Subject: Unemployment

PYQ Relevance [UPSC 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? Linkage: The PYQ asks for an evaluation of the four Labour Codes, including the Code on Social Security, and their implementation progress. The article’s account of the un-operationalised gig worker fund under the Code on Social Security directly answers the “progress so far” component of this question.

Mentor’s Comment

On June 12, the International Labour Conference adopted Convention No. 193 on Decent Work in the Platform Economy by a vote of 406 to 8. India’s government delegate abstained even as India’s own employer and worker delegates voted in favour. The abstention exposes a gap between India’s stated commitment to gig worker welfare through its domestic Labour Codes and its long-standing refusal to accept binding international obligations that courts could enforce.

What floor of rights does Convention No. 193 set that Indian law currently denies gig workers?

1. Rights regardless of classification: The Convention extends minimum pay, on-time payment, occupational safety and social security to platform workers whatever a company calls them, whether “employee” or “independent partner.”
2. Algorithmic management disclosure: Platforms must disclose significant automated decisions in writing and keep a human in the loop. Algorithmic management: the software that allocates work, sets pay, monitors performance and can deactivate accounts. No prior global labour standard has regulated this domain.
3. Correct classification mandate: Article 9 requires governments to classify workers by the facts of the work performed, not by the label a platform assigns.
4. Enforceability through ratification: A worker in a ratifying country can sue a platform for redress once the Convention is written into domestic law. India’s abstention forecloses that route.
5. Limited but real floor: The Convention does not resolve every gig work dispute. It sets a minimum below which no ratifying country can fall.

How large and precarious is India’s gig workforce today?

1. Scale: India’s gig workforce stood at roughly 7.7 million in 2020-21. NITI Aayog projects it will reach 2.35 crore by 2029-30, about 6.7% of the non-agricultural workforce.
2. Wage distribution: About 39% of gig workers earn ₹10,000-₹25,000 a month. Another 34% earn ₹25,000-₹40,000.
3. Unpaid costs: Workers cover fuel costs themselves and work 12-hour shifts with no overtime. Overtime requires an employer to exist in law.
4. Social security gap: Only about 15% of gig workers have any social security cover.
5. Algorithmic exposure: An algorithm can deactivate a worker’s account and cut off income without explanation. Workers have no accident cover, sick pay or pension to fall back on.

Does India’s Code on Social Security, 2020 already deliver what Convention No. 193 promises?

1. Early definitional step: The Code on Social Security, part of the four Labour Codes in force from November 2025, was among the world’s first central laws to define “gig worker” and “platform worker.”
2. Funding mechanism on paper: Aggregators must pay 1%-2% of annual turnover, capped at 5% of worker payouts, into a social security fund.
3. Unspecified benefits: Neither the central law nor most state laws specify the nature, quantum or eligibility of benefits.
4. Un-operationalised contribution: The contribution mechanism remains largely unimplemented. The schemes remain notional.
5. Gap between claim and delivery: The law reads as leadership on paper. It functions as a promise that has not been converted into disbursed protection.

Who is actually legislating gig worker protection: the Centre or the states?

1. Rajasthan’s model: The Rajasthan Platform-Based Gig Workers Act, 2023 is a standalone state law establishing gig worker registration and welfare mechanisms.
2. Karnataka and Telangana boards: Both states have drafted welfare boards for platform workers independent of central action.
3. Federalism argument tested: The Centre cites labour as a concurrent subject to justify caution. States are already exercising that same concurrent jurisdiction.
4. Centre-state asymmetry: The Centre abstains in Geneva while states legislate at home. This reverses the usual expectation that national commitments lead subnational implementation.

Is India’s abstention a one-off caution or a settled institutional posture?

1. Founding member, selective ratifier: India is a founding member of the ILO and has ratified six of eight core conventions. It has not ratified Convention 87 on Freedom of Association or Convention 98 on the Right to Organise and Collective Bargaining.
2. Domestic rule conflict: India has not ratified Conventions 87 and 98 because they would grant government servants the right to strike. Domestic rules bar that right.
3. Violence and harassment convention untouched: India has also not ratified Convention 190 on violence and harassment at work.
4. Reversed sequence: India ratifies conventions only once domestic law is already in full conformity. This reverses the sequence in which ratification typically drives domestic reform.
5. A settled choice: A founding member of the ILO that will not sign the ILO’s own guarantees is not acting out of unfamiliarity. It is exercising a settled choice to endorse principles without accepting enforceable obligations.

What does the abstention cost gig workers and India’s global standing?

1. Lost legal recourse: Ratification would let a worker sue a platform for redress. Abstention forecloses that possibility inside India.
2. Signal to aggregators: The abstention tells every aggregator operating in India that calling workers “partners” rather than employees remains a safe classification.
3. Cross-country disparity: A delivery worker in China will have enforceable rights under the Convention. A worker in Chennai will not.
4. A choice by default: The government chose neither the worker nor the platform in a forum where one side holds the app and the other holds the handlebars. That default functions as choosing the platform.
5. Scale of the stake: The World Bank estimates 154-435 million people already earn through platforms worldwide. 2.35 crore of them will be Indian by 2030.

Conclusion

India’s abstention on Convention No. 193 is not an isolated diplomatic caution. It follows the same pattern as its non-ratification of Conventions 87, 98 and 190: endorse the principle in domestic law, withhold the obligation that would make it enforceable. Gig workers are left with a social security fund that exists on paper but not in disbursement, while individual states legislate protections the Centre will not commit to nationally. Until India converts stated intent into binding law, its 2.35 crore gig workers by 2030 will remain outside the floor of rights their counterparts elsewhere now hold.

PYQ Relevance[UPSC 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. Linkage: The PYQ asks whether India is ignoring falling employability while flaunting its demographic dividend, and where future jobs will come from. It matches the article’s central tension between the demographic dividend narrative and the graduate unemployment reality.

Mentor’s Comment

Periodic Labour Force Survey (PLFS) 2023-24 data shows that unemployment among India’s Gen Z rises, not falls, with higher education. Also, most employed Gen Z workers hold no job contract or social security cover. This has exposed a widening gap between India’s celebrated demographic dividend and the actual quality of work available to its youngest working-age cohort.

How Wide Is India’s Youth Employment Gap?

1. Low participation: Labour Force Participation Rate (LFPR) for Gen Z stands at 41.7%, against 75% for Millennials, reflecting continued engagement in education as well as exit from the workforce.
2. Rural-urban reversal: Rural Gen Z participation (44.1%) exceeds urban participation (37.2%), indicating urban youth delay labour market entry for education and training while rural youth enter earlier out of necessity.
3. Unemployment gap across cohorts: Overall Gen Z unemployment is 11.9%, compared to just 2% among Millennials, showing the crisis is concentrated in the youngest cohort.
4. Urban unemployment is sharper: Urban Gen Z unemployment rises to 17.1%, well above the national Gen Z average.
5. Gender compounds urban unemployment: Urban young women face 22.6% unemployment, the highest among all sub-groups measured.

How Does Gender Deepen the Employment Crisis for Gen Z?

1. Domestic duties as exclusion: 27.1% of Gen Z women are engaged only in domestic duties, against just 0.32% of Gen Z men, pulling them out of the labour force altogether.
2. Low regular wage employment for women: Only 4.7% of Gen Z women hold regular wage jobs, compared to 14.8% of Gen Z men.
3. Male LFPR advantage: Male labour force participation stands at 59.3% in rural India and 51.3% in urban India, against just 28% and 21.1% respectively for young women.
4. Structural, not just economic, barriers: Childcare burdens, safety concerns, mobility constraints, and social norms keep women out of paid work, independent of job availability.
5. Demographic dividend undermined: A large share of young women outside the paid economy weakens the case that India is fully harnessing its demographic dividend.

Why Does More Education Correlate with Higher Unemployment? 

1. Graduate unemployment exceeds average: Among Gen Z men with graduate-level education or above, unemployment stands at 29%, and among Gen Z women at 36.9%, both far above the respective cohort averages.
2. Inverted assumption: Education is expected to lower unemployment; instead, unemployment rises at the highest education levels, contradicting the standard human capital logic.
3. Persists across cohorts: Millennial graduate unemployment is 5.2% for men and 13.8% for women, confirming the pattern is not unique to Gen Z alone but is sharper for Gen Z.
4. Root cause is mismatch: The gap reflects a mismatch between what the education system produces and what the labour market demands, not merely a shortage of degree-holders.
5. Technology reshapes demand: Automation and growing adoption of artificial intelligence are altering the nature of available jobs, widening the skill mismatch further.
6. Risk of delay compounding: When higher education does not convert quickly into employment, frustration rises, family investment in education comes under strain, and confidence in the growth story weakens.

Why Is Social Security Coverage a “Mirage” Even for Employed Gen Z?

1. Low social security coverage: Only 20.1% of Gen Z individuals are covered by social security, leaving the vast majority without protection even when employed.
2. Job contracts are rare: Just 14.1% of Gen Z workers have a formal job contract; among the 79.9% lacking social security, only 3.2% have a job contract.
3. Contractual employment is the exception: Only 17.3% of Gen Z workers hold any form of contractual employment, meaning most enter the workforce without either a contract or social protection.
4. Informalisation within formal employment: Recent years show growing evidence of informalisation of formal employment among Gen Z, meaning even formal-sector jobs are losing security features.
5. Millennials are only marginally better: Only 26% of Millennials have a job contract and 28.6% are covered by social security, showing the informality problem extends across cohorts, not just Gen Z.
6. Social cost visible: Large-scale labour protests by industrial and factory workers in Noida, Uttar Pradesh, demanding higher wages and better working conditions, reflect the frustration insecure and poorly protected employment can produce.

Why Must India Treat Unemployment, Skilling, Women’s Work, and Informality as One Problem?

1. Debate wrongly siloed: India’s jobs debate is usually discussed separately as unemployment, skilling, women’s work, and labour force participation, obscuring their common origin.
2. Single connected failure: All four are facets of one connected failure of labour market transition, where education is prolonged but the bridge from education to work remains weak.
3. Skilling alone is insufficient: Skill programmes have value but cannot substitute for actual job creation, since the binding constraint is demand for labour, not only its quality.
4. Structural, not motivational, barrier for women: Women face structural barriers that keep them out of work or push them into unpaid roles, and even when employed, work is too often outside formal protection.
5. Precondition for resolution: Expanding labour-intensive sectors, strengthening school-to-work pathways, aligning training with employer needs, and enabling women’s paid work through apprenticeships, hiring incentives, safe transport, and childcare support are named as the necessary conditions for change.

Conclusion

India’s demographic dividend is faltering not from a shortage of young workers but from a labour market unable to convert education into secure, well-paid work; unemployment rises rather than falls with higher education, and even the employed largely lack contracts or social security. Until labour-intensive job creation, skilling-employer linkages, and women’s structural access to work are addressed together rather than in silos, the demographic dividend will remain, in the article’s own words, a promise deferred.