How Emerging Technologies are Bridging Employment Inequality in India’s Economy

The Changing Landscape of Employment in India

India’s job market is shifting. Since 2000, there have been fewer jobs created compared to the 1990s. The goal is to generate about 7.85 million jobs each year in the non-farm sector by 2030. Yet, the rise of Artificial Intelligence (AI) poses a significant threat, replacing many human workers.

Despite being one of the world’s fastest-growing economies, India faces problems like "severe underemployment." Many people are working, but not at jobs that provide a livable income. According to reports from NITI Aayog, this paradox of growth leads to income inequality, making the term “jobless growth” a common refrain among economists.

A recent study from the World Inequality Database highlights this issue. In 2022-23, the richest 10% of people in India captured nearly 60% of total income. Meanwhile, half the population earned just 15%. The top 1% alone claimed 22.6% of the income—the highest share since 1922. Disparities based on caste, gender, and region mean that marginalized communities bear the brunt of economic struggles.

Capital-Intensive Industries on the Rise

Several reasons contribute to India’s growing underemployment. One key factor is the country’s move toward capital-intensive industries. Unlike leaders in manufacturing such as China and South Korea, India’s workforce demands are evolving. Capital-intensive sectors require fewer workers, while advancements in AI and automation are replacing those who perform routine tasks. A study from the World Economic Forum indicates that Indian companies are adopting these technologies faster than their global counterparts.

This trend is troubling. Jobs are not keeping pace with the growing workforce. For unskilled and semi-skilled workers, this creates barriers to upward mobility and economic improvement. If the situation continues, it risks deepening inequality and threatening long-term economic stability.

Rebuilding Labor-Intensive Sectors

To combat this trend, India should focus on labor-intensive industries that can provide jobs for the large unskilled workforce. Sectors like construction, textiles, and food production currently generate significant employment—13%, 10%, and 11% respectively. An important report from the International Labour Organization (ILO) emphasizes the urgency of refocusing growth efforts toward labor-intensive manufacturing.

Encouraging women’s participation in the workforce is crucial. Currently, women’s employment participation stands at around 37%. Improving transportation, workplace conditions, and flexible work options can help draw more women into the job market. Tackling the challenge of youth not in employment, education, or training (NEET) is also essential.

The Indian government’s Make in India initiative, launched in 2014, aimed to boost manufacturing investment. Despite these efforts, the share of manufacturing in GDP has decreased from 16.7% in 2013-14 to 15.9% in 2023-24. Surveys indicate that cumbersome labor regulations hinder the growth of labor-intensive firms, which create more jobs per unit of capital.

The Path Forward

To create a balanced approach to automation and job creation, India needs to rethink its strategies. By easing labor regulations and providing better infrastructure, the country can cultivate an environment for small and medium enterprises (SMEs). Currently, 92% of SMEs lack access to financing, making it challenging for them to grow.

Sustainability in job creation shouldn’t just focus on profits. Companies that invest in workforce training and expansion should be rewarded. The societal benefits should outweigh corporate gains.

India’s economic future hinges on its ability to adapt its job market to meet the needs of its people. With timely interventions and policies, it can turn its demographic advantage into a sustainable source of employment.

For more detailed insights on income inequality and labor trends in India, you can refer to the World Inequality Database and International Labour Organization.

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EMPLOYMENT, WORKERS, JOB LOSSES, ARTIFICIAL INTELLIGENCE, INDIAN ECONOMY, NEW TECHNOLOGIES: TACKLING THE EMPLOYMENT INEQUALITY IN INDIAN ECONOMY