Skill in Indian Labour Market: Current Trends and Estimating Future Gaps

Abstract

Countries with a higher proportion of the working age population can achieve higher growth rate if this labour force is employed optimally and productively. India is going through this stage of demographic transition but the recent macroeconomic trend does not indicate that India is reaping any demographic dividend. A large mass of manpower is not engaged productively and both unemployment and underemployment are increasing. A mismatch between labour demand and labour supply both in terms of quantity and quality is observed. In this context, this article tries to forecast the future labour market situation in India across different industries, occupations and skill groups. Results indicate surplus labour for lower skill categories and shortages for higher skill categories soon. The new economy is expected to be more dependent on machines and skilled workers conversant with them. With the fourth industrial revolution looming large, demand for skilled professionals would increase further, while a huge surplus of low-skilled labour force released by the primary sectors would coexist. A twin strategy of targeted employment expansion programs and up-skilling labour force to fit the demands of the new economy is called for. Otherwise, a demographic disaster would explode in our faces.

JEL: E24, J6, J10, J11, J23, J24