India’s formal workforce is growing, but traditional labour-intensive sectors are losing ground. Recent data from the Employees’ Provident Fund Organisation (EPFO) shows that contributors from these industries have decreased over the past two years. This trend indicates a major shift in job opportunities, especially for workers with limited formal education.

The EPFO data reveals that contributors from 12 key labour-intensive industries, such as garments, textiles, and brick-making, fell by 1.3% to 54.64 lakh in 2025-26. This decline happened even as the overall EPFO-covered workforce grew by nearly 9%, rising from 7.30 crore to 7.95 crore. The share of these industries in total EPFO membership dropped from 7.58% to 6.87%. This trend is concerning for those who depend on these sectors for employment.

Job Openings in Manufacturing Are Disappearing

The decline in labour-intensive sectors is especially noticeable in manufacturing. For example, the cashew industry saw a 25.1% drop in EPFO contributors, while the tea plantation sector faced a 19.3% decline. In absolute numbers, the beedi-making sector lost over 33,000 contributors. This trend raises concerns about the future of jobs in traditional manufacturing, which have historically helped workers transition from agriculture.

Career Ahead’s analysis shows that the shift towards automation and capital-intensive manufacturing is leaving many workers behind. As companies invest in technology, the demand for low-skilled labour is decreasing. This shift affects job availability and wages, as fewer positions require manual labour. Workers who relied on these industries now have limited options. The EPFO data indicates that the manufacturing sector, once a source of employment for unskilled workers, is becoming increasingly automated, reducing job openings for traditional roles.

Moreover, the overall landscape of formal employment is changing. The services sector has grown significantly, adding 42.32 lakh contributors. However, many of these new jobs do not match the skills or experiences of traditional labourers. Harshil Sharma, a labour economist, points out that workers from industries like jute or brick-making cannot easily move into roles in expert services or finance. This mismatch creates a challenge for the labour market, as many individuals feel unprepared for new opportunities.

The shift towards more skilled positions in the formal workforce requires a comprehensive approach to workforce development.

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This gap in job opportunities highlights the urgent need for upskilling. Workers in labour-intensive sectors must adapt to the evolving job market. Without targeted training and education, many will struggle to find stable employment. The shift towards more skilled positions in the formal workforce requires a comprehensive approach to workforce development. Partnerships between educational institutions and industries can help create relevant training programs.

Wages in Construction Are Affected by the Formal Workforce Expansion

The expansion of the formal workforce also impacts wages in sectors like construction. As more workers enter the formal economy, employers may change their wage structures, often leading to lower pay for entry-level positions. This shift is concerning for those who rely on these jobs for their livelihoods. The construction industry has traditionally employed many workers with limited formal education. However, as the formal workforce grows, competition for these roles increases. Many employers now seek skilled workers, which can marginalize those without specialized training. This trend could worsen wage stagnation and job insecurity for construction workers.

Career Ahead research shows that the construction industry is at a turning point. While the demand for housing and infrastructure continues to rise, the skills needed for these jobs are changing. Workers who relied on manual skills now face pressure to learn new competencies, such as digital literacy and safety certifications. This shift could leave many behind if they do not adapt quickly. Furthermore, the EPFO data suggests that the influx of new workers into the formal sector may create a surplus of unskilled labour, driving down wages and creating precarious employment for many in construction.

As the formal workforce expands, it is essential to monitor how these changes affect job security and wages in construction. The industry must find ways to balance the influx of new workers while ensuring fair compensation for existing employees. This balance will be critical in maintaining a stable workforce and preventing further declines in job quality. The construction sector’s reliance on informal workers, who often lack benefits and job security, poses additional challenges as the formal workforce grows and employers seek to cut costs.

The future of work in these sectors depends on workers’ ability to adapt and gain new skills.

Additionally, the agriculture sector is also feeling the effects of the growing formal workforce. As traditional labour-intensive roles decline, many agricultural workers find few options for stable employment. The EPFO data shows that sectors that typically hire workers with limited education are shrinking. This raises concerns about future job opportunities for this demographic. Career Ahead’s analysis highlights that the decline in labour-intensive sectors poses a significant challenge for workers transitioning out of agriculture. With fewer pathways into formal employment, many may turn to informal jobs that often lack security and benefits. This shift could increase vulnerabilities within the agricultural workforce.

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Furthermore, upskilling is crucial in agriculture. As the sector evolves, workers must adapt to new technologies and practices. This includes using digital tools and sustainable farming methods to stay competitive. Without proper training and support, many agricultural workers may find themselves at a disadvantage. The implications of these shifts are significant. As the formal workforce grows, it is vital to ensure that workers in agriculture, manufacturing, and construction have access to the necessary training and resources to succeed in a changing economy. The future of work in these sectors depends on workers’ ability to adapt and gain new skills.

The decline of labour-intensive sectors raises important questions about the future of employment in India. As the formal workforce continues to grow, will there be enough opportunities for traditional workers to transition into new roles? Targeted training and support will be crucial in addressing the skill gaps that are emerging as industries evolve. According to a report by Hindustan Times, the growth of the formal workforce is reshaping the employment landscape. This change requires a reevaluation of how workers can be supported during this transition.

Frequently Asked Questions

What new skills should manufacturing workers acquire to remain competitive?

Manufacturing workers should focus on skills related to automation and digital technologies. As the industry shifts towards capital-intensive processes, skills in machine operation, programming, and data analysis will become more valuable.

Manufacturing workers should focus on skills related to automation and digital technologies.

How will the shift to a formal workforce impact job security in construction?

The growth of the formal workforce may increase competition for construction jobs, potentially affecting job security for existing workers. Employers may seek more skilled labour, which could marginalize those with traditional manual skills.

What strategies can agriculture sector employees adopt to adapt to changing employment trends?

Agriculture sector employees can benefit from upskilling in areas like digital farming techniques and sustainable practices. Embracing new technologies will help them stay competitive in an evolving job market.

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