GREENVISSAGE EXPLAINS: Why Formal Jobs Are Still Out of Reach?

India, with its vast and dynamic workforce, is often celebrated for being one of the fastest-growing major economies in the world. The headlines are filled with optimism, GDP is rising, millions of people are entering the labour force, and technology is reshaping work. Yet, beneath this optimistic façade lies a more troubling truth: India’s job market is fundamentally broken. It’s not that jobs don’t exist; it’s that the quality, security, and potential for advancement in most of them are alarmingly poor.

The numbers paint a curious picture. In recent years, India has added millions of jobs, a metric that usually signals economic strength. But when you dig deeper, you see that a vast majority of these are in the informal sector, where protections, benefits, and even basic labour rights are absent. This means that while employment figures may look healthy on paper, the actual lived experiences of workers tell a very different story. Take, for example, a young man who becomes a delivery executive after college. He’s “employed,” yes, but on contract, without job security, medical benefits, or a retirement plan. His income is uncertain, dependent on how many deliveries he can manage in a day. His role is precarious and replaceable. Multiply this example across millions, and the scope of the problem becomes clear: we’re creating jobs that don’t help people escape poverty or build meaningful futures.

A significant problem with India’s labour market is its lack of mobility. Ideally, economic progress should allow workers to climb from informal to formal employment, from low-productivity to high-productivity jobs. But in India, the rungs of this ladder are missing. Most people who start in the informal sector, be it as a daily wage labourer, street vendor, or contract worker, remain stuck there for life. There are very few opportunities to transition into better roles, regardless of experience or performance. Once someone is in the informal economy, their chances of “graduating” into formal employment are slim. This lack of mobility traps millions in a cycle of low pay and high instability, generation after generation.

One would think education could act as the great equaliser, the bridge between unstable work and long-term careers. But even that narrative is beginning to crack. While it’s true that higher education can improve one’s chances of formal employment, the benefit is far from guaranteed. Today, India is producing a surplus of graduates with degrees but no jobs that match their qualifications. Many of them end up taking roles well below their skill level, contributing to what economists call educated underemployment. This is not just a waste of individual potential; it’s a structural inefficiency that slows down economic growth. Another contradiction is the surprising resilience of agricultural employment. Traditionally, as economies develop, workers move out of agriculture and into industry or services. But in India, that shift has stalled. Despite the country’s modernisation, the number of people working in agriculture has increased in recent years. This is not because farming is suddenly more lucrative; it’s often the opposite. It’s more of a fallback option for those who can’t find anything else. When urban jobs dry up or offer poor wages, many return to their villages and take up small-scale farming or allied activities. It’s survival, not choice.

Adding to the precarity is the growing trend of contract work. Permanent, stable jobs are becoming rarer, especially in the private sector. Companies increasingly prefer short-term, contractual workers to keep costs low and reduce liabilities. This model benefits employers but leaves workers vulnerable, unable to access long-term credit, plan for the future, or invest in skills that could yield better returns over time. This is particularly harmful for young workers entering the job market. Instead of gaining experience and building a career, many find themselves stuck in a loop of short-term gigs and temporary contracts, often in low-productivity sectors.

At the heart of this dysfunction is India’s stagnant labour productivity. Despite technological advancements and higher enrollment in education, the average output per worker has not seen the kind of leap expected in a growing economy. Wage growth, a direct outcome of rising productivity, has been sluggish at best. An increase in the number of people working does not automatically translate to economic prosperity if those jobs are inefficient or redundant. Without productivity gains, the economy grows larger but not stronger, and wages remain low.