Economic Survey 2025-26 Exposes Skilling-Jobs Disconnect, Urges Outcome-Oriented Reforms
The Economic Survey 2025-26, presented ahead of the Union Budget, has delivered a stark assessment of India's skilling landscape, highlighting a persistent failure to translate training programs into stable employment and meaningful wage growth. Despite substantial public investment in skilling initiatives over the years, the survey notes that the nation continues to grapple with converting certifications into durable labour-market value for its vast workforce.
Scale Over Substance: The Core Challenge Identified
The annual pre-budget document pointedly flagged that skilling policy has historically prioritized scale and volume—measured through enrolments and certifications—over tangible results. Low job retention rates and limited wage growth among trainees remain critical issues, underscoring a deep-seated gap between skilling efforts and actual labour-market outcomes. "The central challenge in India's skilling landscape is not the absence of training effort but the weak translation of training into durable labour-market value," the survey stated emphatically.
This analysis arrives at a crucial juncture, as the government intensifies its focus on enhancing job quality and boosting labour force participation. The survey reports that India's workforce has now surpassed 560 million individuals, making the efficiency of skilling interventions more critical than ever for sustainable economic growth.
From Outputs to Outcomes: A Proposed Paradigm Shift
The Economic Survey called for a fundamental reset in how skilling success is measured and incentivized. It strongly recommended shifting the focus from mere outputs—such as the number of programs conducted or individuals certified—towards concrete outcomes. These outcomes should include improved employability, sustained income gains, and enhanced job quality for program graduates.
"There is a need to shift the focus from outputs, such as the number of programmes and enrolments, towards outcomes in terms of employability, improved earnings, and job quality," the document advised. It argued that while headline labour indicators might show rising participation and falling unemployment, skilling efforts must demonstrably lead to stable jobs and higher earnings to create real economic impact.
Linking Incentives to Employment Results
To operationalize this shift, the survey proposed a radical re-anchoring of public funding and incentives. It suggested that financial support, contracts, and the empanelment of training providers should be explicitly tied to verified employment outcomes. Key metrics should include:
- Successful employment starts post-training
- Six-month and twelve-month job retention rates
- Documented evidence of earnings growth relative to pre-training baselines
"If contracts and empanelment hinge on verified employment starts, six- and 12-month retention, and evidence of earnings uplift relative to the baseline, the system begins to reorganize itself around placement quality," the survey reasoned. "The first step is to re-anchor incentives around outcomes and retention."
Addressing Structural Gaps: Employer Involvement and Degree Realities
The Economic Survey also identified weak employer participation as a major structural weakness in current skilling frameworks. It argued that programs achieve the best results when employers are actively involved from the outset—contributing to curriculum design, participating in trainee assessments, and providing on-the-job training opportunities.
"Employer linkage should be treated as a core design feature rather than an add-on," the document emphasized, highlighting the need for deeper industry-academia collaboration.
Simultaneously, the survey cautioned policymakers against viewing formal degree upgrades as a simple shortcut to improved employability. It advocated for a prudent and balanced approach, where degree enhancements serve as complementary instruments rather than substitutes for comprehensive, outcome-oriented skilling reforms.
Defining Success: Post-Training Trajectories as the Ultimate Metric
In its concluding remarks, the Economic Survey 2025-26 firmly stated that the true test of skilling success must remain anchored in post-training outcomes for individuals. The ultimate metrics should be:
- Higher and more sustained employment rates among graduates
- Better match quality between skills acquired and jobs secured
- Measurable, positive earnings trajectories over time
"The test of success should remain the same: Higher and more sustained employment, better match quality, and measurable earnings trajectories for graduates," the survey asserted, setting a clear benchmark for future policy evaluations and program designs in India's critical skilling ecosystem.
