3 days ago
Wanted: A new social contract for ‘Make in India'
Earlier this month, external affairs minister S. Jaishankar launched the Global Access to Talent from India (GATI) Foundation to position India as a global talent hub. GATI signals India's ambition to be at the centre of global labour mobility, offering legal, ethical and safe pathways for Indian workers to fill skill gaps abroad.
GATI has the potential to enable a transformation. By creating pathways to high-paying jobs abroad, it can recast the social perception of vocational training.
When skilling leads to economic and social mobility, the social contract is complete and individuals are empowered to invest in their own growth.
A similar social contract is needed for domestic manufacturing if 'Make in India' is to truly succeed.
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It is necessary to ensure the availability of a skilled and motivated workforce, one that is adept at new-age capabilities such as electric vehicle assembly and meets the requirements of in-demand workers such as qualified welders and fitters who can read machine drawings.
We also need to create reliable pathways for stable jobs and economic mobility for skilled workers. To realise this ambition, we must confront a few systemic constraints.
First, a large proportion of shop-floor jobs in India remain informal and short term. Around 69% of the manufacturing workforce is temporary and hired usually through formal and informal intermediaries.
Smaller intermediaries or contractors are poorly organised, with limited capacity to meet wage and safety standards, let alone invest in skill development. This informal workforce does not have job security, leading to high attrition. The weak fallback net creates a floating pool of workers who often switch from one job to another, driving down productivity.
Second, the gap between industry demand and available skills is widening. More than 56% of employers report difficulty in finding skilled workers. As a result, many employers invest in basic to intermediate training for new recruits, a process that can take weeks, if not months.
However, companies prefer a plug-and-play approach, seeking job-ready workers. Larger, legacy companies are better placed as they have invested in developing internal skilling systems over time. But mid-sized and smaller firms, which make up a large share of India's industrial base, struggle to bridge this gap.
Third, our existing system disadvantages women. Women have better safety records and deliver higher productivity but they remain significantly under-represented in the manufacturing workforce.
Also Read: How a manufacturing boom could help India close the gender gap
The transitory nature of contract work, remote locations with lack of mobility and limited support structures are hurdles to female participation.
This ecosystem reveals a paradox: Even as manufacturers report difficulty finding skilled workers, large numbers of young Indians remain unemployed. As the economy evolves, shaped by automation and AI, the demand for productivity is rising.
How, then, can we shape a new social contract for India's workforce, one that supports the vision of 'Make in India' while ensuring meaningful employment?
A critical effort lies in carving a middle path, one that offers greater job security for workers while preserving flexibility and cost competitiveness for businesses. This requires intermediaries that operate the full stack; i.e. manage the entire employment lifecycle: from screening and onboarding to skilling, job matching, compliances and benefit provision.
There is a role here for markets, philanthropy and government to come together. We need a public-interest organisation for workforce management at population scale. There is an unmet need of managing the lifecycle of workers.
Profits in this domain may be thin or non-existent. Who can shoulder this responsibility in the absence of a viable market? Perhaps the National Skill Development Corporation (NSDC) should go beyond skilling to take end-to-end ownership of worker well-being.
Another option could be to build an organisation similar to the National Payments Corporation of India that runs payments. India is the pioneer of Digital Public Infrastructure (DPI), and we can use technology to enable better demand–supply matching, track worker lifecycles and ensure continuity in employment histories and benefits.
Interoperable platforms that build on digital credentials could unlock a worker-friendly ecosystem without compromising industry's need for efficiency.
Also Read: Time to re-imagine Indian manufacturing from the ground up
Second, the industry needs to focus on developing a productive workforce with an eye on worker well-being. A 10% increase in trained workers can boost firm-level productivity by 6%.
'Farming' talent internally rather than 'fishing' for ready-made talent can create a systemic change across industries. We need manufacturing firms to treat workers as a strategic investment. The payoffs in productivity, retention and legacy are significant.
Third, tap the potential of women in the manufacturing workforce. Steps to meet women's needs, including gender-friendly mobility, accommodation and childcare support can be promising avenues. Equally important is to change the narrative. Skilling must be made aspirational for women, as a path to employment and a symbol of agency.
More than a century ago, Henry Ford said, 'There is only one rule for the industrialist and that is: make the best quality goods possible at the lowest cost possible, paying the highest wages possible."
His legacy was not just Ford's Model T motor car, but a system where workers could afford the products they themselves had made. If we can forge this new social contract, where most of India's workers have the safety net of wages and essential benefits, we will finally unlock the potential of 'Make in India.'
The author is founder and CEO, Kalpa Impact.
