The West Bengal government has introduced Yuva Sathi, an unemployment assistance scheme, guaranteeing Rs 1,500 every month for five years or until a beneficiary secures employment. The scheme was pushed ahead to April 1, in view of the approaching Assembly elections in the state. An amount of Rs 5,000 crores has been allocated for the scheme.Unemployment benefits play an important supportive role for workers. In theory, such benefits reduce the immediate cost of remaining unemployed, allowing individuals to search more effectively for jobs that better match their skills and capabilities. This can improve the efficiency of labour allocation in the economy.Additionally, unemployment assistance can improve social welfare by providing income support to those who are unable to secure employment. However, sustained economic progress ultimately depends on the simultaneous expansion of employment opportunities. Long-term gains require a parallel focus on job creation, particularly through the development of the manufacturing sector. Given its relatively labour-intensive nature, manufacturing can absorb workers across different skill levels and serve as a key driver of inclusive growth.However, there has been a continuous low and stagnant value added in the manufacturing sector as a share of the Gross State Domestic Product (GSDP) of West Bengal. Over the last six years, it has hovered around 16-17%. According to the 2023-24 Periodic Labour Force Survey, the value added by the manufacturing sector is 16.36% of the state GDP (GSDP).On the other hand, the services sector has the highest value added – 51.35% of the GSDP. However, studies have suggested that service sectors and their sub-sectors are often skill-intensive and less labour-intensive and have limited employment generation capacity when compared to manufacturing. The low importance of manufacturing in the GSDP of the state is, therefore, concerning.Another cause for concern is that the share of employment in the manufacturing sector has also been stagnant and slightly falling over the last six years. In 2023-24, while 38.16% of the people were employed in the agricultural sector, the value added by this sector in the total GSDP was only 9.81%. Thererefore, a pronounced structural misalignment exists in the state’s economy – a substantial portion of the labour force remains concentrated in a sector characterised by a disproportionately low contribution to the GSDP.Meanwhile, the percentage of workers employed in the manufacturing sector has also declined, from 17.8% in 2017-18 to 16.66% in 2023-24.The quality of employment among workers in West Bengal also raises concerns. There has been a decline in the proportion of Regular Wage and Salaried Workers, from 22.1% in 2017-18 to 20.4% in 2023-24. These are the jobs that are considered more stable, with higher earnings.Correspondingly, the percentage of workers employed as own-account workers and employers has increased from 38.7% in 2017-18 to 45% in 2023-24. The concerning trend is that the share of unpaid household helpers has increased from 7.4% to 11.4%. This may imply a shift away from better kinds of jobs towards a more distress-driven inclusion in the labour force.A closer examination of the aggregate structure of the manufacturing sector adds to these concerns. Figure 1 (below) shows the year-wise composition of workers in the listed manufacturing sector (two-digit) of West Bengal based on data from the Annual Survey of Industries (ASI). The data distinguishes between contract workers and directly employed workers as a share of total employment from 2008-09 to 2023-24.Figure 1: Trend in Employment Composition: Contract vs Direct Workers (Year-wise, calculations based on ASI data, by authors.)There is a clear structural shift in workforce composition over time, where the share of contract workers has increased from 23% in 2008-09 to 40% in 2023-24. At the same time, the share of direct workers has correspondingly declined, from 77% to 60%, over the same period.Regular/direct employment is thus gradually being replaced by contract arrangements. The period after 2018 appears to be a structural turning point. The post-COVID-19 phase (2020 onwards) did not reverse this trend. Instead, contract labour continued to expand.The data points towards a labour market where a growing portion of the workforce lacks legal protections and long-term stability. This contractualisation is, as expected, paired with declining labour costs and reduced social security obligations for employers (Figure 2, below).Figure 2: Percentage of Employer Contribution to Wages and Salaries. (Year-wise, calculations based on ASI data, by authors.)Thus, the transformation is not merely quantitative, or in terms of the type of worker, but also qualitative – employment protection and compensation structures have also changed.ASI also gives us information about the number of registered and operational factories in the state. Not all factories are considered operational since some may be closed or locked out. It is distressing to note that between 2022-23 and 2023-24, around 465 factories stopped being operational in West Bengal.The share of non-operational factories in total factories was a sizeable 16.7% in 2023-24.The overall story paints a picture where there is not enough focus on job creation in the manufacturing sector in West Bengal. While unemployment benefits can be a useful welfare mechanism in the short run, they are sustainable only if complemented with job creation, especially jobs that focus on labour-intensive manufacturing.The discontinuation of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in West Bengal further compounds this challenge, as it takes away an important fallback source of employment and income support for vulnerable households.Satyaki Dasgupta and Namrata Singha Roy are faculty members of the Department of Economics at Christ University, Bangalore.