Middle Class 2.0: Changing Employment Sector in India

• India’s middle class has undergone a significant transformation in the post-liberalisation era. The traditional middle class, shaped by government employment, is now being replaced by a new middle class driven by private sector growth, particularly in information technology (IT), banking, and service-based industries.
• However, this shift also presents a significant challenge—limited growth in manufacturing employment, leading to concerns over sustainable job creation.

Changing Employment Landscape in India

Decline of Public Sector Employment

• Indian Railways reduced its workforce from 16.5 lakh (1990-91) to 12.5 lakh (2023-24).
• Central Public Sector Enterprises (CPSEs) saw a drop from 22.2 lakh (1990-91) to 8.1 lakh (2023-24).

Rise of Private Sector Employment

• Top 5 IT firms (TCS, Infosys, Wipro, HCL, Tech Mahindra) employ 15.3 lakh, surpassing Indian Railways and the armed forces.
• Private banks had 8.74 lakh employees in 2023-24, exceeding public banks’ 7.5 lakh workforce.
• HDFC Bank (2.13 lakh) nearly matches State Bank of India (2.32 lakh) in workforce size.

Expansion of the Services Sector

• IT, finance, banking, insurance, healthcare, hospitality, logistics, aviation, media, retail, and e-commerce have seen employment booms.
• Gig economy platforms like Uber, Zomato, and Swiggy have created large-scale informal employment.

Challenges of Middle Class 2.0 in India’s Changing Employment Landscape

Stagnation in Manufacturing Jobs

• Despite economic shifts, the agriculture sector’s dependency increased—workforce share fell from 64% (1993-94) to 42.5% (2018-19) but rose again to 46.2% in 2023-24 due to a lack of alternative jobs.
• Manufacturing employment stagnated, with its share in total employment rising modestly from 10.4% (1993-94) to 12.6% (2011-12) before declining to 11.4% in 2023-24.
• Construction jobs overtook manufacturing, now accounting for 12% of total employment, signalling a shift toward low-skilled labour-intensive work rather than high-value industrial jobs.

Rise of Informal, Low-Paying Jobs

• The services sector absorbed labour but failed to generate secure, high-paying employment. A large portion remains informal, contract-based, and low-paying, including delivery, sanitation, security, and petty trade.
• The gig economy expanded but remains unstable, with Uber (10 lakh drivers), Zomato (4.8 lakh deliverers, 1.45 lakh quick-commerce riders), and Swiggy (5.4 lakh partners).

Limited Inclusion in Middle Class 2.0

• Well-paying jobs are concentrated among the highly educated in fields like software, finance, and healthcare, creating a widening economic divide.
• The unskilled and semi-skilled workforce struggles to move beyond informal, low-income employment, restricting mass upward mobility and deepening socio-economic inequality.

Way Forward: Strengthening Middle Class 2.0 in India’s Employment Landscape

• From Public Sector Reliance to Private Sector-Led Growth: Foster high-skill job creation in IT, finance, and emerging industries while ensuring job security and fair wages.
• From Manufacturing Stagnation to Industrial Revival: Expand PLI schemes, boost MSMEs, and enhance ease of doing business to generate sustainable employment.
• From Informalisation Trap to Secure & Skilled Workforce: Integrate social security with large-scale vocational training to ensure quality jobs.
• From Gig Dependency to Formal Employment Expansion: Strengthen labour laws, contract protections, and income stability for gig and service sector workers.
• From Job Seekers to Job Creators: Promote entrepreneurship, digital innovation, and self-employment to empower the next-generation workforce.

A strong Middle Class 2.0 requires high-quality employment, economic mobility, and workforce security, ensuring India’s transition to a resilient and future-ready economy.

Reference: The Indian Express | PMF IAS: Employment Archives

UPSC Mains PYQs – Theme – Employment

1. [2024] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?
2. [2023] Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements.
3. [2022] Economic growth in the recent past has been led by increase in labour productivity. Explain this statement. Suggest the growth pattern that will lead to creation of more jobs without compromising labour productivity.
4. [2021] Examine the role of ‘Gig Economy’ in the process of empowerment of women in India.
5. [2017] Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports rather than capital-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports.
6. [2016] How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?
7. [2015] Success of ‘Make in India’ program depends on the success of Skill India programme and radical labour reforms. Discuss with logical arguments.
8. [2014] While we flaunt India’s demographic dividend, we ignore the dropping rates of employability. What are we missing while doing so? Where will the jobs that India desperately needs come from? Explain.

PMF IAS Pathfinder for Mains – Question 82

Q. The transition from a government job-driven economy to a private sector-led employment model has reshaped India’s workforce. Critically examine the impact of this shift on income security, social mobility, and economic growth. (250 Words) (15 Marks)

Approach

• Introduction: In the introduction, briefly define the shift in India’s workforce to a private sector-led employment model.
• Body: Discuss the impacts of the shift on income security, social mobility and economic growth.
• Conclusion: Write a way forward and conclude appropriately highlighting the need for robust measures.