State of Employment Reporting in India.
Unemployment in India: Stories and Statistics
How was your weekend?
My weekend was spent on Blume's Indus Valley Report of 2025 (4th edition). I have found this report quite though-provoking.
covers quite a good ground. So, when I saw this slide
I asked my inquiZitive mind, really?
"That's how it all started."
What Industry says?
Manish Sabharwal, co-founder of one of India's leading staffing company (TeamLease), at Business Today India@100 event, said:
“Our problem is not jobs, it’s wages,” he said, highlighting that many jobs do not offer sufficient wages to lift individuals out of poverty.
At the same event, Dhiraj Nayyar (Chief Economist -Vedanta), said
“…issue isn't the lack of jobs but rather the mismatch between available jobs and the skills of the workforce.”
Now, a slide of Ambit Asset Management deck.
Since the slide is heavily reliant on Periodic Labour Force Survey (PLFS) data, we have to carefully analyze the government figures, which isn't always easy!
"The government is very fond of facts and statistics, provided they are of the sort which can be used to support the government." - George Bernard Shaw
What Government Data says?
Before we start. Lets understand more about PLFS (citied by both Blume and Ambit). PLFS, is conducted by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation (MoSPI). It started in 2017, and has two primary objectives regarding employment measurement:
To estimate employment & unemployment indicators such as the Worker Population Ratio (WPR), Labour Force Participation Rate (LFPR) and Unemployment Rate. This is done every three months for urban areas only using the Current Weekly Status (CWS) approach.
To annually estimate employment and unemployment indicators in both rural and urban areas. This is done using both the usual status (ps+ss) and CWS approaches.
The usual status (ps+ss) approach considers a person’s usual principal and subsidiary activities together to determine their employment status. The CWS approach considers whether a person worked for at least 1 hour or was seeking/available for work for at least 1 hour on any day during the 7 days preceding the date of the survey.
Key Findings from PLFS 2023-2024
Labor Force Participation Rate (LFPR)
Overall LFPR: Increased from 57.9% in 2022-2023 to 60.1% in 2023-2024, indicating a broader engagement in the labor market.
Gender Disparity: Male LFPR rose slightly from 78.5% to 78.8%, while female LFPR saw a significant jump from 37.0% to 41.7%, reflecting increased female workforce participation.
Rural-Urban Divide: Rural LFPR stood at 63.7%, up from 61.9% in 2022-2023, while urban LFPR increased to 52.0% from 50.4%. This suggests stronger labor market engagement in rural areas.
Worker Population Ratio (WPR)
For 2023-24, assuming a total population aged 15 and above of 1 billion, rural population was estimated at 565 million and urban at 435 million, based on sample proportions. Worker numbers were calculated using WPR: rural workers at 350.8 million (62.1% of 565 million) and urban at 214.79 million (49.4% of 435 million), so WPR of 58.2% for all.
Overall WPR: Rose from 56.0% to 58.2%, showing more people are employed relative to the population.
Gender and Location: Male WPR was 76.3%, and female WPR increased from 35.9% to 40.3%. Rural WPR was 62.1%, compared to 49.4% in urban areas, highlighting rural employment strength.
Unemployment Rate (UR)
Overall UR: Remained at 3.2%, unchanged from 2022-2023, marking a significant departure from the declining trend observed since 2017-2018.
Gender Trends: Male UR decreased slightly from 3.3% to 3.2%, while female UR increased from 2.9% to 3.2%, indicating a slight worsening for women.
Rural-Urban Variation: Rural UR was 2.5%, significantly lower than urban UR at 5.1%, suggesting urban areas face greater unemployment challenges.
So, if you read-through the latest PLFS, you will get a notion that, ALL is ALMOST WELL.
a robust increase in labor force participation and employment, particularly for women and in rural areas, but some challenge of stagnant unemployment and informalization.
But Can We Trust the Numbers?, and if NOT, how to counter and validate that counter?
The Indian Workforce: A Three-Part Story
The distribution of workers in India can be broadly categorised into self-employed, regular wage/salaried employees, and casual labourers.
Self-Employed
Individuals who operate their own enterprises either independently or with partners. Their earnings consist of a non-separable combination of a reward for their labour and profit of their enterprise.
Self-employed can be further divided into:
Own account worker and employer: Own-account workers operate enterprises on their own or with few partners and mostly without hiring labour.
Unpaid helper in household enterprises. [moms, kids working for papa]
Regular Wage/Salaried Employee
This category includes individuals who work for others and receive a regular salary or wages.
Casual Labour
This category includes individuals who are engaged in casual work and receive wages accordingly. They sometime work in public works like MGNREG.
Now, with three distributions, let’s again look at PLFS data.
Distribution and Growth of Worker Categories (last 2 years of PLFS report)
Self-Employment Growth
Self-employment, saw increases across all groups. Rural females experienced the largest growth, rising from 71.0% to 73.5% of workers, a 2.5 percentage point increase, reflecting more women engaging in small businesses or family work. Rural males saw a 0.6 percentage point increase (58.8% to 59.4%), while urban males and females had smaller rises of 0.4 and 1.9 percentage points, respectively.
Regular Wage/Salaried Employment Changes
Regular wage/salaried jobs, typically formal and stable, showed mixed trends. Rural males saw an increase from 14.3% to 15.8% , but rural females saw a slight decline from 8.0% to 7.8%. In Urban India, males dropped from 47.1% to 46.8% and females from 50.8% to 49.4%, indicating challenges in formal job creation in urban settings.
Casual Labor Decline
Casual labor, rural males saw the largest drop, from 26.8% to 24.9%, followed by rural females from 21.0% to 18.7% . Urban males & females had smaller declines, from 13.6% to 13.4% and 8.9% to 8.3%, respectively, suggesting a shift away from temporary jobs.
Now, that I have thrown a lot of numbers at you, let me give an interesting twist. Most of these %, numbers, largely don’t make ANY sense, because, PLFS is JUST a survey!
So, what’s the conclusion?
But still, even if its a survey. Let me give some interesting insights so that you should mostly ignore this data.
Number of Formal Jobs
PLFS estimates ~144 million people in regular wage/salaried jobs for 2023-24. Now, based on the Employees' Provident Fund Organisation (EPFO) data, only ~74 million people are employed in formal jobs in India in 2024 (March 2024). While there is a consistent growth: in May 2024, EPFO added 1.95 million net new members, and in August 2024, it added 1.85 million, indicating ongoing formal job creation.
If you add the Employee's State Insurance Corporation (ESIC) numbers, we have 35 million more employees (blue-collar workers earning up to Rs. 21,000 per month).
So, net we have ~110 million wage and salaried workers in India.
Let me also go back to our Middle Class’s story. As of March, 2024, ~80 million people have filed their ITR (Salary income).
So, PLFS is bit off in their guesstimate (~30% overestimations).
"If you torture the data long enough, it will confess to anything." - Ronald Coase
The Invisible Unemployment
Agriculture is most common sector where disguised unemployment is prevalent in India. You might have a large family working on a small plot of land, where the work could actually be done by fewer people. But, Everyone appears to be employed. That’s why modernise our agriculture, is a ‘Pandora Box’ of our economy.
Agriculture accounts for 46% of jobs in India..…but only contributes to 15% of GDP
Atmanirbhar Bharat
Majority of the folks that are surveyed are self-employment (in rural india). The World Bank estimated self-employment in India to be even higher, at 76.13% in 2023.
The increase in self-employment, particularly among rural females, highlights a reliance on informal and family-based work, potentially due to limited formal job opportunities.
Distress-driven non-farm employment
Landlessness, marginal farming, and illiteracy drive the workforce towards non-farm activities, leading to increased casualisation (mood-driven) of the rural workforce.
Mismatch of Expectations
The mixed trends in regular wage/salaried employment suggest that formal job growth is uneven, with rural males benefiting more than others, while urban areas face stagnation.
Larsen & Toubro MD, SN Subrahmanyan, has recently expressed concern (this is real!) regarding the decreasing migration of construction workers in India. He observed that labor mobility is limited, potentially due to various factors including the strength of local economies and the availability of government schemes and direct benefit transfers.
Freebies
Two week’s back, Supreme Court expressed strong disapproval of pre-election freebies, stating that such practices discourage work and diminish the labor force.
Now, from that view, if you see the PLFS. The decline in casual labor indicates
a possible shift towards self-employment may also reflect jobless growth,
no decision of NOT doing any labor.
That’s all, hope all this make sense, and my sparked insatiable curiosity might end up in another post on going more deep into the Landscape of Indian Workforce (white, grey, blue, etc).
Happy to hear your feedbacks & criticism at thebizdomin@gmail.com
"It is easy to lie with statistics, but it is hard to tell the truth without them." - Andrejs Dunkels