Changing Dynamics of the Labour Market in India: Structure, Challenges, and Policy Pathways
Abstract
The labour market serves as a vital mechanism connecting production, employment, and income distribution within an economy. In India, it represents a complex structure that mirrors both the nation?s demographic diversity and its developmental imbalances. This paper examines the Indian labour market through a comprehensive lens?exploring its features, demand and supply dynamics, composition, and evolving challenges amid globalization, technological transformation, and policy reforms. The analysis begins with theoretical insights into the labour market, emphasizing its dualistic nature that encompasses both formal and informal sectors. It then delves into the structural characteristics of the Indian labour force, which remains dominated by informal employment, underemployment, and low labour productivity. The study draws upon recent data from the Periodic Labour Force Survey (PLFS), NITI Aayog, the International Labour Organization (ILO), and other governmental sources to illustrate key trends such as rising labour force participation in rural India, gender-based employment gaps, and the emergence of gig and platform-based employment. It further highlights the interplay between demographic transition and skill mismatches that constrain productive absorption of labour. The paper argues that India?s labour market continues to reflect persistent dualism?between organized and unorganized sectors, rural and urban economies, and male and female workers?creating deep-seated inequalities. The COVID-19 pandemic magnified these structural weaknesses, exposing the vulnerability of migrant and informal workers. Despite legislative consolidation through the four labour codes (2019?2020), implementation gaps and institutional inefficiencies hinder inclusive growth. The concluding section identifies critical challenges, including unemployment, informality, gender disparity, and skill shortages, while proposing actionable policy recommendations. It calls for a transition toward a human-centred labour policy emphasizing social security, skill development, and technological adaptation. The study posits that the future of India?s labour market depends on its ability to reconcile economic flexibility with social protection, ensuring that growth translates into equitable employment opportunities. By integrating empirical data with theoretical insights, this article contributes to ongoing academic and policy debates on employment and labour reforms in developing economies. It asserts that a comprehensive reorientation of labour institutions, coupled with inclusive growth strategies, is essential for achieving India?s sustainable development and social justice goals in the twenty-first century.
Keywords
Labour Market, Employment, Informality, Unemployment, Labour Codes, Social Security, India.
Citations
IRE Journals:
Ganesh Shrirang Nale (Satarkar) "Changing Dynamics of the Labour Market in India: Structure, Challenges, and Policy Pathways" Iconic Research And Engineering Journals Volume 9 Issue 5 2025 Page 768-771 https://doi.org/10.64388/IREV9I5-1711769
IEEE:
Ganesh Shrirang Nale (Satarkar)
"Changing Dynamics of the Labour Market in India: Structure, Challenges, and Policy Pathways" Iconic Research And Engineering Journals, 9(5) https://doi.org/10.64388/IREV9I5-1711769
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