India’s labor market has shifted from the “jobs for life” model to a much more uncertain landscape. Recent commentary from market experts and fresh labor-market data paint a sobering picture: headline unemployment is rising again, youth and graduate joblessness are disproportionately high, and structural changes — automation, weak manufacturing job creation and sluggish export demand — are reshaping who gets work and what kind.

 How many people may be unemployed?

Official monthly PLFS snapshots show unemployment creeping up in 2025 — the June 2025 PLFS flagged unemployment near 5.6% — while private trackers such as CMIE report broader joblessness closer to 7% (and often higher in certain cohorts). Those percentages translate into millions of people out of work: India’s working-age population is expanding rapidly and, by one estimate, roughly 12 million people will enter the working-age population every year until 2030 — meaning India needs roughly 9 million new jobs per year just to keep pace with entrants. If job creation continues to lag, the absolute number of unemployed could remain in the tens of millions over the next few years. 

   Who will be hit hardest?

• Youth and recent graduates. Youth unemployment rates are several times the headline number. Graduate unemployment and underemployment figures in some surveys are striking — one analysis showed unemployment among graduates as high as ~13%, and youth (15–29) unemployment around ~10%, with some age bands and states far worse. CMIE and other trackers show even higher distress in the 20–24 cohort in some months. These groups face both quantity (not enough open positions) and quality (mismatch between skills offered and skills demanded) problems.

• White-collar mid-level employees. Several commentators, notably Saurabh Mukherjea, warn that conventional salaried white-collar employment growth has largely plateaued — a trend driven by automation, process efficiencies, and companies scaling revenues without matching headcount increases. This means mid-career professionals in banking, large corporate services, and routine back-office roles may face stagnation rather than steady upward mobility.

• Workers in labor-intensive export sectors and vulnerable MSMEs. Apparel, leather, gems & jewelry, and some electronics exporters are vulnerable to global demand shocks and trade frictions (tariffs, supply-chain shifts). If those sectors contract, they will produce localized spikes of unemployment, especially for semi-skilled workers in Tier-2/3 towns. 

• Women and marginalized groups. Female labor force participation remains low; when jobs are scarce, historically marginalized groups are often hit first and hardest. Declines in labor-force participation can mask underlying distress.

Which sectors will shrink — and which could absorb labor?

• Likely to create fewer jobs than before: Large, technology-enabled financials, retail chains, and many corporate services can expand output without proportional staffing because of automation, AI, and process re-engineering. Traditional large employers (some banks, insurance and large corporates) may thus add revenue but not headcount.

• At risk due to external shocks: Labor-intensive exporters (apparel, certain electronics, gems/diamonds) face demand and tariff risks; MSMEs in these chains could downsize first.

• Possible absorbers of labor: Informal services, gig economy platforms, and entrepreneurial/self-employment activities may pick up slack — but these are often lower-paid, less secure and fragmented forms of work. Agriculture may also again become a fallback for many, reversing some earlier structural gains. Public investment in labor-intensive infrastructure and targeted manufacturing policy could also create jobs if implemented at scale.

The structural drivers behind the “jobless future” thesis

1. Automation & productivity gains. Firms can now scale without hiring at previous rates. Mukherjea and others argue that automation and more efficient processes reduce the need for large salaried workforces.

2. Mismatch of skills vs. demand. Large cohorts of graduates lack employable skills for growing domains (AI/ML, advanced manufacturing, specialty services), producing structural unemployment even when vacancies exist. Surveys suggest only about half of graduates are considered employable for modern job requirements.

3. Weak formal job creation in manufacturing. Manufacturing hasn’t absorbed labor at the scale needed; in some periods manufacturing employment has even contracted — constraining traditional absorptive capacity.

4. Global demand shocks and policy headwinds. Trade disputes and tariff changes can quickly impair export-led employment, particularly in labor-intensive lines.

What can policymakers and society do? (Practical levers)

• Push skill upgrading at scale. Focused vocational training, fast-track reskilling for technology domains, and industry-aligned apprenticeships to reduce structural mismatch.

• Stimulate labor-intensive growth. Targeted support to MSMEs, export incentives with worker protections, and infrastructure projects that create broad employment. 

• Strengthen social safety nets & income diversification. Expand welfare, portable benefits for gig workers, and easier access to credit for micro-entrepreneurship.

• Improve labor-market data & city-level policies. Better local labor intelligence (beyond headline unemployment) so policy is granular and responsive.

Bottom line

India faces a real jobs challenge: with millions of new entrants each year, a rising headline unemployment rate in 2025, and disproportionately high joblessness among youth and graduates, the economy risks a prolonged period of under-employment unless policy and market adjustments accelerate. The likely scenario for the near term is not wholesale collapse but a re-shaping of work — more gig-style, more self-employed, and more skills-dependent — which will produce winners and many at-risk groups. Managing this transition will determine whether India’s demographic dividend is realized or becomes a demographic burden.