Blitz Bureau
NEW DELHI: India today faces a paradox that should worry policymakers and business leaders alike. The economy is among the world’s fastest growing, corporate profits are robust, infrastructure spending is unprecedented, and India is pitching itself as a reliable alternative in global supply chains. Yet behind these strong indicators lies a persistent weakness that refuses to fade: economic growth is failing to generate enough quality, middle-income jobs.
The problem is not unemployment in the narrow statistical sense. India’s labour market absorbs workers, but largely at the extremes. At one end are high-skill, high-pay jobs in IT, finance, consulting and a few advanced manufacturing niches.
At the other is a vast informal economy offering low-paid, low-productivity work with little security. What is missing is the broad band of stable, semi-skilled, reasonably paid jobs that historically powered social mobility in East Asia and much of the West.
Manufacturing was expected to fill this gap. Despite repeated policy pushes — from “Make in India” to production-linked incentives — manufacturing’s share in employment has barely moved. Capital-intensive factories, automation, and a focus on scale rather than labour absorption have limited job creation. Even when manufacturing output rises, employment elasticity remains weak.
Services, meanwhile, are growing rapidly but are sharply bifurcated. High-end services generate wealth but employ relatively few people. The rest of the services sector — retail, logistics, hospitality, delivery platforms — absorbs labour but often without formal contracts, predictable wages, or skill progression. Platform work, while innovative, has largely replaced traditional informal jobs rather than creating a new middle tier.
Education and skills mismatch deepen the problem. India produces millions of graduates every year, but many lack industry-ready skills. Firms complain of shortages even as young people struggle to find suitable work. The result is credential inflation: degrees that no longer guarantee employability, and jobs that do not justify educational investment.
Labour regulations are often blamed, but the reality is more complex. Compliance costs matter, but firms also hesitate to hire because demand remains uncertain and global cycles volatile.
In such an environment, companies prefer automation, outsourcing, or contractual labour over building permanent payrolls. The risk is transferred to workers, weakening income stability and consumption growth.
The absence of middle jobs has broader economic consequences. It constrains domestic demand, limits savings, and fuels inequality. It also creates political pressures, as aspirations rise faster than opportunities. Growth without jobs can sustain numbers for a while, but it erodes trust over time.
What is needed is not a single silver bullet but a strategic reset. India must focus on labour-intensive manufacturing segments such as textiles, food processing, electronics assembly and green technologies.
Urban services — healthcare, education, care work, tourism — need formalisation and productivity upgrades. Skill development must move closer to industry, with apprenticeships and certification tied to real jobs.
India’s growth story is real, but its durability depends on who participates in it. Without a strong middle layer of jobs, growth risks becoming an elite phenomenon — impressive on charts, fragile on the ground. Jobs, not just GDP, must become the main yardstick for judging the next growth phase now.
The absence of middle-income jobs constrains domestic demand, limits savings, and fuels inequality. It also creates political pressures, as aspirations rise faster than opportunities. Growth without jobs can sustain numbers for a while, but it erodes trust over time.