and Technical Education at high school
- Dual/hybrid model: School instruction + workplace training. Germany's dual system; Switzerland's 3–4 days apprenticeship + 1–2 days classroom; South Korea's Industry-Academy Integrated Apprenticeship Schools (2-year apprenticeship from Grade 10)
- Extensive industry participation: Employers co-design curricula, pay apprenticeship wages (Germany), and co-finance programmes
- Government support: China's tuition waivers, Korea's employment-support services, Australia's qualification frameworks
- Flexible routes: Korea's 'Job First, University Later'; Germany's vocational-to-higher-education pathways
India's School-Level Skilling Initiatives: CBSE mandates Kaushal Bodh textbooks for Grades VI–VIII from 2025-26 (NCERT). Vocationalisation of School Education under Samagra Shiksha. State-level under STARS: MP's Skill GPS app, Rajasthan's Career Education Programme, Maharashtra's Career Portal, Odisha's industrial visits, Meghalaya's SPARK (6,048 students; 1.2 lakh training hours in pilot year), Kerala's ESTEEM. Annual Kaushal Mela (Skill Fair) in all schools.
🎯 Policy Concept: Odisha's 'Fix-Accelerate-Scale' Model for ITI Reform
Odisha Skill Development Authority (OSDA, 2016) built a replicable ITI transformation template:
- Fix the ITI: Address perception and underutilisation. '10-64-2 formula' — 10 alumni success stories, 6 employed outside Odisha, 4 women, 2 entrepreneurs. New uniforms, ITI fests, global exposure for confidence-building.
- Scale short-term training: DDU-GKY scaled up; highlighting DDU-GKY trained workers employed at Tata Aerospace for aircraft manufacturing shifts social perception
- Accelerate Advanced Training Institute: Odisha World Skill Centre (Bhubaneswar, 2021) — Schools of Engineering and Services, partnered with ITEES Singapore. Scholarships, training from basic to advanced levels.
- Lesson: Image reinvention, alumni engagement, and success stories are learnable and scalable. Local ITIs and polytechnics should be revamped visibly and aspirationally.
Apprenticeships (PM-NAPS + NATS): 43.47 lakh apprentices engaged under PM-NAPS; 51,000+ establishments; 20% female participation. NATS: 5.23 lakh apprentices in FY25. NAPS 2.0: ₹1,110.64 crore disbursed via DBT directly to apprentices (25% of stipend). Need: unified apprenticeship mission merging NAPS + NATS; expand into green manufacturing, gig economy, digital services. Regional gap: North-East has only a few hundred to few thousand registrations vs 10 lakh+ in Maharashtra and UP.
💡 Concept: Skill Impact Bond (SIB) — Outcomes-Based Financing
The Skill Impact Bond (implemented by MSDE through NSDC) is a performance-linked payment mechanism:
- Private investors fund skilling programmes upfront
- Government/outcome funder repays only when independently verified placement and retention outcomes are achieved
- De-risks private participation and rewards sustained employment (not just enrolment)
- Creates incentives for quality, employer alignment, and long-term labour-market impact
- Part of a broader shift from input metrics (# trained) to outcome metrics (employed, earning, retained)
💡 Concept: Skill Vouchers — Demand-Side Financing
A skill voucher is a demand-side financing instrument that gives trainees choice over their training provider, encouraging competition on quality:
- Learner chooses course + pays a small co-payment; training institute redeems voucher on verified performance outcomes
- Global models: Singapore's Skills Future Credit (near-universal), Germany's Training Voucher Programme, USA's Trade Adjustment Assistance, Kenya's TVVP
- India examples: Tamil Nadu's Adi Dravidar tribal welfare vouchers (₹12,000–₹25,000 for graduates with 60%+); Maharashtra's Vikalp Skill Voucher Programme — 60% job retention rate among completers
- Design principle: Unused vouchers simply lapse — no penalty; quality providers survive, poor providers exit
Accountability Gaps (CAG 2025 on PMKVY): Inconsistencies in beneficiary and data management; delays in fund disbursement; gaps in monitoring systems; low placement outcomes. Only 56.3% overall youth employability (India Skill Report 2026). 22–25 age group dominates employability; Northern and Southern states outperform others.
Towards a Skilling Scorecard: Track post-training trajectory (6-month and 12-month employment + earnings) via UAN → EPFO/ESIC linkage. Integration of SIDH + NCS + e-Shram creates digital public infrastructure for real-time monitoring. Outcome-linked financing to reward high-performing institutions and sunset weak ones. Germany, Switzerland, Korea model: link funding + institutional legitimacy to measured outcomes over time.
Model Skill Loan Scheme 2024 (CGFSSD): Increased maximum loan limit; expanded pool of eligible lending institutions; covers non-NSQF courses on SIDH. Provides credit-based route for skill acquisition alongside grant-based models — recognising that diverse financing mechanisms reduce access barriers.
Vision for 2029-30: India is building an integrated digital labour market infrastructure — combining e-Shram (unorganised workers data), NCS (vacancies + skill requirements), and SIDH (training opportunities) into a unified DPI for the labour market.
Labour Codes
Implementation Priorities
- 32 states/UTs have draft rules published; full implementation is now underway
- Private sector must update HR systems, policies, digital readiness
- Industrial Tribunals to expedite dispute resolution
- FTE expansion reduces incentive to remain small
Gig Economy
Regulatory Priorities
- Algorithmic transparency and fairness in work allocation
- Co-investment by platforms in worker asset ownership (bike, equipment)
- Portable social security + emergency savings for gig workers
- Minimum per-hour/per-task earnings (including waiting time)
- Competition rules on platform concentration
Skilling
Skilling Reform Priorities
- Unified apprenticeship mission (NAPS + NATS convergence)
- Whole-of-government skilling (horizontal + vertical coordination)
- From enrolment metrics → outcome metrics (earnings, job retention)
- Expand skill vouchers; outcome-linked SIBs; employer co-investment
- Longitudinal UAN-based tracking of trainees
Practice MCQs — Chapter 12
Q1. As per the Annual Survey of Industries (ASI) FY24, how many jobs were added in the organised manufacturing sector over the decade FY15–FY24?
- A. 10 lakh
- B. 30 lakh
- C. 57 lakh (CAGR 4%)
- D. 100 lakh
Explanation: ASI FY24 data shows the organised manufacturing sector added more than 57 lakh jobs over FY15–FY24 at a CAGR of 4%. In FY24 alone, over 10 lakh jobs were added (6% YoY growth). Large factories (>100 workers) grew at CAGR 6% vs 2% for smaller factories.
Q2. The Female Labour Force Participation Rate (FLFPR) in India increased from 23.3% in 2017-18 to which figure in 2023-24, as per PLFS data?
- A. 28.5%
- B. 35.0%
- C. 41.7%
- D. 50.0%
Explanation: FLFPR rose from 23.3% (2017-18) to 41.7% (2023-24), while female unemployment rate fell from 5.6% to 3.2%. This is a significant structural shift, supported by reforms allowing women to work night shifts, growth of self-employment, and expansion of digital economic opportunities.
Q3. The Code on Social Security (CSS) 2020 defines a 'gig worker' as:
- A. Any worker employed in the informal sector
- B. A worker employed by a digital company for less than 6 months
- C. A person who participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship
- D. A casual labourer in agriculture or construction
Explanation: Chapter I, Section 2(35) of the CSS 2020 precisely defines a gig worker as one who "participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship." This formal recognition enables social security extension to gig and platform workers.
Q4. The 'Skill Impact Bond' implemented by MSDE through NSDC is best described as:
- A. A government bond issued to fund ITI infrastructure
- B. An outcomes-based financing model where private investors fund training and are repaid only upon verified placement and retention outcomes
- C. A scheme offering skill loans to unemployed youth at zero interest
- D. A subsidy given to private training institutes based on enrolment numbers
Explanation: The SIB is an outcome-based financing instrument. Private investors provide upfront capital; the outcome funder (government) repays only when independently verified placement and retention outcomes are achieved. This shifts the incentive from maximising enrolments to achieving real labour-market outcomes.
Q5. According to the Time Use Survey 2024 (MoSPI), women in India in the 15–59 age group spend how many minutes per day on unpaid activities?
- A. 123 minutes
- B. 278 minutes
- C. 363 minutes
- D. 414 minutes
Explanation: TUS 2024 shows women spend an average of 363 minutes/day on unpaid activities (vs 123 min for men). Women also spend 140 min/day on caregiving (vs 74 min for men). The total paid + unpaid burden on women is higher than men — the dual burden — explaining women's preference for flexible work arrangements.
Q6. The Odisha 'Fix-Accelerate-Scale' strategy for ITI transformation used the '10-64-2 formula'. What does this formula represent?
- A. 10 districts, 64 ITIs, 2 advanced institutes
- B. 10 weeks training, 64% placement rate, 2 lakh students targeted
- C. 10 alumni success stories, 6 employed outside Odisha, 4 women, 2 entrepreneurs
- D. 10 states, 64 partnerships, 2 global institutes
Explanation: The '10-64-2 formula' was a role-model campaign: highlighting 10 successful alumni — of whom 6 are employed outside Odisha, 4 are women, and 2 are entrepreneurs. This was used to change public perception of vocational education and boost ITI enrolments through confidence-building and aspirational marketing.
Q7. Maharashtra's 'Vikalp Skill Voucher Programme' achieved which notable outcome?
- A. 95% job placement rate for all enrolled trainees
- B. Disbursement of ₹25,000 vouchers to all SC/ST graduates
- C. A 60% job-retention rate among trainees who completed training within the prescribed time
- D. Enrolment of 10 lakh trainees in a single year
Explanation: Maharashtra's Vikalp Skill Voucher Programme (a joint initiative of NSDC, BARTI, Centre for Civil Society, and Michael & Susan Dell Foundation) provided redeemable skill vouchers with payments linked to outcomes (course completion, certification, job placement). It achieved a 60% job-retention rate among completers — validating the demand-side voucher model.
Q8. As per SBI Ecowrap (November 2025), the implementation of all four Labour Codes is expected to contribute what amount to India's GDP by 2029-30?
- A. 0.5% of GDP
- B. 1.25% of GDP
- C. 2.5% of GDP
- D. 5% of GDP
Explanation: SBI estimates that the Labour Codes implementation could contribute 1.25% to GDP by 2029-30 through enhanced worker welfare and business agility. The Code on Wages alone could boost consumption by ~₹75,000 crore. Medium-term employment gains are projected at +77 lakh jobs with UR falling to 1.9–2.9%.
