India's long-standing livelihood crisis has only worsened since the pandemic. Of 900 million working-age adults, only 41% are employed or seeking work, with female labour participation declining.
As traditional livelihoods prove unviable, rural youth are flocking to the cities in search of better lives. However, most end up in the vulnerable informal job sector that employs 90% of India's workforce. With over 200 million people still living in multidimensional poverty, it is evident that urban migration alone is insufficient to address the issue. India needs full-spectrum employment solutions: increasing income levels in traditional rural livelihoods to minimize distress-driven migration, strengthening resilience in the informal sector and promoting skill-based hiring in the formal sector, enabling and encouraging female workforce participation, and supporting entrepreneurs who can scale these solutions to the population level.
Non-profits and their impact on livelihood transition
For-profit firms tend to hire skilled middle-class individuals, leaving behind those lacking digital literacy, financial access, or upskilling opportunities.
Non-profits and social entrepreneurs are key to bridging this gap, and there are many who are already lighting the path for others.
Skill development and access to formal jobs
There are two aspects to skill development: learning the actual skills at a technical level and having the confidence to use them. Most upskilling efforts focus only on technical training and fail. Trainees are often the first generation in their family to join a formal job and need significant support to develop the confidence and emotional resilience required to face an unfamiliar world.
The Lighthouse Communities Foundation is a non-profit that takes a holistic approach to solving this issue. The foundation provides world-class learning experiences to underserved youth in large, aspirational spaces called ‘lighthouses’, and runs a mandatory 50-hour program called ‘Rhythm’ along with continued support to aspirants through their livelihood journey.
Creating new and lucrative revenue streams
Despite middle-class income growth in cities from the IT sector, the poor are excluded from high-paying digital jobs. Social enterprises can create opportunities for dignified work, such as Karya, which offers fair wages to low-income workers for data collection and annotation services in the AI industry.
The company was started after founders Vivek Seshadri and Manu Chopra realized that Indian language speech data sets for AI training models were being sold at 200 times the cost of collecting the data. Declaring a mission to create dignified digital work for rural Indians, the company developed a business model that compensates workers every time their data is used, providing them with a share of future revenue forever.
Financial inclusion initiatives that go beyond banking
While formalizing jobs in India is crucial, the informal sector will persist, as it employs over 60% of the workforce even at a global level. The answer to the livelihood crisis will therefore require efforts to make the informal job sector less vulnerable and provide agency to those in it.
There have been various government efforts for financial inclusion through bank accounts and subsidies, but access to credit and markets continue to be tough, making it hard for rural workers to find sustainable self-employment. Non-profit entrepreneurs have a crucial role to play in plugging these gaps at a hyperlocal level.
Kaarigar Clinic is one such example, which acts as a ‘business clinic’ for rural craft entrepreneurs. The company works with artisans to identify gaps in their skills and market needs, and equips them with design, marketing, digital, and business skills so they can earn higher incomes and avoid migrating to cities for work.
Empowering the labour force by reducing information asymmetry
A key aspect of labour empowerment is to help workers' negotiate better wages and benefits. However, even if they gain employable skills, lack of equitable access to information can make this difficult. There is very little economic incentive for private entrepreneurs to solve this, making it critical that non-profits help identify and solve information gaps.
An example of this is the Gramhal Foundation, which addresses information and network asymmetry for farmers through their AI chatbot, Bolbhav. By providing access to crop prices, weather, and government schemes via a conversational bot in their language, Bolbhav empowers small-landholding farmers to negotiate fair prices and maximize their harvest returns.
The Road Ahead: New Tech Landscape Provides Opportunities for Significant Change
Many stakeholders are chipping away at India’s big developmental problems, but the emerging tech landscape provides an opportunity to achieve scale that wasn’t possible before. The government is establishing a foundational India Stack that enables paperless, cashless, and presence-less delivery ecosystems, while the upcoming Open Network for Digital Commerce (ONDC) intends to democratize the digital commerce ecosystem for all players, large and small. Ground-breaking advancements in AI also present new possibilities.
Non-profits can serve as a vital middle layer above this foundation, bridging the gap to the final global market layer, which can unlock unprecedented prosperity for all Indians.
If there ever was a time to seize the moment, it is now.
Sudha Srinivasan is CEO, The/Nudge Centre for Social Innovation and Subhashree Dutta is Managing Partner, Social Entrepreneurship, The/Nudge Centre for Social Innovation. Views are personal.