India’s youthful demographic profile can positively impact the global labour market if strategic efforts are employed
India's demographic milestone—surpassing China as the world's most populous country—positions it uniquely to address the looming labour shortages in many advanced nations. With a population exceeding 1.4 billion, nearly 65 percent of whom are of working age (15–64 years), and more than 27 percent between the ages of 15 and 24, India’s youthful demographic profile presents significant potential to positively impact the global labour market.
India's job market is undergoing significant changes as it emerges as the world's fastest-growing large economy post-COVID-19, with a GDP growth rate of 7.8 percent. This rapid economic expansion, driven by robust private consumption and public investment, could help India achieve its target of a US$ 5 trillion economy by 2026-27. Employment elasticity estimates from the recent ORF report reveal significant differences across sectors, regions, and genders. The service sector shows the highest long-run employment elasticity, particularly in rural areas (0.53) and among females (0.31).
India's job market is undergoing significant changes as it emerges as the world's fastest-growing large economy post-COVID-19, with a GDP growth rate of 7.8 percent.
On the other hand, many high-income countries are experiencing rapid demographic shifts characterised by ageing populations and declining birth rates. By 2050, the working-age populations in these countries will have shrunk by more than 92 million, while their elderly populations (65 and older) will grow by over 100 million. This shift creates a critical imbalance: Working-age individuals are essential for contributing to pension and healthcare systems that support the older generation, thus maintaining financial and social stability.
To preserve the current ratio, advanced nations will need over 400 million new workers in the next 30 years, a need that domestic workforce mobilisation alone cannot meet. This shows how India can strategically align its labour supply with the demands of advanced economies, ensuring mutual economic growth and integration. India's population is young and growing, while many advanced economies face shrinking workforces. For example, the working-age population in Germany is projected to decline by 10 million by 2050, while the elderly population will rise significantly. Similar trends are observed in Japan, Italy, and other developed nations.
Figure 1: Projected Decline in Working Age Population (aged 20-64) in selected OECD Countries
Source: World Economic Forum
Labour mobility can connect these potential migrants with employers in need, enhancing global equity and productivity. For instance, workers moving to richer countries can expect to increase their incomes by 6 to 15 times, significantly alleviating poverty. India's demographic advantage provides a substantial potential workforce. Projections estimate that low-income countries, including India, will have two billion new working-age individuals by 2050. This surplus labour force presents an opportunity to bridge the gap between labour demand and supply in advanced nations.
The positive impacts of labour mobility extend beyond individual migrants. Remittances sent back home by migrant workers can play a crucial role in the economies of their home countries. In 2022, India received over US$ 111 billion in remittances, making it the first country to surpass the US$ 100 billion mark—India was closely followed by Mexico, China, the Philippines, and France. This underscores the significant role of migrant workers from South Asia, with India, Pakistan, and Bangladesh among the top remittance recipients. These funds contribute to poverty reduction, improved healthcare, education, and overall economic development. However, the pandemic severely impacted migrant workers, particularly those in low-skilled jobs, leading to significant job losses and debt.
Anti-immigrant sentiments and restrictive immigration policies in many high-income countries create barriers for potential migrants.
Despite these clear benefits, the current systems supporting labour mobility are insufficient to handle the necessary scale and are often hindered by negative public perceptions. Anti-immigrant sentiments and restrictive immigration policies in many high-income countries create barriers for potential migrants. These cultural issues often lead to policies that limit the number of immigrants and fail to provide adequate support systems for them. Moreover, the legal and bureaucratic hurdles associated with migration can be daunting. Many countries have complex immigration processes that can deter potential migrants. Additionally, there is often a lack of comprehensive integration programs to help migrants adapt to their new environments and become productive members of society.
To overcome these challenges, a strategic and well-coordinated approach is required. One potential solution is to enhance bilateral and multilateral agreements to facilitate labour mobility. Simplifying immigration processes, providing clear information about migration opportunities, and offering support services for migrants can make the process more accessible and efficient. Furthermore, addressing negative public perceptions through public awareness campaigns and highlighting the positive contributions of migrants can help create a more favourable environment for labour mobility.
India aims to transition from being a “Vishwa Guru” (global teacher) to a “Vishwa Bandhu” (global partner), focusing on collaboration and mutual benefit. This shift is essential for effectively addressing global labour market demands. To facilitate this transition, India must invest in skilling initiatives to equip its workforce with the necessary skills to meet international market needs.
Simplifying immigration processes, providing clear information about migration opportunities, and offering support services for migrants can make the process more accessible and efficient.
Skilling initiatives are crucial for enhancing the employability of Indian workers in international markets. These initiatives should focus on technical skills development in high-demand areas such as technology sectors, professional healthcare training to address specific shortages in advanced nations, and language and cultural training to enhance communication skills and cultural adaptability. Additionally, investing in Indian educational and vocational institutions can build a robust skilling ecosystem that meets global standards.
Strategic integration of Indian labour into advanced economies involves several steps. First, there is a need to identify high-demand sectors in advanced nations that face acute labour shortages, such as healthcare, information technology, education, and manufacturing. Second, analyse the economic implications of integrating Indian labour into these sectors using labour market frameworks, including assessing the productivity of Indian workers and the overall global financial impact. Third, enhancing labour mobility by identifying enabling conditions for global labour migration from India involves reducing labour mobility transaction costs and ensuring the smooth reintegration of returning workers into the Indian labour market.
In conclusion, effectively aligning India’s abundant workforce with global demand requires a multifaceted approach involving targeted skilling initiatives, enhanced labour mobility frameworks, and robust support systems for migrant workers. Through such strategic efforts, India can alleviate global workforce gaps and establish itself as a pivotal partner in the international labour market.
Soumya Bhowmick is an Associate Fellow at the Observer Research Foundation
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Soumya Bhowmick is an Associate Fellow at the Centre for New Economic Diplomacy at the Observer Research Foundation. His research focuses on sustainable development and ...
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