India Needs More Formal, Quality Jobs For Better Income Distribution: Report

India will need more formal and quality jobs to ensure better income distribution, according to Deloitte India's Economy Outlook for October 2024. The emphasis on manufacturing and the rise in emerging industries, such as semiconductors and electronics that require advanced education and specialised skills will create more high-quality jobs, it added.

Additionally, India’s push toward clean-energy alternatives is set to generate green jobs across various sectors, including energy, agriculture, tourism, and transport. Besides, India’s greatest strength–its young, aspiring population-- positions it to gain rapid and substantial returns from the government’s recent efforts in skill development, the report stated.

Job creation in the economy is key to ensuring a steady household income, and the latest employment data points to some green shoots. The MGNREGA scheme provides temporary jobs to employ people who have limited or no alternate stable income opportunities. 

For the first time since the pandemic, the scheme’s 12-month moving average ‘employment demanded’ number has fallen below pre-pandemic levels in August 2024. A steady decline probably also points to the possibility of individuals finding better paying job opportunities elsewhere.

According to the latest PLFS annual data 2023-24, the share of employment in the secondary sector has improved post-pandemic, primarily driven by strong job creation in construction. Initiatives such as the National Infrastructure Pipeline and increased government capital expenditure have been crucial in this recovery of employment share in construction from 11.6 per cent in 2019-20 to 12.2 per cent in 2023-24.

 As a result, construction has become a key area for job growth, reflecting broader trends in employment dynamics, according to Deloitte India. According to its research, employment shares in the manufacturing and services sectors have also improved modestly. Implementing schemes like production-linked incentives has contributed to the recovery of job shares in manufacturing (11.4 per cent) since the pandemic (10.9 per cent). 

Meanwhile, the services sector’s share in employment has seen a big jump in last one year, up from 28.9 per cent in 2022-23 to 29.7 per cent in 2023-24. The biggest employment gain has been in the "other services" category, which includes business and professional services. 

Additionally, the share of salaried workers, which had declined during the pandemic, is now on the rise again. According to the latest PLFS report, the share of formal jobs has rebounded, with average salaries for salaried employees significantly outpacing those of self-employed and casual workers, further highlighting the positive impacts of the services sector recovery on formal employment.

Notably, the female participation rate in the labour force for ages 15 years and above increased from 22 per cent in 2017-2018 to 40.3 per cent in 2023 -2024. The jump is much higher in rural areas (22.8 percentage points) than in urban (7.8 percentage points) during this period. 

According to the report, this trend indicates improved inclusivity and growing empowerment of women in rural India. However, the post-pandemic labour market has seen a significant increase in the share of informal jobs, particularly in the agriculture and construction sectors, characterized by a high concentration of casual and self-employed workers. “These jobs often lack social protection from employers, creating vulnerabilities for workers,” it stated.

Besides, construction jobs are usually low-skilled, as evidenced by the average years of formal education needed, leading to the availability of low-quality jobs and pay. While the share of salaried positions in the manufacturing and services sectors is higher, at 51.4 per cent and 41.2 per cent respectively, their overall contribution to total employment has only seen modest improvements over the years.