A new report has revealed that nearly 88 percent of India’s workforce is concentrated in low-competency occupations, exposing critical gaps between education and employment that threaten the country’s ambition of becoming a developed economy by 2047.
The study, titled “Skills for the Future: Transforming India’s Workforce Landscape,” conducted by the Institute for Competitiveness, warns of an urgent need to reform India’s skill development ecosystem, highlighting large-scale underemployment and skill mismatches across sectors and states.
Majority of Educated Workers in Low-Skill Jobs
According to the report, only 10–12 percent of the workforce is engaged in high-skill roles, while over 50 percent of university graduates work in jobs that require only secondary or primary-level education.
The mismatch is most pronounced among workers with a graduate-level education, where just 8.25 percent are employed in corresponding skill-level jobs.
“This signals significant underutilization of India’s educated workforce,” said Amit Kapoor, honorary chairman, Institute for Competitiveness and the lead author of the report, noting that 72.18 percent of secondary-educated workers were appropriately matched, the highest among all education levels.
Technical Training Lags Despite Importance
India’s Technical and Vocational Education and Training system, meant to bridge educational qualifications with job requirements, also reveals inefficiencies.
The report finds that a limited share of the workforce has received formal vocational training, and training often lacks alignment with industry needs.
In 2023–24, more than 66 percent of vocational training enrolments came from five sectors: Electronics, IT-ITeS, Textiles and Apparel, Healthcare and Life Sciences and Beauty and Wellness.
However, despite these concentrated efforts, high-skill jobs remain rare and unevenly distributed.
States Show Stark Contrasts in Skill Profiles
The skill composition across Indian states highlights deep regional disparities. While Delhi and Chandigarh report over 30 percent of their workforce in high-competency occupations, or Skill 4, states like Bihar, Jharkhand and Uttar Pradesh have less than 6 percent in the same category.
In Bihar, 95 percent of the workforce remains in low-skill , or Skill 1 and 2, categories.
Chandigarh recorded the highest increase in high-skill occupations, while states such as Ladakh saw a dramatic decline in Skill 3 roles, from over 16 percent in 2017 to just 0.35 percent in 2023.
Wage Disparities Reflect Skill Gaps
The report shows strong correlation between skill level and wages. While Skill Level 4 workers such as doctors, engineers and software developers earn an average of ₹3.94 lakh annually, workers in Skill Level 1 – including street vendors and domestic helpers – earn just ₹98,835 on average.
Over 46 percent of India’s workforce earns less than ₹1 lakh per year, highlighting the dominance of low-income, low-skill employment and the limited economic mobility it allows.
Recommendations: Data, Training and Policy Reforms
To address these issues, the report recommends institutionalizing a national Skill Gap Analysis Survey to track employment outcomes, wage differentials, and training efficacy.
It also calls for a centralized Skill Data Repository and updates to the National Classification of Occupations to reflect emerging job roles in AI, renewable energy, and advanced manufacturing.
The report urges stronger alignment between training programs and regional industrial clusters, and mandates industry linkage through employment of government-certified (PMKVY) individuals.
“Without targeted interventions, the mismatch threatens to derail India’s growth story, particularly as its demographic dividend begins to wane,” the report warned.
Toward a ‘Viksit Bharat’ in 2047
The report concludes by emphasizing that transforming India’s workforce is critical to achieving the government’s vision of a “Viksit Bharat” by 2047. This requires a long-term skills roadmap that integrates education, training, and employment in a unified national strategy.
“The skilling landscape must evolve in tandem with industry to ensure India’s youth are not only employed, but meaningfully and productively engaged,” it said.
