India is facing challenges in its labor force compared to China, despite having the world’s largest population. According to a report by Oxford Economics, India’s labor force participation is only at 51%, trailing China by 25 percentage points. The report projects that India’s labor force will remain smaller than China’s until the late 2040s unless it achieves a participation rate of over 70% by 2030. Additionally, while a larger proportion of India’s population is of working age, those between 15 and 64 years only make up 51% of the country’s labor force, compared to 76% in China.
The report also highlights the significant gender disparity in India’s workforce. While China’s female labor force stands at 71%, women make up only 25% of India’s workforce, even lower than poorer economies like Pakistan and Bangladesh. In contrast, smaller developing nations in the region, such as Indonesia, Malaysia, Laos, Thailand, and Vietnam, have a higher number of female workers in their labor force.
Apart from the low labor force participation, India also struggles with the productivity of its workforce due to a lack of proper education and healthcare standards. The report states that India’s average human capital levels, which determine productivity, rank behind China and most of its regional peers. The country also lags behind China in literacy rates and education quality, with disruptions during the pandemic further hampering learning outcomes. In terms of healthcare, India has lower life expectancy at birth and fewer doctors per population compared to China. The report emphasizes the need for increased funding to improve education and healthcare in the country. Overall, India faces the challenge of not only increasing its labor force participation but also enhancing the quality and productivity of its workforce.