India’s Jobs Story Is Changing — And the Economic Survey Just Proved It

For more than a decade, India’s growth story has carried an uncomfortable contradiction. The economy expanded, reforms multiplied, startups flourished, and infrastructure surged—but the question refused to go away: Where are the jobs?

“Jobless growth” became a convenient shorthand, repeated across panel discussions, election debates, and social media threads. It was simple, sharp, and politically potent. But as the Economic Survey 2025–26 makes clear, that shorthand no longer captures what is happening beneath the surface of India’s labour market.

The shift is not dramatic or headline-hungry. There is no single scheme claiming to create millions of jobs overnight. Instead, the Survey reveals something more consequential: India’s employment model itself is changing.

A Labour Market That’s Quietly Healing

One of the most telling signals in the Survey lies in two numbers that are rarely read together. Labour force participation in FY26 has remained strong, hovering in the mid-50s, even as unemployment has edged lower towards the 5 per cent mark. In labour economics, this combination matters. When participation rises or stays steady while unemployment falls, it suggests the economy is not merely absorbing existing workers—it is creating room for new ones.

This is a subtle but important departure from past cycles, where declining unemployment often coincided with people giving up the search for work. The Survey’s data suggests the opposite dynamic is now at play: more Indians are willing to work, and more are finding opportunities.

That alone does not settle the jobs debate, but it does shift the burden of proof.

From Job Schemes to Job Systems

Perhaps the most striking aspect of the Survey is not what it announces, but what it assumes. There is little emphasis on short-term employment programmes or stopgap measures. Instead, the focus is on structural conditions that allow jobs to emerge organically.

At the centre of this approach is India’s long-delayed labour reform. In November 2025, the country finally completed the consolidation of 29 labour laws into four comprehensive labour codes. For decades, India’s rigid and fragmented labour framework discouraged firms from hiring formally or scaling beyond a certain size. Small firms stayed small, informal jobs multiplied, and productivity stagnated.

The Survey positions the new labour codes as a turning point. By simplifying compliance, recognising modern forms of work such as gig and platform employment, and allowing greater flexibility in hiring while expanding social security coverage, the reform attempts to resolve a paradox that haunted Indian industry: jobs existed, but firms were afraid to formalise them.

An estimate cited in the Survey suggests that effective implementation of these labour codes could result in the creation of nearly 77 lakh additional jobs over time. The number itself is less important than what it represents—a belief that employment growth is more likely to come from lower friction in hiring than from fiscal handouts

Why Services Are Carrying the Jobs Story

If there is one sector that clearly dominates India’s employment narrative today, it is services. The Survey makes little attempt to romanticise manufacturing-led mass employment. Instead, it acknowledges a reality that has been unfolding for years: India’s services sector has become the primary absorber of labour, particularly in urban areas.

Services now account for nearly a third of total employment and close to two-thirds of urban jobs. Even more telling is the formal employment data. More than half of net additions to the formal workforce—tracked through EPFO registrations—are coming from services. This includes IT and digital services, Global Capability Centres, logistics, tourism, healthcare, financial services, and real estate.

For startups, this matters deeply. India’s startup ecosystem is overwhelmingly service-led, and the Survey implicitly recognises startups not as fringe innovators but as core employment generators. In this sense, India’s jobs story is becoming inseparable from its entrepreneurial story.

Manufacturing Isn’t Missing—It’s Maturing

Manufacturing has not disappeared from the Survey’s employment framework, but it is no longer portrayed as a quick fix for job creation. Instead, the focus is on quality and capability.

The Survey notes strong growth in real manufacturing output, particularly in electronics, electric vehicles, pharmaceuticals, and automobiles. Medium- and high-technology activities now account for nearly half of India’s manufacturing value addition. These sectors are less labour-intensive in the traditional sense, but they generate jobs that are more stable, better paid, and deeply linked to skill development.

In other words, manufacturing’s contribution to employment is becoming slower, but sturdier. This is not the factory-floor explosion many once envisioned, but it may prove more sustainable in the long run.

The Quiet Revolution in Women’s Employment

Buried within the Survey’s labour data is one of the most transformative shifts in India’s workforce. Female labour force participation has risen sharply over the past few years, climbing from just over 23 per cent in 2017–18 to more than 41 per cent by 2023–24. At the same time, female unemployment has fallen significantly.

This is not a statistical anomaly. The Survey links the trend to deliberate policy choices—flexible work arrangements, expanded maternity benefits, safer urban infrastructure, night-shift permissions, and improved access to housing and childcare near workplaces.

For an economy long constrained by low female participation, this shift has far-reaching implications. It expands the talent pool, boosts household incomes, and raises long-term growth potential. More importantly, it signals that job creation is no longer gender-neutral in intent but gender-conscious in design

Skilling That Finally Meets the Market

India’s skilling programmes have often been criticised for focusing on numbers trained rather than people employed. The Survey reflects a quiet but meaningful correction. Increasingly, public spending on skilling is being tied to outcomes—placements, retention, and employer participation.

Apprenticeship models backed by direct benefit transfers, industry-led ITI upgrades, and performance-linked financing instruments like skill impact bonds mark a departure from certificate-driven training. The emphasis is clear: skills must translate into paycheques.

What the Survey Is Really Saying

Taken together, the Economic Survey 2025–26 does not claim that India has solved its employment challenge. What it argues—carefully, and with data—is something more nuanced. The country is no longer relying on episodic job creation. It is building the conditions under which jobs can emerge, scale, and endure.

The old question—“Where are the jobs?”—may no longer be the right one.

The better question now is: Are we paying attention to where they are actually coming from?

For startups, workers, and policymakers alike, the Survey’s answer is unmistakable. India’s jobs story is changing—and quietly, but convincingly, the evidence is beginning to back it up.